Coalition pact signed amid discord over health reform

18th November 2005, Comments 0 comments

18 November 2005, BERLIN - Designated German chancellor Angela Merkel's conservatives and the Social Democrats on Friday signed their pact for a grand coalition government amid discord over a controversial health insurance reform proposal.

18 November 2005

BERLIN - Designated German chancellor Angela Merkel's conservatives and the Social Democrats on Friday signed their pact for a grand coalition government amid discord over a controversial health insurance reform proposal.

"We want to lead Germany back to the top," said Merkel in a speech at the ceremony, adding that her goal was to make Germany one of the top three nations in the European Union (E.U.) in terms of growth, job creation and education within a decade.

Germany at present has one of the lowest economic growth rates in the E.U. with GDP expected to expand by just 0.8 per cent this year, with painful 11 per cent unemployment.

"We urgently need a more dynamic economy," said Social Democratic (SPD) chairman Matthias Platzeck, adding: "But while protecting social welfare system."

The three future ruling parties, Merkel's Christian Democratic Union (CDU), their Bavarian Christian Social Union (CSU) sister party and outgoing Chancellor Gerhard Schroeder's SPD inked the almost 200-page accord exactly two months after German elections.

Merkel is due to be elected by parliament on Tuesday but there are fears that some members of the SPD will vote against her or abstain.

Given the grand coalition's huge majority this will not threaten her chances of becoming chancellor - but a large number of SPD rebels would be seen as a bad start for the new government.

The coalition deal has been criticized over plans to raise value added tax (VAT) to 19 per cent from the current 16 per cent and a hike of the top income tax rate to 45 per cent from the present 42 per cent.

As party leaders celebrated the future government, members of their parties slid into sharp disagreement over how to reform Germany's creaking health insurance system.

The issue is so crucial and so controversial that it had to be left out of the coalition agreement.

Merkel had called for all health insurance policies to charge a single, flat rate for all members to bail out Germany's public "sickness funds" to which most people belong.

But the present and future SPD health minister, Ulla Schmidt, has essentially called for abolishing Germany's smaller private health insurance sector by forcing doctors to charge the same fees for both public and private patients.

Doctors at present charge far higher rates to private patients, meaning that the eight million mainly higher income people with private health insurance tend to get faster and better service.

This has fuelled accusations that Germany has two classes of health insurance.

Merkel's CDU/CSU has rejected the move which has also drawn fury from doctors who say private patients subsidize their practices and that without the extra funds many doctors would be driven out of business.

DPA

Subject: German news

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