Could it soon get harder to get private health insurance in Germany?

What's going on?

Germany's health insurance funds have been struggling with huge deficits recently - especially in the wake of the Covid pandemic that placed an unprecedented burden on the health and care system.

This year, the statutory insurance funds (GKV) could face a historic deficit of €17 billion, while the care insurance funds need an estimated €4.5 just to stabilise the system.

Health Minister Karl Lauterbach (SPD) has recently taken a number of steps to correct the situation, including allowing insurance funds to hike their additional contributions to enforcing pharmaceutical discounts on medicines. But there are signs that his emergency measures may not be enough.

Speaking to Handelsblatt on Monday, Dagmar Schmidt, vice chair of the SPD parliamentary group, called for a discussion on placing a higher financial burden on high earners in order to plug the financial hole in the healthcare system. 

Schmidt said a "significant increase" in the threshold for switching from public insurance to private insurance was needed to ensure that wealthier people in Germany were shouldering their fair share of the costs.

This would likely involve raising the salary threshold for transitioning to private insurance from €4,987.50 gross per month to the same level required to opt out of public pension contributions: €7,300 per month in western states and €7,100 per month in eastern states. 

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How does the system work at the moment? 

Currently, regular salaried employees in Germany must have statutory health insurance unless their income exceeds a certain threshold. This threshold increases incrementally each year and currently stands at €66,600 per year for 2023. 

If employees earn over this amount, they have the option to switch into the private system and opt out of statutory insurance contributions. Since private insurance isn't income-linked and generally provides more attractive benefits than statutory insurance - including lower waiting times - many higher earners choose to make that switch.

In addition to the salary threshold, there are a few other exceptions to obligatory public insurance for certain groups of the population.

For example, freelancers can generally choose whether to take private or public insurance, though it can be hard to switch back to statutory insurance after opting for private.

This can be an issue in later life when private insurance contributions can go up significantly, or in circumstances when higher earners end up in a much lower salary bracket.

As of 2020, around 90 percent of the population were paying statutory insurance contributions, while 10 percent had private insurance, according to data published by the Association of Substitute Health Insurance Funds (VDEK).

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What do each of the parties think of the current system?

Hiking the earnings threshold for entering the private healthcare system has long been a goal of the centre-left SPD - and it seems the largest party in the traffic-light coalition also has support from the Greens.

Maria Klein-Schmeink, vice chair of the Greens' parliamentary group, told Handelsblatt that her party would also support such a move.

"This would mean significant additional income for the statutory health insurance and - unlike higher contribution rates - would only burden high earners," she explained.

However, the reignition of the healthcare debate by both the SPD and Greens sets the parties on a collision course with the liberal FDP, who currently control the Finance Ministry within the traffic-light coalition.

In their party manifestos back in 2021, both the Greens and SPD had called for an end to the two-tier insurance system of private and public health insurance, arguing that it was unfair for higher earners to opt out of statutory contributions. This idea was branded 'Citizens' Insurance' (Bürgerversicherung).

However, these proposals were blocked by the FDP during coalition negotiations and never made it in to the final coalition pact. 

But Schmidt said the FDP's insistence on austerity measures had forced the coalition to consider other options financing the healthcare system outside of government subsidies. 

"The question is how the coalition will finance its health policy plans," she said. 

In the aftermath of the pandemic and Russia's invasion of Ukraine, Finance Minister Christian Linder (FDP) is keen to regain control of the nation's finances and dramatically cut government spending.

"The Minister of Finance does not see himself in a position to provide subsidies for (healthcare) at the moment," Schmidt said. "Because service cuts are not an alternative, we have to improve the revenues of the social security system."

Could the SPD and Greens force a shake-up of the health system? 

The debate over whether to shake up Germany's existing healthcare system is likely to come to a head as the coalition parties - and opposition CDU/CSU - debate the forthcoming budget. 

The FDP remains firmly against proposals to make it more difficult for higher earners to switch to private insurance - largely because it would spell a reform of the two-tier health insurance system. 

However, Schmidt hinted in Handelsblatt that the Greens and SPD could potential refuse to support the Finance Ministry's plans if Linder wasn't prepared to make concessions.

FDP leader and Finance Minister Christian Lindner speaks at a press conference in Berlin. Photo: picture alliance/dpa | Sebastian Gollnow

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"After all, the finance minister wants to get a majority for his budget," she said.

Nevertheless, not everyone is convinced that funnelling more people into the statutory insurance system would solve existing issues.

Speaking to Handelsblatt, economist Martin Werding, slammed the proposals as "citizens' insurance through the back door".

If the income threshold were to rise to the level of the pension insurance, only a small minority of workers would be able to opt out of statutory health insurance, meaning the private insurance funds would be "bled dry", he said.