Rising costs have spurred America’s leaders to look abroad for a model upon which to pattern reform of our health care system. On the surface, at least, Germany would appear to have an ideal system combining universal access, high quality, free choice of physicians, and cost control. Germany has been particularly effective in curbing pharmaceutical and administrative expenses, and has avoided the progressive imbalance between primary care providers and medical specialists seen in America. However, Germany lags behind the US in emphasizing preventive services and in shifting services to the ambulatory setting. Also, an oversupply of physicians, lack of incentives to limit the volume of services, and a global budget cap have combined to induce physicians to do more while their incomes were falling sharply relative to those of other workers. Although selected elements of the German health care system could be beneficial to America, full-scale adoption of the German system is neither realistic nor desirable.