German healthcare reform faces parliament delay

BERLIN, Jan 2 (Reuters) German Chancellor Angela Merkel's landmark healthcare reform suffered a new setback today when a top deputy announced that parliamentary approval would be delayed two weeks amid a growing outcry over the legislation.

Volker Kauder, parliamentary floor leader of Merkel's Christian Democrats (CDU), told fellow deputies in a letter today the ealthcare measure that Merkel's government has long struggled with will not be ready for a vote until February.

Karl Lauterbach, healthcare expert of the CDU's coalition partners the Social Democrats, even said in an interview it was possible to put off the reform beyond its already delayed April 1 target date for coming into force.

The CDU's conservative sister party, the Christian Social Union, has threatened to veto the reform package that aims to trim fat from the 185.9 billion dollars system and make it transparent for workers who fund it through mandatory contributions.

The CSU, which rules Bavaria, and several other conservative states have objected to uncertainties about the exact financial burden faced by the nation's richer states.

Merkel, who saw her popularity plummet in the second half of last year as the healthcare reform plan foundered, has said she is willing to discuss the concerns of the states, which could veto any measure the Bundestag lower house passes in the upper house, or Bundesrat.

Kauder said Health Minister Ulla Schmidt of the Social Democrats (SPD) needed time to give the states answers to their ''justified questions'' before the vote.

Although Kauder apparently agreed to delay the vote, which had been due in the second half of January, after consultations with his SPD counterpart Peter Struck, several SPD deputies said they were surprised and angered by Kauder's decision.

The overhaul of the healthcare system had originally been scheduled to go into force in January but was pushed back until April as Merkel's coalition fought over the details.

''April 1 is not carved in stone,'' the SPD's Lauterbach told Der Tagesspiegel newspaper ahead of publication tomorrow.

The reform deal, approved by Merkel's cabinet in late October after months of divisive battles between the ruling parties, has been criticised by many as a shabby compromise.

Critics say it falls far short of what is needed and does little to solve the long-term issue of shifting the funding burden away from workers.

Opposition parties have been calling on the government to scrap it altogether, saying no reform at all would be better than the tepid measures it is planning.

REUTERS KR VC2346