Germany reaches deal on health reform

Germany reaches deal on health reform

Health insurance reform has emerged as the central test of whether the "grand coalition" of Merkel's Christian Democrats and the center-left Social Democrats that resulted from last year's election can move Germany forward and revive its sluggish economy.

After an all-night negotiating session, coalition leaders said they had agreed that children's medical care - currently covered by premiums that workers and employers pay to health insurers - would be financed by taxes starting in 2008, according to the AP.

In the long term, the move should stabilize employer and worker contributions, without taxes having to rise, she added.

It was unclear exactly how the costs would be financed.