Will health insurance costs go up again in Germany?

There's a growing financial gap in Germany's health insurance system. The country's ageing population means that overall healthcare costs are going up - and three years of the Covid pandemic made the problem even worse. 

According to the latest estimates, statutory health funds like TK and AOK are facing a financial black hole to the tune of around €17 billion this year. In order to tackle this looming deficit, Health Minister Karl Lauterbach (SPD) has set out a number of plans, from allowing insurance funds to hike their additional contributions to enforcing pharmaceutical discounts on medicines.

In 2023, Lauterbach also plans to inject €14.5 billion of treasury funding into the statutory insurers, as well as drawing money from a central health fund and from the insurers' own reserves. 

However, there are signs that even this suite of measures may not be enough.

In an interview with business paper Handelsblatt on Wednesday, Lauterbach warned that a further increase in health insurance contributions was "almost impossible to avoid".

Since the start of 2023, statutory health insurers have been given leeway to increase the premiums that they levy to customers on top of the base contributions of 14.6 percent. Normally these premiums are between 1.2 percent and 1.6 percent. 

Some - including certain regional branches of AOK - have chosen to do so, while others have kept their contributions at the previous rate.  

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According to Lauterbach, however, the fact that Finance Minister Christian Lindner (FDP) wants to maintain the so-called 'debt brake' in 2024 means that patients will probably have to make up the shortfall - rather than the government.  

"The Finance Minister's focus is on compliance with the debt brake and on projects such as the equity pension and the Bundeswehr," he told Handelsblatt. "That means that rising deductions from the wage packet can hardly be avoided." 

'Up to €2,000 per year'

The Health Minister isn't the only one debating the future of the health insurance funds in recent days.

In an interview with Bild on Wednesday, right-wing economist Bernd Raffelhüschen called for a drastic reform of Germany's healthcare system - including penalising those who make unhealthy or risky choices.

"We can no longer afford the system. Patients will have to pay more out of their own pockets in the future," Raffelhüschen said, adding that some financial relief should be offered by the state. "The subsidies for low-income earners, for example, must come from the federal budget."

According to the economist, health insurance contributions could rise as high as 22 percent of income by 2035 if nothing is done to reverse the trend. 

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Currently, statutory contributions are around 16 percent of income on average - though employers split these half-and-half with their employer, meaning the income deduction is more like eight percent. 

Raffelhüschen - who considers himself part of the neoliberal 'Freiburg School' of economists - told Bild that health insurers shouldn't have to cover the full cost of treatment.

Instead, he argued, patients should receive a bill for doctors' visits and then forward this to their insurer, who would cover the bulk of the costs. 

Patients would then have to cover part of the costs out of their own pocket - capped at around €1,500 or €2,000 per year.

The economist also called for higher contributions for smokers and said people who voluntarily undertake risky activities such as skiing should have to cover the cost of treatment for any injuries themselves. 

Health cuts on the horizon?

Another potential solution to the growing deficit is to make cuts in healthcare services or reduce fees for doctors and dentists.

However, Lauterbach was quick to pour cold water on this idea, arguing that he had already drawn on so-called 'efficiency reserves' in the previous reform package. Making cuts in surgeries and hospitals would be "absurd", he added. 

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In addition, he said, placing further financial pressure on pharmaceutical companies couldn't be justified, since these companies could ultimately choose to leave Germany. 

Nevertheless, the Health Minister said he disagreed with the Association of Statutory Health Insurance Funds' claim that the deficit stood at more than €30 billion.

"That is definitely wrong," he said. "We're working to make the deficit smaller."