Higher health insurance costs approved

After months of debate, the government coalition partners hammered out an agreement to raise the contribution rate, shared roughly equally between worker and employer, from 14.9 percent to 15.5 percent of a worker’s income.

Health insurers will also be free to charge limitless Zusatzbeiträge, or “additional contributions.” This top-up money, which insurers can charge members to balance out extra costs, is presently capped.

The higher rate of 15.5 percent would take effect from 2011 and is expected to bring in about €6 billion to aid the ailing insurers. Statutory health funds, which insure about nine out of 10 Germans, face an estimated deficit of €11 billion over the next year.

“The expected deficit in excess of €11 billion for the year 2011 will be balanced,” said Health Minister Philipp Rösler, announcing the new plan in Berlin. “At the same time we will also get the health system on a course of sustainable, solid financing.”

To compensate for higher “additional contributions,” the government will provide a subsidy for the poor – both workers and pensioners – funded by taxpayers.

Funds can presently charge no more than 1 percent of a member’s income as an additional contribution. This limit will be scrapped.

However, if the additional contribution exceeds 2 percent of a member’s income, a “hardship provision” kicks in and they are eligible for a subsidy.

The reform will also abolish the present upper limit on additional contributions that an insurer can charge members irrespective of their incomes – currently set at €8 per month.

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

The centre-right coalition leaders agreed on the plan Tuesday morning after a three-hour meeting. Health financing has become a troublesome issue for Chancellor Angela Merkel’s government, with frequent clashes between her CDU’s Bavarian sister party the Christian Social Union, and the pro-business Free Democrats.

But Rösler, a Free Democrat, denied the announcement was a pale compromise.

“We in the government coalition can be happy because this is exactly what the coalition agreement called for. We have never questioned that.”

Opposition Social Democratic parliamentary leader Frank-Walter Steinmeier, however, called for Rösler’s resignation, saying his failure to negotiate more fundamental health reform within the coalition showed he was unfit to be minister.

CDU-CSU parliamentary leader Peter Altmaier announced in the morning it would be the last rise in the contribution rates “for a long time,” and would therefore pave the way for more fundamental structural reform.