Merkel's First Big Health-Care Test

Up until now, Germany's grand coalition of Social Democrats and conservative CDU/CSU parties has been slow to tackle major reforms.

Chancellor Angela Merkel has instead reveled in her winning appearances on the international stage. Political aides waited patiently for last Sunday's three major state elections to pass.

This Wednesday evening, the waiting will be over. Merkel will meet with the coalition's political elite to reach agreement on one of the country's most pressing and complicated reform projects: the health care system.

Next year the public health care system will have a budget hole between 8 and 10 billion euros ($9.6 billion to $12 billion). Germans, who have long enjoyed one of the most beneficial health care systems in Europe, will have to steel themselves for difficult changes ahead. As is, workers and employers split the monthly premiums to health care providers. About 10 percent of the population has elected out of the state-sponsored public system, preferring costlier, but some say better, private insurance.

Social Democrats, conservatives far apart

The differences between the two sides remain wide.

The Social Democrats have favored a system which abolishes the division between public and private health care. Critics say patients with private insurance receive preferential treatment. Their "citizen's insurance" would mean that every insurance company would be required to insure every citizen regardless of risk, but would also eliminate tax loopholes for big-earners and freelancers. The fees would depend on income. The higher a person's salary, the higher the rate.

The conservatives are absolutely against the idea. They want a solidarity-based system that would require every adult to pay the same insurance fee regardless of income. Rather than abolish the public-private divide in health insurance, the conservatives would seek to increase competition between the two.

SPD leader Matthias Platzeck, who will be taking part in the meetings Wednesday night, has already marked out a few "do-not-cross" lines, including no drastic cutbacks in services and leaving open the possibility of increasing the employer's share of the monthly premium. He also ruled out the conservatives' solidarity-based system.

Going for some "basic understanding"

But the SPD has shown itself open to the conservative plan to finance childrens' health insurance through taxes. Whether there is any money in state coffers for that sort of solidarity is anybody's guess.

The divide between the two major parties continues to be wide -- but Merkel and her coalition counterparts, Labor Minister Franz Müntefering and Platzeck, have already shown they are willing to compromise: They were able to form the government coalition in the first place.

But what about Merkel's goals in the talks? She wants the parties to reach some sort of "basic understanding."