(eca085) German health service gears up for major surgery (Feature)

By Andrew McCathie Mar 12, 2010, 12:24 GMT

Berlin - Germany's lumbering health service is facing up to another bout of major surgery as the government attempts to stem ballooning costs and a patch up a gaping 4-billion-euro (5.5-billion- dollar) deficit in the system.

Forged in the 1880's and now costing about 250 billion euros a year, the nation's state-backed healthcare service has already undergone two rounds of far-reaching reforms during the last seven years.

Coming as the US Congress prepares to vote on sweeping changes to the American health service, German Health Minister Philipp Roesler has laid out another set of reforms for healthcare in Europe's biggest economy. This includes a controversial plan to introduce a flat-rate contribution irrespective of income.

'The strong and healthy will help the weaker patients,' said Roesler, adding that the reforms would be implemented step by step.

While not firing up the same political storm as President Barack Obama's moves to expand health insurance coverage in the US, Roesler's health plan has nevertheless stirred up hefty political debate.

Combined with tensions over tax cuts, the 37-year-old Roesler's proposals for Germany's costly healthcare service have led to cracks emerging in Chancellor Angela Merkel's conservative-led coalition.

Horst Seehofer, who heads up Merkel's Christian Democrats' (CDU) associate party, the Bavarian-based Christian Social Union (CSU), has threatened to veto the move to replace the existing wages-linked contributions scheme with a flat contribution.

Despite support for the Roesler reforms emerging from the ranks of Merkel's CDU, Bavarian CSU Health Minister Markus Soeder dismissed the proposal for a flat-rate contribution as 'unfair and unaffordable.'

A member of the pro-business Free Democrats (FDP), the junior member of Merkel's coalition, Roesler this month stepped up his push for a makeover of the health system by calling for a radical restructuring of Europe's biggest pharmaceutical market in a bid to reduce the cost of new drugs.

The political conflict and industry lobbying by the healthcare reform drives in both the US and Germany also serve to underscore the battle facing governments around the world as they attempt to overhaul their health services and to rein in mounting health costs.

Reforming Germany's healthcare system, which covers about 90 per cent of the nation's 82 million citizens, formed part of the coalition agreement signed by Merkel's political bloc and the FDP after last September's election.

But now the controversial reform measures risk becoming an issue in the election set for May 9 in Germany's biggest state, North Rhine-Westphalia.

A government commission, comprising 8 ministers, is now due to report on the health reform plan until after the election in the middle of the year.

Due to be introduced in 2011, Roesler's flat-rate health insurance system would also help to break the link between health costs and labour costs.

Keeping the lid on Germany's high labour costs has formed a key part of recent government efforts to bolster the nation's international economic competitiveness.

Under the Roesler plan, the state would have to subsidize the contributions made by the less well off.

However, doubts about funding the reform have also surfaced as a result of Germany's current attempts to wind back the deficit it ran up last year in the wake of the global recession.

Anyone wanting more than the basic coverage provided by Roesler's flat-rate contribution system could then top up with private health insurers.

But critics have warned that the Roesler reforms would further strengthen the two-class health system with patients covered by basic insurance forced to pay for extra treatment out of their own resources.

In the meantime, Roesler, who himself is a trained medical practitioner, has proposed breaking up the existing pricing arrangement between drug companies and Germany's health insurers.

Instead of the pharmaceutical companies setting their own price for new drugs, Roesler wants to force the pharmaceutical sector and the insurance groups to hold compulsory negotiations on the prices to be charged.

He believes this would result in trimming by 2 billion euros the 30 billion euros which Germans spend each year on pharmaceuticals.

But while the drug companies have not rejected the moves to hold negotiations, they have expressed concerns about the impact that the change might have on the huge outlays required for researching and developing new drugs.