German Funds' 1995 Deficit

The german public-sector health fund deficit is set to reach 6-7 billion Deutschemarks ($4.2-$5 billion) in 1995, says Eckart Fiedler, director of the main white-collar workers' fund. As the deficit rises, legal limits are being imposed on fund spending, including spending on medicines, to the end of the year, and Mr Fiedler says that before long a rise of 0.3% is likely in premium levels.

The basic principle on which the entire German system currently hangs is that the fixed budgeting introduced under the health reforms excludes a rise in premiums. Fund spending should increase in line with the growth in the level of deductible contributions calculated as a proportion of basic wage rates.

Mr Fiedler says it is obvious that this legislative aim has not been reached. This means that the Bonn government's easing of tax burdens under the latest legislation will be partly undermined by increases in social security costs through 1996.