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Germany passes Merkel's unpopular healthcare reform

By Erik Kirschbaum BERLIN, Nov 12 (Reuters) - The German parliament passed healthcare reform on Friday to overhaul the country's cash-strapped insurance system and plug a threatened 11-billion euro shortfall in the public health system next year. Chancellor Angela Merkel's centre-right coalition has called the healthcare reform bill one of its most important laws this year, even though her Christian Democrats have clashed for months over details with their Free Democrat coalition partners. Along with savings, healthcare insurance levies will be raised for employers and for the country's 72 million insured. Anger over the rising health insurance costs has contributed to a prolonged slump in polls for Merkel's coalition. The mandatory health insurance charge now split evenly between employers and workers will rise from January to 15.5 percent of gross wages in January from 14.9 percent. Any future increases will be paid for only by employers. The measure has been widely attacked by opposition parties, trade unions and insurers. They complain the reforms' focus was on raising levies rather than cutting costs. They also criticise that employers must pay future increases on their own. The issue also provoked slanging matches inside Merkel's government for months, threatening unity in her coalition. "This law will make the healthcare system better and fairer," Health Minister Philipp Roesler told parliament. "I'd have preferred bigger steps. But small steps forward are better than big steps backwards." Frank-Walter Steinmeier, a leader of the opposition Social Democrats, said Roesler was wrecking "one of the best healthcare systems in the world". Analysts said the healthcare reform fell short of deeper structural reforms needed and concentrated on raising revenues. Germany's highly regarded health system covers 72 million people via state health insurance and 8.5 million via private schemes, according to health ministry data. It employs 4.3 million people and accounts for 11 percent of economic output. On Thursday parliament approved a set of related rules that limit the power of pharmaceutical companies to set prices in Europe's biggest market, in an effort to cut costs for the health insurance system by some 2 billion euros. The measure limits the amount that pharmaceutical firms are allowed to charge for prescription drugs. (Additional reporting by Thorsten Severin; Editing by Charles Dick) Keywords: GERMANY HEALTH/ (Reuters messaging: erik.kirschbaum.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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