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German parliament set to approve watered-down health reform

dpa German Press Agency
Published: Friday February 2, 2007

Berlin- Germany's parliament is expected to approve a watered-down healthcare reform bill Friday which even some backers admit falls far short of the government's ambitious goals. The legislation creates a huge health fund from 2009 which will collect health insurance payments and then redistribute them to public "sickness funds" which insure most Germans.

Government officials will gain far more control over the sickness funds under the law and be able to make key decisions including setting the level of insurance premiums.

Critics warn this will decrease competition among the sickness funds.

The government has also cut an annual 1.7 billion euro (2.2 billion dollar) subsidy to the sickness funds.

This, combined with last month's increase of value added tax to 19 per cent from 16 per cent, means immediate increases to monthly health insurance premiums of about 15 per cent.

Insurance costs for private individuals are expected to rise by a further 15 cent through 2009, the sickness funds say.

Chancellor Angela Merkel's coalition set three top goals for health care reform in 2005. They were: a sustainable finances for the sickness funds, more competition and reducing the non-wage labour costs for health insurance.

"Measured on these goals the result is a total failure," said the conservative newspaper Die Welt which generally backs Merkel.

Even members of the ruling coalition admit the reform falls far short.

"The fundamental problem of the health system is the ever growing gap between revenue and spending. And this is not solved by the reform," said Elke Ferner, deputy leader of the Social Democratic (SPD) bloc in parliament which serves in Merkel's coalition.

It remains unclear as to much of the health reform package will actually be implemented.

Germany's next federal elections are scheduled for 2009 and many observers predict the massive health fund - which is the core of reform - could be dismantled by the next government even before it begins operating.

© 2006 dpa German Press Agency