Crisis in Long-Term Care Insurance: Financial Situation Reaches Critical Levels

Germany's long-term care insurance has entered a troubling phase, reporting significant financial deficits for the year 2024. The system, which is crucial for supporting the country's aging population, has experienced a deficit of approximately EUR1.55 billion. This alarming situation has prompted leaders in the health sector to caution that the financial stability of long-term care could be in jeopardy unless immediate reforms are implemented.

Doris Pfeiffer, the head of the umbrella organization representing statutory health insurance funds, has indicated that despite recent increases in contribution rates, the financial issues within the long-term care insurance system remain unresolved. She emphasized that the recent adjustments are merely a temporary fix, intended only to cover the rising costs anticipated for this year. However, without decisive action from the next government, the system faces a potential crisis in 2026.

As financial pressures mount, it is projected that in February, some care funds may need to request liquidity assistance from a stabilization fund. While this step is designed to ensure that all care funds remain solvent through the current year, Pfeiffer expressed concern over the sustainability of this approach moving forward.

The financial strain stems from a combination of factors, including a sharp increase in the number of individuals requiring care and rising operational costs. The care benefits provided to individuals in both home and institutional settings were recently increased by 4.5% as part of a reform passed in 2023, which alone will cost around EUR1.8 billion. Additionally, overall expenditure on care is expected to surpass EUR70 billion for the first time this year due to significant rises in the costs associated with care services.

Healthcare professionals highlight that the current model of long-term care insurance, which only covers a portion of the costs, leaves many patients and their families facing escalating out-of-pocket expenses. This situation has persisted for several years, leading to increased financial burdens for those in need of care.

As the nation approaches an election period, the issue of long-term care is set to be a focal point of political discourse. Various political parties are proposing different solutions to address the challenges faced by the long-term care system. The Social Democrats (SPD) aim to limit the out-of-pocket expenses for basic care in institutions to EUR1,000 per month. Meanwhile, the opposition parties are presenting diverse proposals, including the use of tax revenues to support care costs and the introduction of a capital-based component to insurance contributions.

Pfeiffer has urged political leaders to prioritize the development of a comprehensive reform strategy that garners broad societal support. She noted that the long-term sustainability of the care system hinges on adequate financial backing, including the reinstatement of funds previously allocated for pandemic-related expenses and the continuous support for family caregivers.

As the financial landscape of long-term care insurance becomes increasingly precarious, it is imperative that the next government acts swiftly and decisively to ensure the system's viability. Without significant reform and investment, the future of long-term care in Germany remains uncertain.