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German health care compromise reached


BERLIN— The German ruling coalition government has finally struck a compromise deal to reform the country's debt-laden health care system, which is estimated to face a funding gap of €7 billion.

Currently German workers must hold a policy with one of the country's public health insurance companies.

A statutory health insurance premium is paid, partly by employees and partly by their employers, as a percentage of their salary level. The rate is currently fixed at around 14%.

The costs of treatment and medicines are covered by their insurer. Some higher earners and government employees, however, are outside of the system and take out private health cover which do not charge premiums linked to earnings.

Some politicians are keen to bring as many people into the public scheme as possible as a way of bridging the funding gap.

Others wanted to see as many people exit the scheme and enter the private sector to reduce the overall burden.

According to reports, the latest compromise agreement confirmed that a new central fund will be created to pool contributions from workers and employers based on salary levels. The fund will now, however, be introduced in 2009 and not 2008 as originally planned.

German health insurance companies will receive a fixed sum out of the fund for each policyholder and an additional sum if they insure a high number of the chronically ill and old.

The insurers will be allowed to levy extra contributions from policyholders if they run out of funds.

Under the compromise, these contributions will be capped at 1%, but there are provisions to allow for it to be supplemented by modest one-off fees.

It was also agreed that private health insurance companies must offer an entry-level premium to those who wish to switch from statutory to private health care.

The government says it plans to introduce a draft bill by mid-October and that the reform will take effect from April 1 next year.