Hungary coalition parties strike deal on reforms

Hungary's two coalition parties have reached a compromise deal on key healthcare reform measures, cementing their alliance after months of wrangling, the Socialists and the Free Democrats said on Sunday. The government last year raised taxes and cut price subsidies to reduce the country's huge budget deficit and launched structural reforms but the Free Democrats (SZDSZ) have been concerned that reforms have slowed down. The two parties have been at odds over the transformation of the health insurance system and the deal reached on Sunday has averted a potential split in the coalition.

The parties have now proposed to allow competition between health insurance funds - as demanded by the SZDSZ - but also pledged to retain an element of state insurance and to introduce a regional structure, which the bigger Socialists had asked for. “The governing parties are presenting a compromise proposal and solution on each question,” Socialist Prime Minister Ferenc Gyurcsány said in a joint press conference with Free Democrat leader János Kóka, the economy minister. The detailed reform proposals will be presented to the two parties' leadership and they will decide on it by July 1.

The Socialists had been opposed to liberalization of health insurance, fearing that the poor and old, key voters for them, would lose out. But Gyurcsány said he was confident that both parties would accept the proposals next week. “Some only see this from a party politics viewpoint and want to know who has won,” Gyurcsány said. “I think it is good when those (health) insured win.” The new law on health reform could enter into force in January, after which 5 to 7 new regional health insurance funds could be formed, Gyurcsány said.

Private firms will be able to buy a minority stake in the new health funds. “The changeover could be completed by the end of 2008 or the beginning of 2009,” Gyurcsány said. One analyst said that while the unity of the coalition looked secure, debates are likely to re-emerge and the proposed overhaul of the tax system, to be worked out by September 1, could be the next point of controversy. “There will certainly be more debates,” said Attila Gyulai, analyst at think tank Political Capital. “We can bet with a good chance that the SZDSZ will have its own proposal (on taxation),” he said.

Detailed measures will be presented by the end of the summer about simplifying the tax system and increasing the role of wealth-type taxes as opposed to taxes levied on labor. The new coalition agreement will also include measures to cut bureaucracy and reform education, the two parties said. (javno.com)