Germany raises health premiums to tackle budget deficit

Chancellor Angela Merkel’s coalition government has agreed to raise health insurance premiums by over half a percent in a further effort to cut the country’s deficit.

The premiums will be raised from the current 14.9% to 15.5% of gross pay, health minister Philipp Rosler said in a statement. Employers will contribute 7.3% with an additional one percent paid on top of that by employees.

Health insurers will also be free to charge limitless zusatzbeiträge, or ‘additional contributions’.

A Health Ministry document obtained by Bloomberg shows that only 3.5 billion euros of the total shortfall next year will be covered by savings in administrative costs at hospitals and dental practices on vaccinations and drug prescriptions. This new measure will aim at helping to decrease this shortfall.

The higher rate is set to take effect from 2011 and is expected to bring in about 6 billion euros to aid the ailing insurers. Statutory health funds, which insure about 90% of all Germans, face an estimated deficit of 11 billion euros over the next year.

Rosler said: “The expected deficit in excess of 11 billion euros for the year 2011 will be balanced. At the same time we will also get the health system on a course of sustainable, solid financing.”

The standard for the additional contributions will now be calculated according to average costs in the health sector, which generally have a much higher inflation rate than other industries. The insurers will be able to decide this rate themselves.

This comes one week after the coalition government pushed through a bill to give the government a tighter grip over drug prices in Germany and potentially end the current free-pricing system.

It is the third EU country within the past two months to introduce new healthcare measures to cut its deficit, following action in Greece and Italy to bring their healthcare costs down.

Ben Adams