Parliament Approves Massive Healthcare Reforms

Chancellor Gerhard Schröder’s government succeeded in obtaining a large majority in the Bundestag after critics in his own party threatened to block passage of an expansive healthcare package. In the end, parliament voted 517-54 in favor of the controversial overhaul, the first in a series of tough reforms designed to revive the economy.

Despite fears the coalition government of Social Democrats and Greens would fail to unite on the issue, the parties managed on Friday to establish a majority vote on their own, without requiring the votes of the opposition Christian Democrats to push the legislation through. Debate over the bill had sharply divided members of the government in recent days.

With it’s reform plan, Schröder's center-left government aims to slash billions of euros from German public health costs in an effort to reduce overall non-wage labor costs here, which are among the highest in the world. Economists believe non-wage labor costs make Germany less competitive in the global market and have contributed to the country’s current economic woes, which have placed Europe’s largest economy at the bottom of the heap in growth.

Tough negotiations

Negotiations on the health reform package, which was hammered out with leaders from the conservative opposition Christian Democrats, have tested Gerhard Schröder's mediating skills to the limit. As late as Thursday, the chancellor was forced to do some arm-twisting in order to make rebels within his own party toe the line.

Debate within the coalition became so contentious that Schröder and Franz Müntefering, who heads the Social Democrats' parliamentary group, threatened to disband the SPD-Green Party government coalition if they were unable to achieve a majority vote on their own.

"Whoever believes they can cast a ‘no’ vote here today has no idea of political power and Social Democratic traditions," German public broadcaster ARD quoted Müntefering as saying.

The bill calls for public health spending to be reduced by about €20 billion within the next four years, largely by chopping down special benefits like sick pay and coverage for expensive dental work. But a handful of members of parliament in Schröder's coalition of Social Democrats and Greens objected to the bill, saying it would be socially harmful because the cuts will hit low and medium wage earners especially hard.

"The main problem is that a majority within our party consider the reforms socially unjust," a Social Democratic member of parliament said. "They have the impression that the party leadership is lacking political orientation."

SPD and Green critics of the bill said it would place an unfair burden on patients – with the majority of the cuts, €17 billion, to be shouldered by individual, and only €3 billion to be picked up by the health industry.

But prominent Social Democrats defended both the bill and the compromises made with the Christian Democrats necessary for its passage. Gudrun Schaich-Walch, the deputy chairwoman of the SPD’s parliamentary group, said it was necessary to lower insurance premiums in order to maintain a high-level of healthcare. "We’re doing these reforms so that all insured people have access to what’s medically necessary," she said, adding that the compromise reached with the opposition had been difficult but "fair."

In the end, the government prevailed over its internal critics. Only six SPD parliamentarians voted against the measure, and none of the Greens said "no" to the reform.

Internal strife

Failure to muster a parliamentary majority of its own in the 603-seat Bundestag would have come as a major blow to the center-left government. The health reform bill is only the first of 11 pieces of legislation to be brought into parliament this autumn as part of Schröder's Agenda 2010 reform platform.

In the past Schröder has threatened to resign if his party refused to follow him in parliament. The chancellor is said to have avoided this tactic on Thursday, but reports said he warned members of parliament of the consequences of a loss of momentum in the reform process.

Speaking to reporters after the vote, Schröder’s spokesman Bela Anda said, "The chancellor does not threaten to resign. But he emphasized the importance of the Agenda 2010 measures being passed with an own (meaning SPD-Greens) majority."

"It is important not only for the health care reform vote today but also for further votes down the road on Agenda 2010 reforms," he said.

The bill still requires approval from Germany's upper legislative chamber, the Bundesrat, but that body is expected to pass the law as soon as mid-October.