Germany: "health fund rates to remain stable"

Eckart Fiedler, head of Germany's Barmer health fund, has forecast falling income and rising health care spending for public sector health funds in 2006. Drug and hospital spending by the Barmer fund went up by over 10% and 7% in the first quarter, respectively. Despite this, Mr Fiedler said that Barmer had made a net surplus and he expected spending pressure to ease through the year. There would be no hike in contribution rates.

Nationally, the fall in fund income and spending rises are expected to generate a shortfall of about 4.5 billion euros ($5.73 billion) and the position is not expected to be different next year when further cost-related service cuts are made by the German government.

Mr Fiedler said higher value-added tax rates on drug products alone would cost about 1.0 billion euros. He added that the government should change course over the planned service cuts and VAT rates on drugs should be reduced - the rates are currently "higher on drugs than on pornographic magazines."