Many observers have begun to question the U.S. reliance on an employment-based private health insurance system. In thinking about the future of this system, it is instructive to examine the German experience. The German health insurance system is almost entirely organized and financed around the labor market. In recent years, the German labor market has changed in several ways. Among other changes, more German women now work, the proportion of retirees in the population has increased, the share of manufacturing in employment has declined, and the economy has become more open. These labor market changes have made it more difficult to organize health insurance around employment in Germany. Recent changes in the German health insurance system have, to some extent, decoupled health insurance from employment. This decoupling is likely to continue as the labor market changes further. We explore the implications of this experience for the United States.

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