At the heart of the proposed changes are moves for liberalising the nation's pharmaceuticals market and measures aimed at revolutionising the method of selling drugs in Germany.

While final details of the government's health reforms are not expected to be released until May, under the proposals that have do far emerged Health and Social Affairs Minister Ulla Schmidt also wants to deregulate the pricing of drugs and the ownership of pharmacies.

At present, German pharmacists are not permitted to own chains with the nation having tough restrictions on how a large number of drugs are sold.

Schmidt's health care revolution also calls for:

• A strengthening of patient rights with a federal government commissioner to be appointed to represent patient interests.

   

• Greater competition among doctors including steps to improve freedom in the choice of doctors. This will also involve the opening up in part of hospitals for out-patient care.

   

• The creation of health care centres.

   

• A change in the system of payments to doctors so as to provide incentives for better and more cost-effective treatment.

   

• A make-over of the payment for family doctors to make it more patient-oriented with flat rates to be introduced for medical treatment.

   

• The launch of a bonus system to reward those pursuing cost-conscious and healthy behaviour

At present, Germany's health service is one of the most expensive in the world with Berlin having already been forced to introduce a highly unpopular hike in employer and employee monthly contributions to the health service as a way of shoring up its finances.

And the fear is that further increases might be necessary before the reforms to the Health service, which covers about 90 percent of the population, can take effect.

The crisis facing the health service follows a dramatic shift in the nation's demographics, which has opened up a time-bomb under the country's hard-pressed health system.

The admission by Chancellor Gerhard Schroeder that its deficit last year overshot the strict three percent target for euro member states has also given Berlin little room to move as it attempts to seek out ways of restructuring welfare spending.

Changes to the country's costly health reforms form a central plank of Chancellor Gerhard Schroeder's new reform agenda, which also includes controversial steps to liberalise the nation's fragile and inflexible jobs market.

Already the proposed reforms have run into trouble with major interest groups with the government's plans to relax Germany's tough hiring and firing laws having resulted in the nation' powerful union movement threatened to break off co-operation with Schroeder's Social Democrat-led government.

At the same time, German doctors have taken to the streets in a bid to head off the reforms that have so far been outlined by Schmidt.

In a sharp rebuke to Schmidt’s plan, Germany’s General Medical Association president Joerg-Dietrich Hoppe attacked the results as “leading to the building up of a state medical bureaucracy, which had never been seen before.”

Hoppe was speaking Tuesday at special meeting of the association in Berlin, which had been called to discuss the government’s health reforms.

But the real battle for Schmidt might be in trying to find a compromise with the conservative Christian Democrat-led opposition, which is now in control of Germany's upper house of parliament, the Bundesrat.

The government needs the support of the Bundesrat, which represents Germany's 16 states if it is to push through the reforms.

Already the Christian Democrats have laid out plans including the introduction of annual deductibles and the elimination of all dental care coverage by public health funds, which could be expected to run into strong opposition from the union movement.

February 2003