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Germany Approves Healthcare Reform

Posted on Nov 15, 2010 by Sergio Ulloa ()

Final approval has been granted by the German parliament to reform the country's mandatory health insurance scheme. The overhaul of the healthcare system is seen as vital for Germany to stem increasing costs associated with its public healthcare system, which covers more than 72 million insured people in the country. The move by the German government comes at a time when the country, with the largest economy in Europe, struggles to contain raising healthcare costs and seeks to avoid a predicted €11 billion (US$13.2 billion) shortfall in German public healthcare finances, expected to occur in 2011. The German public healthcare system is calculated at being one the most expensive in the world, with the new reform on mandatory health insurance coming into effect in 2011 in a bid to curb the ever growing cost of health costs on public finances. The controversial reform of the German compulsory health insurance is seen as one of the most important decisions passed by the German parliament in recent years. The debate surrounding the details of the German healthcare reform has lead to clashes between the government and opposition parties in Germany, with Chancellor Angela Merkel's centre-right coalition government facing strong opposition about the hike in both employer and employee compulsory contributions. Public disapproval has been wide ranging across Germany and has lead to Chancellor Angela Merkel's approval ratings falling, while the reform has divided the Chancellor's Christian Democrat party's coalition government. In the wake of the financial Tsunami which impacted the world markets, economies and governments, Germany announced an ambitious austerity program designed to reduce the European nation's spending by as much as € 80 billion (US$ 95 billion) within the next 4 years. Like many developed nations, Germany is facing the difficult prospect of adjusting budgets and cost cutting measures. With Germany taking numerous steps to curb government spending, the move to increase contributions towards mandatory health insurance through increased taxation on gross wages in a bid to beat the expected public healthcare deficit of €11 billion (US$ 15 billion) in 2011 has drawn skepticism on its potential for long term success. Under the new proposal, the mandatory health insurance contributions will require an equal split between employers and employees in Germany, with the contribution increasing by 0.6 percent from 14.9 percent to 15.5 percent of gross wages; the increase being applicable from January 2011 forward. Any future increases in mandatory contributions will be borne solely by employers - a move which is also regarded as being unfair. The reform of German mandatory health insurance has drawn widespread criticism from opposition parties, German insurers and trade unions across the country. Many feel the planned reform is purely focused on off-setting increasing costs rather than tackling the problem of cost control within the public healthcare system. Also, many feel that the burden is going to adversely impact low-income earners in Germany and has not given significant consideration to the large number of German pensioners. Although there are large numbers of Germans opposed to the rise in mandatory health insurance, the reform in German health law is seen as a fair way to maintain the high standards of the Germany public healthcare system. However, some analysts feel that there needs to be more stringent measures taken to ensure German healthcare reform includes measures to contain costs rather than to simply raising additional revenue. Criticism of the current reform package also includes the failure to address issues concerning the aging population and a shrinking German work force. Germany, like other western countries including the United Kingdom and the world's richest nation, the USA, have taken steps to undertake radical reforms in their healthcare systems to meet changing circumstances and rising healthcare costs, coupled with nation state's varied economic problems after the 2007-2008 global financial crisis. Germany has a healthcare system, which accounts for approximately 11 percent of GDP - amounting to € 245 billion (US$ 294 billion) annually. The German healthcare system is noted for the high standards of medical care provided. It covers more than 72 million people under the mandatory health insurance system and a further 8.5 million through private German health insurance. The Federal Ministry of Health's (Bundesministerium für Gesundheit) network of health provision is comprised of nearly 2,200 hospitals and 300,000 doctors, with the German healthcare system responsible, either directly and indirectly, for roughly 4.3 million of the country's total workforce.
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