What's going on?
On Wednesday, the Constitutional Court in Karlsruhe ruled that parents with more than one child should pay a reduced rate of care insurance compared to people with fewer children - or those with none at all.
The case had been brought by 376 families in a campaign called Elternklage (Parents' Complaint), who were supported by the Family Federation of Catholics in the Archdiocese of Freiburg. The families had argued that the amount of health insurance, pension insurance and care insurance they pay should be directly linked to the number of children they have.
Since raising a family costs time and money, this contribution to society should be taken into account when setting insurance rates and people with more children should pay lower contributions, the parents argued.
What does the current law say?
At present, Pflegeversicherung (care insurance) - a type of social security designed to fund care in old age - is already paid at different rates by parents and non-parents. Since the beginning of 2022, people without children pay 3.4 percent of their income towards social care, while parents pay 3.05 percent of their income.
The decision to have two different rates dates back to an earlier court ruling from 2001. At the time, the judges decided that charging people with children and those without the same amount of care insurance went against the Basic Law. This is because, in the view of the judge, parents pay a "generative contribution to the functioning of a pay-as-you-go social security system", since their children pay back into the pot later in the life. The two-tiered system for people with and without children was adopted shortly afterwards.
At the same time, however, the judges ruled against a reduction in pension or health insurance contributions for parents. They said it was legitimate for the state to subsidise parents in other ways, such as through free education or topping up the pensions of people who had raised a family.
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So if parents already pay less, what's the problem?
According to the plaintiffs, the 2001 ruling made a false equivalence between small and large families and didn't fully take into account the loss of income, time and cost associated with raising kids.
The lawyers argued that the plaintiffs suffered a double loss of earnings when raising their children and looking after the older generation, and pointed to the fact that women's pensions are often much lower than men due to time spent bringing up children.
The Catholic Family Federation also suggested that families didn't really receive free healthcare for their children. That's because the parents' contributions are only assessed on their overall earnings, which means that the number of children they have and the costs associated with that aren't taken into account.
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And what were the counterarguments?
Arguing against the constitutional complaint, a spokesperson for the Health Ministry said the costs associated with bringing up a child should be shouldered by society as a whole rather than any given insurance fund.
The National Association of Statutory Health Insurance Funds (GKV) pointed out that children may not necessarily grow up and pay into the same insurance pot that their parents' did, making it hard to calculate parents' contributions based on their children's future ones. Some children may grow up and move abroad, which would mean they would pay into a different pension or health insurance fund entirely, they pointed out.
The GKV advocated for reimbursing parents through child benefits rather than through reductions in insurance contributions.
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Did the judges agree with the plaintiffs?
Partly - but only on the care insurance issue. According to the judges, the 2001 ruling didn't go far enough in taking into account the number of children in a family. The more children a family has, the greater the effort and the associated costs for parents, they wrote in a statement announcing the ruling.
"This disadvantage occurs even from the second child," the statement reads. "Charging the same contribution rate to parents regardless of the number of children they have is not constitutionally justified."
On health insurance and pensions, however, they disagreed with the plaintiffs.
They said that time taken out by parents to look after children was already factored into the statutory pensions system and pointed to the fact that people benefit from free healthcare as a teenager and child as part of their parents' health insurance plans.
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What happens now?
The court has given the government until July 31st 2023 to introduce a tapered system with larger discounts for larger families.
Speaking to RND on Wednesday, Health Minister Karl Lauterbach (SPD) said his ministry would implement the changes to the law within the agreed timeframe. He said officials would look closely at the reasoning for the ruling and see how it could be best applied to a new tariff system.
However, Lauterbach emphasised that the social care system still needed to be properly financed. "We also want to tackle that," he said.
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