In a last-minute compromise, Germany’s coalition government has agreed on measures intended to prevent further increases in long-term care insurance contributions next year. However, the government has postponed a more far-reaching reform until mid-2027. The draft reform approved by the Federal Cabinet on Wednesday focuses primarily on short-term measures to stabilise the care insurance funds. Key issues remain disputed between the CDU/CSU and SPD.
The first stage of the reform approved by the Federal Cabinet is focused primarily on cost-cutting measures to ease pressure on Germany’s statutory long-term care insurance system, which is facing an acute financial crisis.“The system is under massive financial pressure,” Federal Health Minister Carsten Linnemann (CDU) said in Berlin. “We will have to make savings.”
Linnemann described the package as a “first important step” towards stabilising the care system. The SPD’s main demands have initially not been included and will instead be addressed by a new commission. The CDU/CSU and SPD had continued negotiating the care reform until shortly before Wednesday’s Cabinet meeting.
According to Linnemann, the general contribution rate is to remain stable next year as a result of the savings measures. However, certain groups of insured people will face higher contributions.
The additional contribution paid by people without children is to rise by 0.3 percentage points to 0.9 percent. A surcharge of 0.52 percentage points is also planned for spouses who have previously been covered by the insurance system without paying contributions. In addition, the contribution assessment ceiling for long-term care insurance is to be increased by €300 per month.
Germany’s statutory long-term care insurance system is deeply in deficit. According to the National Association of Statutory Health and Long-Term Care Insurance Funds (GKV), the system could face insolvency as early as October without additional funding. The financial situation has therefore become a central issue in the government’s efforts to stabilise the care insurance system.
According to Linnemann, the Federal Cabinet is expected to establish a commission next week to develop proposals for a deeper structural reform of long-term care by January. A Cabinet decision is planned by Easter, with the legislation to be implemented by 1 July 2027. Linnemann stressed that the reform should make the care system “fit for the 2030s.”
Disagreements within the coalition have initially been transferred to the new commission. The SPD is calling in particular for a cap on out-of-pocket costs for residents of care homes and for a financial equalisation mechanism between statutory and private long-term care insurance. Neither demand was included in Wednesday’s Cabinet decision. The planned commission will instead address the issue of equalisation between the two systems.
Criticism from within the SPD continued after the Cabinet approved the draft reform.The “worst planned benefit cuts” had been prevented, SPD parliamentary group deputy leader Dagmar Schmidt said. She also said that the care insurance system had been stabilised in the short term.
“That was important, but it is not yet a reform,” Schmidt said. An equalisation mechanism between private and statutory long-term care insurance still needed to be implemented, she added. “This is unfortunately not a reform; for now, it is simply more of the same,” Saarland’s Minister-President and SPD deputy leader Anke Rehlinger told the Rheinische Post. “The CDU in the federal government has prevented relief from care costs for the time being.”
The opposition and several organisations also criticised the Cabinet decision. The Cabinet had approved “a care reform that in large parts remains exactly as Health Minister Linnemann wanted it,” Left Party parliamentary group leader Sören Pellmann told the AFP news agency. “The SPD’s central demand for the private long-term care insurance system to participate, however, has been taken off the table.”
The Greens described the coalition compromise as “a political deal at the expense of third parties.” Green Party health policy expert Janosch Dahmen told the Augsburger Allgemeine: “The coalition is agreeing on short-term cuts while once again postponing the actual structural decisions.”
Trade unions also criticised the government’s approach. “The coalition has once again postponed the most important decisions on long-term care,” said Anja Piel, a member of the DGB executive board. “The subsequent changes to the care law do nothing to alter the disappointing course — a cuts programme remains a cuts programme.”
“The care crisis is once again only being managed through additional financial burdens on people without children and co-insured people,” said Ralf Reinstädtler, head of social policy at IG Metall.
Employers took a more positive view of the draft reform. “Federal Health Minister [Carsten] Linnemann stood his ground and defended the core of the care reform against political resistance,” said Steffen Kampeter, managing director of the Confederation of German Employers’ Associations (BDA). “A general increase in contribution rates has been averted for the time being.”
However, he added that the “concessions to the SPD come at a price: the measures are not sufficient to close the long-term care insurance system’s deficit next year.”
Jörg Dittrich, president of the German Confederation of Skilled Crafts (ZDH), said: “The Care Reorganisation Act addresses important problems, but in terms of its scope it remains behind what is necessary to stabilise statutory long-term care insurance.”
The Paritätischer Gesamtverband described the coalition’s dispute as “fruitless.” “In the end, the package of cuts affecting millions of people has remained exactly what it was: a package of cuts that has been warned about for weeks,” said the association’s managing director Joachim Rock. “There isn’t even a cap on care costs as a minimum counterbalance.”
The National Association of Statutory Health and Long-Term Care Insurance Funds (GKV) described the decision as a “first step” in the care reform but called for additional measures. The association also criticised the current draft for placing “burdens disproportionately on people in need of care and those paying contributions.”
Private health insurers, on the other hand, welcomed the Cabinet decision. “It is right that the federal government did not agree to an unconstitutional financing of social long-term care insurance through privately insured people,” said Florian Reuther, managing director of the Association of Substitute Private Health Insurance Funds (PKV). “Today’s Cabinet decision should under no circumstances be weakened during the parliamentary process,” he added.
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