Economic Advisor Advocates for Cuts to Care Benefits and Increased Patient Contributions

The sustainability of Germany's social welfare system is under scrutiny as economic advisor Veronika Grimm has proposed significant reforms to the country's statutory long-term care insurance. She argues that the current trajectory of rising contributions is unsustainable and calls for a reduction in benefits alongside an increase in the financial responsibility of patients.

Grimm, who serves on the German government's Council of Economic Experts, emphasized the need for a reevaluation of the long-term care insurance framework. According to her, maintaining the current level of benefits is not feasible if contribution rates continue to rise sharply. She suggests that it may be necessary to provide fewer benefits that are funded by realistic contributions.

In her perspective, the approach to social security benefits should be linked to a household's financial needs rather than the individual's income. This shift aims to ensure that the social safety net remains stable and capable of supporting those in genuine need.

The context for these recommendations is underscored by recent findings from the DAK-Gesundheit health insurance fund, which indicate that the number of individuals receiving benefits from the care insurance system is projected to increase significantly. Current estimates suggest that the figure, currently around 5.6 million, could rise by over 20% in the next two decades, potentially reaching between 6.8 million and 7.6 million by 2055.

The German government, under Chancellor Friedrich Merz, has acknowledged the pressing need for reforms in the social security systems, including pensions, health, and long-term care. Merz recently remarked that the existing arrangements can only be sustained for a limited time, highlighting the urgency of addressing these systemic issues.

In response to the financial strains on the long-term care insurance fund, Federal Finance Minister Lars Klingbeil of the SPD has indicated plans to support the ailing system with additional funding from the federal budget. The DAK's recent financial assessments project a deficit of approximately EUR1.65 billion for the current year, with expectations that this shortfall could expand to EUR3.5 billion by 2026. Without new funding sources, a contribution rate increase of at least 0.3 percentage points may become unavoidable by the end of the year.

The financial challenges facing long-term care insurance were evident last year when the fund recorded a deficit of EUR1.54 billion, prompting an increase in contribution rates at the start of the year. The need for a comprehensive strategy to stabilize the system has never been more critical, as the pressures of an aging population continue to mount.