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Germany raises health premiums, cuts spending

By V. Schmitt-Roschmann
Associated Press / July 7, 2010

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BERLIN — Faced with a ballooning deficit in Germany’s health care system, Chancellor Angela Merkel’s government decided yesterday to raise premiums and cut into the profits of doctors, dentists, hospitals, and pharmaceutical manufacturers.

The decision was reached after months of wrangling within Merkel’s coalition over a fundamental overhaul of the system and after a series of political blows to the chancellor and plummeting support in the polls.

Government officials said the decision was reached harmoniously, but the opposition immediately criticized the changes, saying they basically consist of everybody paying more.

Germany’s once highly regarded mandatory health insurance covers about 72 million people, or 90 percent of the population.

It has already gone through a series of changes to stabilize its financial base. Costs are rising swiftly because of ever more sophisticated treatments and an aging population.

Health Minister Philipp Roesler said the world is still envious of the German system because of its high quality and average cost compared with other countries.

“However, our system is facing a challenge brought on by demographic changes and progress in medical technology,’’ he said.

To deal with a projected $13.9 billion hole next year, the government decided to increase premiums to 15.5 percent of workers’ gross pay, up from 14.9 percent with contributions split between employers and employees.

The hikes are to bring in about $7.6 billion.

In addition, Roesler announced cuts spread among hospitals, physicians, dentists, insurers, and pharmaceutical companies.

Whatever additional money is needed — next year or in the future — is to come from an extra premium insurers can ask for from their clients, Roesler said.

In contrast to the general 15.5 percent premium the government sets, employers do not contribute to those extra payments.

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