What to know about Germany's plans to raise health insurance fees
Germany is struggling to fill huge gaps in its health funds following the pandemic and is planning to raise health insurance fees next year. Here's who it could affect and how much more people could have to pay.
What's going on?
In the aftermath of the Covid pandemic, Germany is struggling to fill a large gap in its healthcare reserves.
According to Health Minister Karl Lauterbach (SPD), the statutory health insurance funds are facing a deficit of €17 billion next year, placing Germany's healthcare finances under severe strain.
Lauterbach says this is largely due to the generous spending policies of the previous government both before and during the Covid crisis. As well as pouring billions of euros into free tests, the healthcare system was overwhelmed by patients during the most severe waves of the pandemic.
To tackle this shortfall, the Health Ministry has drafted a set of proposals for raising additional funds.
One of these proposals is to increase the level of health insurance contributions that people have to pay each month. The funds raised from this would account for around 10 percent of the total rescue package.
READ ALSO: How to make the most of reward schemes on your German health insurance
How much more could people have to pay?
Lauterbach has pitched a 0.3 percent rise in monthly contributions. This would be added to the so-called additional contribution, which is currently set at a maximum of 1.3 percent, on top of the 14.6 percent general contribution that is paid as standard.
For people in employment, contributions are divided equally between the employer and the employee. That means the extra 0.3 percent would translate to 0.15 percent extra per month in reality.
In concrete terms, that's an extra €1.50 for someone with a gross income of €1,000 per month, or €4.50 extra for someone with a gross income of €3,000 per month.
Self-employed people - who generally have to bear the full brunt of the health insurance costs themselves - will fare a little worse under the plans. They'll be expected to shell out €3 extra per month for every €1,000 of gross profit.
Would everyone have to pay this much?
No. Firstly, the changes would only affect those who are registered with one of the statutory health insurance companies such as TK or AOK. People who are privately insured will continue to pay the contribution set by their insurer.
Secondly, unlike the general contribution of 14.6 percent, statutory insurance funds have the option to decide how much of the additional contribution they want to charge.
That means that, while 1.6 percent could become the new maximum, there's no guarantee that companies will choose to charge this. Depending on their financial situation, they may decide to keep the additional fees lower to remain competitive, or alternatively hike the fees to the maximum in order to shore up their reserves or offer better services.
In other words, people will still pay a minimum contribution of 14.6 percent of their income but could pay a maximum of 16.2 percent (assuming that their health insurance company chooses to charge the full additional contribution). Most will pay something in the middle.
READ ALSO: Reader question: How can I change my German health insurance provider?
Health insurance cards from AOK. Photo: picture alliance/dpa | Karl-Josef Hildenbrand
What other plans are on the table?
As we mentioned, raising health insurance contributions is likely to cover just a small fraction of the deficit. To cover the rest, Lauterbach is proposing a range of other measures, including:
More state funding
In 2023, the federal government will step in with increased funding for the health insurance funds. Instead of the usual spending of €14.5 billion per year, the traffic-light coalition will shell out €16.5 billion on topping up the healthcare funds next year and will also provide a further €1 billion in the form of an interest-free loan.
Money from healthcare reserves
Statutory health insurance companies will have to dig into their savings to the tune of €4 billion to help cover the deficit. At the same time, €2.4 billion will be taken out of a pool of money known as the 'Health Fund' (Gesundheitsfond), which is built up through a combination of health insurance contributions, taxpayer funding and other forms of insurance such as pensions insurance.
Increased discounts on medicines
Under German law, pharmaceutical companies are required to provide statutory health insurance companies with a discount of at least seven percent on certain types of medicine. This will be hiked to 12 percent for one year.
A pharmacist scans a prescription. Photo: picture alliance/dpa | David Inderlied
Furthermore, pharmacies will be required to provide the insurance funds with a discount of €2 (rather than the previous €1.77) per packet of prescription drugs. This will last for at least two years. Meanwhile, a moratorium on raising the price of medicines will be extended to 2026.
Restrictions on bonuses for doctors
Doctors' surgeries will no longer be given financial incentives for taking on new patients.
Is this all set in stone?
Not yet, although it is likely to be passed in a parliamentary vote. So far, the cabinet has already waved through the changes, and on Friday they were debated for the first time in the Bundestag.
READ ALSO: Why large families are set to pay less for German care insurance
What are people saying?
In a seething speech in the Bundestag on Friday, Bavaria's state health minister Klaus Holetschek (CSU) criticised Lauterbach's plans to raise health insurance contributions, arguing that it would "send the wrong signal" to patients.
He also laid into the proposals to cut doctors' bonuses for taking on new patients, arguing that this would lead to a cut in services.
However, the FDP health expert Andrew Ullmann said Lauterbach's plans could help to avoid a hike in contributions that could cost people hundreds of euros per months. "That would not be responsible in times of inflation and energy crisis," he said.
Health Minister Karl Lauterbach (SPD) speaks at a debate in the Bundestag on the measures to bail out the health insurance funds. Photo: picture alliance/dpa | Annette Riedl
In his speech in the Bundestag, Lauterbach said the rise in health insurance contributions was ultimately fair since employers would be expected to pay half. He also defended his plans to dig into the health insurance funds' reserves. At some of the health insurance funds, board members "earn significantly more than the Federal Chancellor", he claimed.
