“I would like to reach a policy agreement in the first half of the year and finalize negotiations in the second half of the year,” said Gyurcsány in a meeting with journalists in London this week. The Hungarian prime minister’s difficulties mirror those faced by health reformers elsewhere in ex-Communist central Europe, where people are loathe to lose the free health services they enjoyed before 1989. Gyurcsány’s comments were addressed principally at his Socialist party, the leading force in the coalition government, and the Free Democrats, the liberal junior partner, which have been quarrelling for months over the reforms. The Free Democrats want to end the state’s near-monopoly of healthcare financing by introducing competition and permitting private insurance companies to manage health insurance contributions. But many Socialist party members are fighting to retain the state’s dominant role, partly out of concern that privatizing healthcare financing, even in part, could create a bigger gap in the health care provision between rich and poor.

Gyurcsány avoided committing himself to a particular form of healthcare finance, saying different approaches worked in Europe, ranging from Sweden’s state-dominated model to the market-oriented Dutch system. However, he said the question was important to the Free Democrats and he understood their arguments. The Free Democrats are preparing for another push on the issue by putting forward Ágnes Horváth, a reform-advocate, as health minister, following the resignation two weeks ago of Lajos Molnár, who quit over Gyurcsány’s refusal to support a competitive multi-player insurance system. The Free Democrats said they would remain committed to this option, though Horváth has signaled a willingness to compromise.

Gyurcsány has made a priority of reforming Hungary’s public finances, after the budget deficit ballooned under successive governments. With the economy growing strongly, the government this week cut its 2007 deficit target to 6.7%, down from last year’s 9.1%. But it leaves the country with the highest deficit ratio in the European Union and far above the 3% level required for joining the euro, which Hungary wants to do in 2010-14. Gyurcsány said the budget needed further attention. “We need a very disciplined budget but we don’t need any more austerity measures.” In health care, the government has this year faced down opposition and introduced charges for doctors’ visits and prescription medicines and cut drug subsidies.

Healthcare reform remains a political minefield in the ex-Communist states of central Europe. Reformers want to avoid the experience of Slovakia where the centre-right government of Mikulas Dzurinda implemented rapid changes in 2003-4 – including the introduction of charges and private health insurers – only to lose last year’s parliamentary elections. The new centre-left administration has since partly rolled back the reforms. In Poland too, wholesale reforms in healthcare financing pushed through in 1999-2001 were later revised and diluted. Gyurcsány’s insistence on negotiation and compromise shows that he too is intensely aware of the political dangers of healthcare reforms. (news.moneycentral.msn.com, FT.com)