German Commission Proposes Solution to Cut Health Plan Premiums

German Chancellor Gerhard Schröder likes to bring in outside help for his toughest political jobs -- the reforms designed to cut employer costs and revive the country's job market. The chancellor called in Peter Hartz, a personnel executive at Volkswagen, to lead a commission that could find way to cut the country's legion of jobless workers. And he called on the leading economist Bert Rürup to direct a 26-member panel that could help resuscitate the country's social services system, which has been choking under the weight of massive deficits.

Hartz finished his work last fall. And on Wednesday, it was Rürup's turn to present his group's ideas on cutting the costs of the country's health care system. The professor's commission announced short-term solutions designed to save the country's public health insurance companies €24 billion ($25.6 billion) and thus enable them to cut premiums. But the panel was unable to agree on a long-term reorganization of the premium system.

Cut in premiums sought

The short-term solution is designed to cut the average premium charged by the public insurance companies. Today, that premium amounts to 14.4 percent of gross pay, and is generally shared on a 50-50 basis between employers and employees. Rürup said his program would be able to cut the premium by 2.4 percentage points by next Jan. 1.

To achieve such savings, insured citizens will have to shell out money in other areas, though. They will have to pay €15 each time they go to the doctor and will see their co-payments on prescription drugs rise.

But Rürup said the commission would let the country's political leaders make the final decision on an overarching reorganization of the health insurance system. Despite previous cost-cutting efforts, the deficit of the public health insurance companies climbed nearly 6 percent last year to €2.96 billion.

Commission members divided

Rürup and another member of the commission, Karl Lauterbach, were divided themselves over the best way to reshape the financing. Rürup favored the introduction of a uniform premium that would apply to each insured person. Lauterbach pushed a plan that would base the premiums not only on a person's gross pay but also on his or her interest and rental income.

The commission's proposals will be incorporated into a reform plan that Social Minister Ulla Schmidt plans to present next month.