Pointing to his proposals to shift some of the financial burden onto pharmaceutical companies, the SPD politician said he would "stand up to lobby pressure" and refuse to change course.
Comments
See Also
What's going on?
In the aftermath of the Covid pandemic, Germany is struggling to fill a large gap in its healthcare reserves.
According to Health Minister Karl Lauterbach (SPD), the statutory health insurance funds are facing a deficit of €17 billion next year, placing Germany's healthcare finances under severe strain.
Lauterbach says this is largely due to the generous spending policies of the previous government both before and during the Covid crisis. As well as pouring billions of euros into free tests, the healthcare system was overwhelmed by patients during the most severe waves of the pandemic.
To tackle this shortfall, the Health Ministry has drafted a set of proposals for raising additional funds.
One of these proposals is to increase the level of health insurance contributions that people have to pay each month. The funds raised from this would account for around 10 percent of the total rescue package.
READ ALSO: How to make the most of reward schemes on your German health insurance
How much more could people have to pay?
Lauterbach has pitched a 0.3 percent rise in monthly contributions. This would be added to the so-called additional contribution, which is currently set at a maximum of 1.3 percent, on top of the 14.6 percent general contribution that is paid as standard.
For people in employment, contributions are divided equally between the employer and the employee. That means the extra 0.3 percent would translate to 0.15 percent extra per month in reality.
In concrete terms, that's an extra €1.50 for someone with a gross income of €1,000 per month, or €4.50 extra for someone with a gross income of €3,000 per month.
Self-employed people - who generally have to bear the full brunt of the health insurance costs themselves - will fare a little worse under the plans. They'll be expected to shell out €3 extra per month for every €1,000 of gross profit.
Would everyone have to pay this much?
No. Firstly, the changes would only affect those who are registered with one of the statutory health insurance companies such as TK or AOK. People who are privately insured will continue to pay the contribution set by their insurer.
Secondly, unlike the general contribution of 14.6 percent, statutory insurance funds have the option to decide how much of the additional contribution they want to charge.
That means that, while 1.6 percent could become the new maximum, there's no guarantee that companies will choose to charge this. Depending on their financial situation, they may decide to keep the additional fees lower to remain competitive, or alternatively hike the fees to the maximum in order to shore up their reserves or offer better services.
In other words, people will still pay a minimum contribution of 14.6 percent of their income but could pay a maximum of 16.2 percent (assuming that their health insurance company chooses to charge the full additional contribution). Most will pay something in the middle.
READ ALSO: Reader question: How can I change my German health insurance provider?
What other plans are on the table?
As we mentioned, raising health insurance contributions is likely to cover just a small fraction of the deficit. To cover the rest, Lauterbach is proposing a range of other measures, including:
More state funding
In 2023, the federal government will step in with increased funding for the health insurance funds. Instead of the usual spending of €14.5 billion per year, the traffic-light coalition will shell out €16.5 billion on topping up the healthcare funds next year and will also provide a further €1 billion in the form of an interest-free loan.
Money from healthcare reserves
Statutory health insurance companies will have to dig into their savings to the tune of €4 billion to help cover the deficit. At the same time, €2.4 billion will be taken out of a pool of money known as the 'Health Fund' (Gesundheitsfond), which is built up through a combination of health insurance contributions, taxpayer funding and other forms of insurance such as pensions insurance.
Increased discounts on medicines
Under German law, pharmaceutical companies are required to provide statutory health insurance companies with a discount of at least seven percent on certain types of medicine. This will be hiked to 12 percent for one year.
Furthermore, pharmacies will be required to provide the insurance funds with a discount of €2 (rather than the previous €1.77) per packet of prescription drugs. This will last for at least two years. Meanwhile, a moratorium on raising the price of medicines will be extended to 2026.
Restrictions on bonuses for doctors
Doctors' surgeries will no longer be given financial incentives for taking on new patients.
Is this all set in stone?
Not yet, although it is likely to be passed in a parliamentary vote. So far, the cabinet has already waved through the changes, and on Friday they were debated for the first time in the Bundestag.
READ ALSO: Why large families are set to pay less for German care insurance
What are people saying?
In a seething speech in the Bundestag on Friday, Bavaria's state health minister Klaus Holetschek (CSU) criticised Lauterbach's plans to raise health insurance contributions, arguing that it would "send the wrong signal" to patients.
He also laid into the proposals to cut doctors' bonuses for taking on new patients, arguing that this would lead to a cut in services.
However, the FDP health expert Andrew Ullmann said Lauterbach's plans could help to avoid a hike in contributions that could cost people hundreds of euros per months. "That would not be responsible in times of inflation and energy crisis," he said.
In his speech in the Bundestag, Lauterbach said the rise in health insurance contributions was ultimately fair since employers would be expected to pay half. He also defended his plans to dig into the health insurance funds' reserves. At some of the health insurance funds, board members "earn significantly more than the Federal Chancellor", he claimed.
Pointing to his proposals to shift some of the financial burden onto pharmaceutical companies, the SPD politician said he would "stand up to lobby pressure" and refuse to change course.
Join the conversation in our comments section below. Share your own views and experience and if you have a question or suggestion for our journalists then email us at [email protected].
Please keep comments civil, constructive and on topic – and make sure to read our terms of use before getting involved.
Please log in here to leave a comment.