Merkel Under Pressure
October 3, 2006
Members of Merkel's bickering conservative and Social Democrat coalition will attempt to finally hammer out an agreement on the government's controversial and deeply disliked plans for shoring up the nation's deficit-hit health service.
The highly charged battle over the health reform plan comes as Merkel prepares to mark the first anniversary of her emergence as Germany's first woman chancellor.
Health policy experts from Merkel's grand coalition are to meet in a bid to try to lay the ground for a meeting of government leaders on Wednesday to sign off on the healthcare changes, which includes a half a percentage point increase in contributions.
"We are heading towards chaos," said Social Democrat health expert Karl Lauterbach ahead of the meeting. If the reform fails, he said, "The government's work will be set back."
Monday's meeting of experts to try to bridge the differences over the plan, which also includes cutbacks in subsidies for health insurance cover such as children sickness pay and maternity payments, follows their failure to reach an accord at marathon talks last Thursday.
"It is too difficult to predict if an agreement can be reached," said Wolfgang Zöller, a member of Merkel's conservative bloc, also ahead of Monday's talks.
Health issue contributing to conservatives' slump
Billed as the centerpiece of the Merkel government's reform agenda, the health plans have already led to a big slump in support for the ruling coalition. One recent poll showed the Chancellor's conservative Christian Democrats (CDU) tumbling to its lowest level in the popularity stakes since Germany unification 16 years ago.
Merkel was forced to forge a grand coalition government with her party's Social Democrat rivals following the inconclusive national election in September last year.
Of particular concern for Merkel is that the planned makeover of the health service has enraged many CDU state premiers, thus making it harder for her to win support for the controversial reforms within her own party.
Merkel's office denies plans to isolate her
With tensions rising over the round of attacks on Merkel by CDU state premiers, her spokesman was forced Monday to deny that there were moves to isolate the chancellor. He insisted that she felt supported by her party colleagues.
However, the conflict over the health reform plans has already forced the government to delay implementing the proposals by three months to April 1.
Merkel's healthcare plan was "inadequate" Bert Rürup, head of the Chancellor's economic advisory panel told daily Süddeutsche Zeitung Monday, saying that it only represented "modest improvements" on the current scheme.
The German health service, which is one of the world's most expensive, has been hit by the ageing of the nation's population and recent high unemployment and is tipped to chalk up a shortfall next year of about seven billion euros ($9 billion).
To add to the woes, the government's unpopular hefty three percentage points increase in Germany's value-added tax in January is likely to further raise the cost of drugs in the nation. That will be a further setback to Merkel's stated aim of lowering the soaring cost of medication in Germany.
Health insurance sector mulls legal action
As a further sign of the growing pressure on Merkel, Germany's private health insurance sector is threatening to take legal action over the changes. That would include injecting more competition into the health sector through measures allowing people to transfer between schemes.
One major area of difference between the Social Democrats and Merkel's bloc is how to share out revenue between the nation's public and private healthcare sectors.
Merkel's Social Democrat coalition partners have argued that with many high income earners paying into the private health service, a key step for overcoming the current health service deficit was to bring to an end the division of the Germany's health systems into a public and a private sector.
Moreover, the private health insurers industry group (PKV) has warned that the proposed changes could result in a steep rise in premiums for the more than eight million Germans who are signed up to private health insurance funds.
Business leaders also have the knives out
Already deeply frustrated over the failure of the Merkel-led coalition to press on with major economic reforms, German industry has roundly attacked the health proposals for likely leading to higher non-wage labor costs and as a result presenting a further hurdle to hiring people.
Last week, in an attempt to defuse the growing political storm surrounding her health plan, Merkel suggested that funds resulting from higher tax revenue following this year's pickup in the Germany economy could be funneled into the health service and as a result head off a rise in premiums.
"If we have more revenue than expected, I would suggest we take back our plans to cut tax subsidies" for the health insurance sector, the chancellor told German public television. "This means that contributions may not have to increase."