Health system | Financial situation of health insurance funds: The protracted crisis
Rising costs and legislative changes have thrown health insurance funds' finances out of balance. Their reserves are dwindling, and additional expenses are already foreseeable. What can be done? Politicians want to avoid service cuts, but higher health insurance contributions are considered difficult to justify. The federal government is therefore putting the problem on the back burner, establishing reform commissions, and plugging several financial gaps. Proposals for sustainable solutions are on the table – but not everyone likes them.
In absolute terms, Germany's total expenditures on its healthcare system are impressive: in 2024, they amounted to almost 538 billion euros. This was an increase compared to the previous year – however, the share of expenditures in economic output fell: from a peak of 12.9 percent in 2021 to 11.4 percent in 2024. This is still among the top three in the OECD, but in comparison, people here are sicker and die earlier.
There are hardly any approaches that would make it easier for citizens to live healthier lives.
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The rapid growth in expenditures can be seen from the preliminary figures for 2024 from the statutory health insurance (GKV): they amounted to almost 327 billion euros – compared to 265 billion euros in 2022. Pure expenditures on benefits in 2024 reached approximately 312 billion euros. The hospital sector received the largest share of this, 102 billion euros. About half as much, namely 55 billion euros, had to be spent on pharmaceuticals, and outpatient medical care required 50 billion euros. The remainder was distributed among dental treatment, dentures, medical aids and assistive devices, sick pay, rehabilitation and preventive care, and, significantly behind, prevention and self-help.
The question of whether these sums are insufficient will likely never be answered in the affirmative by the so-called service providers—hospitals, pharmaceutical manufacturers, pharmacies, and even general practitioners and therapists. "Medical progress" alone is driving up spending. Added to this is the growing proportion of older people, whose risk of illness is higher in many areas than that of younger people.
The focus of the legislature's spending policy is on statutory health insurance funds. These funds have seen their financial strength weaken over the past two legislative periods. Although they had built up a solid surplus of €31 billion (funds and liquidity reserve) between 2011 and 2018, this surplus shrank to €7.8 billion by 2024. Among other things, €2.3 billion was withdrawn from the Health Fund's liquidity reserve in 2020 for pandemic-related special expenses.
The Health Fund has been managing incoming health insurance contributions, a federal subsidy (€14.5 billion in 2024), and other revenues since 2009. Individual health insurance funds receive proportional amounts from the fund; the more sick and elderly members a fund has, the more it receives from the Health Fund.
Both the fund and the health insurance funds must maintain minimum reserves. As of January 15, the fund still had a liquidity reserve of €5.7 billion. However, a deficit of €3.7 billion was projected for 2024. A distribution of €3.1 billion made a significant contribution to this. The goal: to stabilize the supplementary contribution rates. While contribution income (excluding supplementary contributions) also rose by 5.6 percent in 2024, this was primarily due to high wage increases driven by inflation. On the other hand, inflation also affects the personnel and material costs of service providers. Service expenditures rose by over eight percent last year.
Conclusion: The statutory health insurance system has become unbalanced due to various influences. In the search for solutions, a large portion of the political establishment seems to be firmly convinced that benefit cuts cannot be allowed. The statutory health insurers are now demanding a spending policy that reflects revenues. This seems reasonable, but it puts pressure on politicians to ensure that the funds receive the corresponding revenues to offset their growing expenditures. One approach would be to further increase the funds' supplementary contribution rates —but this is becoming increasingly difficult to convey politically.
Now, in one of her first official acts, the new Health Minister Nina Warken (CDU) has decided to prematurely replenish the health fund's liquidity reserve. The reserve threatened to fall below the legally required minimum of 20 percent of monthly expenditures. A portion of the federal subsidy was therefore brought forward.
Short-term relief for the statutory health insurance system could also be achieved through the long-overdue reduction of non-insurance benefits. The most prominent example is the social security contributions for recipients of the citizen's allowance. The health insurance funds receive these contributions as a subsidy from the job centers, i.e., from tax revenue. However, these subsidies do not cover costs, leaving the funds with a deficit compared to the actual expenditures for this group of ten billion euros per year. The statutory insurance funds complain that 40 billion euros have accumulated in this area over the past four years.
At least it has already been promised that the share of the Hospital Transformation Fund previously allocated to the statutory health insurance system will now come from the special infrastructure fund . This will generate 25 billion euros over ten years starting in 2026. The other half, another 25 billion euros, will have to be paid by the federal states – and the funds will only flow to the hospitals if the states actually pay.
Overall, however, the new federal government is also shying away from fundamentally addressing the underlying financing problems and is instead establishing commissions. One of these commissions is to assess the entire system, including innovations, and propose measures. It has been given until spring 2027 to complete this task.
At the same time, much to the annoyance of the statutory health insurance (GKV), new additional expenditures are planned, including for a mandatory primary care physician system and the long-overdue reform of emergency and rescue services. Pharmacists will receive a significant increase in the fixed fee for each prescription filled. Furthermore, the health insurance companies will reduce the rigorous review of physicians' and hospitals' expenditures. The range of proposals remains geared toward keeping the individual players happy as much as possible.
Another issue that consumes human resources (and increases costs) is the bureaucratic requirements in many healthcare professions. These can likely only be partially addressed with improved digitalization. The current state of affairs in this field is likely contributing to nurses, in particular, turning their backs on the profession.
Another systemic problem that neither improves care nor makes costs manageable is the split insurance system between statutory health insurance (GKV) and private health insurance (PKV). For the supposedly privileged private health insurance policyholders, this dualism creates the option of over-provision, which is not medically indicated and ultimately harmful. Furthermore, this type of insurance is no longer sustainable for many self-employed people with insecure incomes, especially in old age.
The Left Party in particular, but also parts of the SPD and the Greens (especially those not part of the respective federal government), see the key solution in a citizens' insurance scheme, into which all citizens, including the self-employed and civil servants, contribute. An interim step could be raising the contribution assessment ceiling, as Left Party politician Ates Gürpinar recently emphasized. However, a parliamentary majority for a citizens' insurance scheme is currently not expected – among other things because the private health insurance reserves (as the property of their insured) are considered inviolable.
Scientists from the Leibniz Institute for Prevention Research recently demonstrated another, politically no less difficult, way out of the disaster. They criticized the German system for relying too heavily on repair medicine and highly specialized treatments, while prevention remains a niche issue. Lobbyists are preventing effective measures such as a sugar tax, advertising bans, and regulations on tobacco and alcohol. A clear public health strategy is lacking. Thus, there are hardly any approaches that would make it easier for citizens to live healthier lives.
To change this, the departmental mentality in the respective governments would have to be overcome. Even former Health Minister Karl Lauterbach (SPD) lacked the courage to even propose his own agenda on this issue. Accordingly, the spiraling costs in the healthcare system are unlikely to be stopped, nor will care improve.
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