German Lawmakers Give Final OK for Health System Reform




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German Lawmakers Give Final OK for Health System Reform

By Andrea Thomas, Dow Jones Newswires

October 17, 2003

BERLIN

Lawmakers as expected gave the final approval to reform of Germany 's healthcare system Friday when the opposition-controlled upper house of parliament supported Chancellor Gerhard Schroeder's bill.

The support was expected because the law, which aims to cut EUR20 billion in annual costs by reducing state health insurance coverage and increasing the burden on pharmaceutical companies, had already been backed by ruling center-left coalition and the conservative Christian Democrats in a lower house in a vote Sept. 26.

The reform was approved by a large majority of the votes given in the Bundesrat, which represents the country's 16 states.

"The healthcare reform is an important pillar for improving the framework for an economic pickup and job creation," Social Affairs Minister Ulla Schmidt told the upper house.

The planned changes include a reduction in what is covered by state health insurance, higher prescription charges as well as revenues from a planned higher tobacco tax.

The government says the reform will help to reduce healthcare contribution levels.

Germany 's non-wage labor costs - already among the world's highest - have soared recently, owing partly to health costs. Economists blame this for stubbornly high unemployment and strains on German competitiveness.

The reforms will become effective Jan. 1, 2004 .

But the government has already conceded that the proposal, part of Schroeder's social-welfare reform dubbed 'Agenda 2010', won't be sufficient in the long term to deal with an aging society and the resultant higher health costs.