Berlin - Germany's healthcare system came under scrutiny in Wednesday's coalition talks between Chancellor Angela Merkel's Christian Democrats (CDU) and the pro-business Free Democrats (FDP), amid warnings of huge shortfalls in health funding.

Members of the CDU, the FDP and the CDU's Bavarian Christian Socialist (CSU) sister party met to hammer out the new centre-right government's healthcare policy.

The free-market FDP wants to abolish the so-called Health Fund, an unpopular reform introduced by the outgoing centre-left government of Merkel's CDU and Social Democrats (SPD).

The talks were overshadowed by warnings that healthcare funding faced serious shortfalls, according to figures released late Tuesday.

Statutory patient funds, which cover individuals' health costs, are to expect an estimated 7.45 billion euros (10.7 billion dollars) of deficits next year, the funds' assessors warned.

"Indeed, there is a funding problem," said outgoing Family Minister Ursula von der Leyen of the CDU, who is heading the sub-committee charged with government health policy.

However, Von der Leyen said this was not due to a fundamental problem with the fund, which the CDU has vowed to keep in place.

"The basic structure of the Health Fund will not be touched," Merkel said after the election on September 27.

"Whoever blames the (healthcare) fund for this is jumping to conclusions and simply misjudging the reality," said Silke Lautenschlaeger, a CDU-participant in the negotiations.

Rather, she said increases in doctors' salaries and the cost of hospital treatment were to blame.

In addition, job losses due to the economic crisis have cut inflows to the fund, which is financed by employer and employee contributions, as well as tax payments.

The Health Fund in turn distributes the money to the statutory patient funds, which settle individual patients' costs for healthcare treatment.

However, the FDP argues that the system is fundamentally flawed, since it allows the government to set the level of contributions.

"If the patient funds had autonomy over their premiums, it would have given them an incentive to cover their outgoings through contributions," said the FDP's health expert Daniel Bahr.

Speaking on behalf of supplementary health insurers, Thomas Ballast also called for a change in the law.

"Otherwise, the funds can only make up the missing 7.5 billion euros through additional patient contributions," Ballast told German WDR radio.

Ballast said doctors, clinics and pharmaceutical companies would also have to tighten their belts. If there were still funding shortfalls, these should be met by employers, he added.

Social interest groups warned the CDU and FDP against unilaterally increasing demands on patients, and said costs should also be borne by employers and the state. (dpa)