What the German welfare state can teach the United States

Some Americans see Germany as a kind of socialist state. But this is not the case.

Germany has a strong welfare state, but it is funded by semi-public institutions that share the costs between individuals, their employers, and the government. It is a social democracy, a capitalist country with laws and taxes that provide a wide range of social services. In short, the “social market economy” of Germany or Marktwirtschaft soziale is a kind of happy medium between the more progressive Nordic model and the American system.

Many Americans look forward to the services Germans receive, and many Germans might raise eyebrows at the lack of social services provided by the United States (especially as efforts to expand them are currently on the table in the United States. amid the Build Back Better negotiations currently underway in Congress.).

“Germans may need to jump over many obstacles, but generally a health emergency does not mean someone has to file for bankruptcy like in the United States.”

Progressives across the country, emboldened by a Democratic trio, had high hopes for the transformative roadmap of the Build Back Better Act. Senator Bernie Sanders of Vermont even launched a $ 6 trillion budget reconciliation plan.

But gradually, due to centrist demands from West Virginia Democrat Senators Joe Manchin and Arizona Democrat Kyrsten Sinema, the cost of the reconciliation package – and the more progressive agendas it contained – was reduced by $ 3.5 trillion to $ 2000 billion. , and ultimately about $ 1.75 trillion.

The window for action is closing as some of the plan’s most popular programs are now eroded: Medicare and Medicaid extensions, free community college, the child tax credit, and paid family leave have already been eliminated or reduced. These programs had the potential to change the lives of millions of Americans by providing a stronger safety net for the working class. Even if some of these programs are successful, the effects will not be so felt if one operates under tighter budgetary constraints.

Nothing in the Build Back Better bill will come close to reflecting the types of benefits enjoyed by citizens of other wealthy democracies around the world, including Germany.

Germany has found a way to provide strong social services to its citizens while balancing a strong, market-oriented economy. German citizens enjoy guaranteed health care, a free public university, a child allowance and guaranteed parental leave.


The differences between the German and American systems are huge, and those who spend time in both countries notice it.

Leonie Hintze is a German citizen and teacher who has lived in the United States; she now lives in Sweden. As a child, Hintze had an idealized view of the United States as a free and prosperous country, so she was surprised when she moved and saw the reality of health care costs.

Almost forty million people in the United States are in debt with student loans, for a total of $ 1.4 trillion in student debt.

“I had heard that people [couldn’t] pay for health care, but I never really believed it until I came, ”she says. “Friends said they couldn’t go to the doctor because then they would have to pay, so instead they would go and buy cheaper over-the-counter drugs.” It was something Hintze had never experienced in Germany.

Germany is one of the largest consumers of healthcare in the world, spending over 11% of its GDP on this cost. Germans can opt for private insurance at a higher cost with better care, or opt for the public option, which about 88% of the population choose. Both options share the same providers. With this dual system in place, almost 100% of the German population is covered by a high-quality health insurance scheme.

The coverage isn’t perfect – some Germans fall through the cracks, and the coverage isn’t necessarily free – but that’s a far cry from health care in the United States, where around 8.5%, or more of 27 million people, are uninsured and just over 20%, or over 69 million people, are underinsured. Germans may have to pay the bureaucratic price of more paperwork for their coverage, but in general they can remain confident about being able to receive care at an affordable cost.

“Germans may need to jump over many obstacles, but usually a health emergency does not mean someone has to file for bankruptcy like in the United States,” says Senta Goertler, originally from Germany and a professor at the University. of Michigan State. Indeed, currently more than two-thirds of all US bankruptcies are related to medical bills.

Goertler prepares students studying abroad in Germany to navigate the German healthcare system and its bureaucracy. She often helps students change their mindset and approach doctor visits differently, encouraging students to go see a doctor and not be afraid of not being able to afford it.

In some cases, this can save American students thousands of dollars or even avoid bankruptcy. An elective surgical procedure that some American students undergo while studying in Germany is the extraction of their wisdom teeth, which can cost thousands of dollars in the United States. Goerther says one of his students saved more than $ 200,000 in medical bills for diagnostic work.

As mothers, Hintze and Goertler recognize the lower costs of raising children in Germany. Kindergarten, or family allowance, is a monthly fee of more than 200 euros per child paid to parents. A consequence of this policy, however, is that the way the benefit is structured sometimes forces people to choose between having children or having a job. Goertler acknowledged this complication, saying that people “often can’t go back to their profession or at least not build a career”.

Raising children in Germany also reduces other costs associated with having children, such as access to public transport and subsidized sports programs. German parents are granted twelve weeks of paid leave and can take up to three years of unpaid family leave.

By comparison, the United States is one of six countries in the world that does not offer paid time off and, under the Democratic plan, would only spend around $ 500 a year on child care, up from 18,656. estimated dollars in Germany.


As adults, young Germans going to university also have a comparative financial advantage. In Germany, public universities are free and funded by the state.

“I felt pressure in the US that you really have to finish your degree quickly and you have to make money after graduation,” says Benjamin Wolfers, a German who spent a year at the foreigner to study in the United States.

The costs associated with studying in Germany are covered by living and administrative expenses, which are still significantly cheaper than in the United States. Wolfers, who is also a DJ, could afford his 155 euros in administrative fees for university in Germany by playing concerts and with the help of his parents. For other students, Wolfers says, college and living expenses could be covered by part-time employment.

While in the United States, Wolfers noticed how inequalities affected Americans’ approach to education. Wolfers worked part-time at the University of Wisconsin-Madison student union and realized there was a gap between his classmates who worked to pay for their education and other students whose parents paid their fees. of schooling.

In the United States, most low-income students have to take out loans to pay for their college education. Almost forty million people in the United States are in debt with student loans, for a total of $ 1.4 trillion in student debt. Of these debtors, nearly 40 percent are in default or past due on their payments.

“It comes back to this issue of pressure and freedom,” Wolfers says of his experience in the American university system. This balance of pressure and freedom is one the United States grapples with right now as Congress negotiates the cost and scope of social services under the Build Back Better Act.

German social services such as healthcare, family leave, family allowances and tuition-free university remain popular and expected. And they have resulted in a less expensive and more equitable society.

As Congress debates the Build Back Better plan, it would be wise to turn to one of our closest transatlantic allies to see how he could deliver tangible benefits to Americans.

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