Altered and Diluted
Germany's Hospital Reform Delay Causes Financial Strain for Health Insurers
The delayed hospital reform in Germany is causing financial strain for health insurers, according to recent reports. The federal government has agreed to take over half of the transformation costs for the healthcare reform, but the statutory health insurance funds are not responsible for bearing these costs.
The consequences for health insurance companies are significant. Rising healthcare costs have already led to increased health insurance contributions in early 2025, with long-term care insurance contributions set to rise further in 2026. The delayed reform means that health insurance companies continue bearing expenses that might otherwise be controlled by improved hospital system efficiencies.
The economic slowdown and recession pressures reduce demand and investment returns for insurance companies, squeezing their financial margins and compelling stricter claims management to maintain liquidity. This can lead to increased premiums for insured individuals and pressure on the insurance system's sustainability amid demographic challenges like an aging population.
Several potential solutions have been discussed to address these issues. Prioritizing hospital reform to improve healthcare delivery efficiency and cost management, reducing bureaucracy and social security contributions, and adopting digital and process innovations are all proposed solutions. Broader social system reform plans under Chancellor Friedrich Merz’s government aim to address these issues by aligning politics and business on growth and competitiveness.
However, the delayed reform has faced criticism from various political factions. Armin Grau, a Green health politician in the Bundestag, criticizes the reform for potentially breaking the intended specialization and concentration. Janosch Dahmen, another Green health politician, sees a relapse into old patterns instead of a courageous structural reform. The Left faction criticizes the foreseeable patchwork of a failed reform, emphasizing the need to cover actual costs for hospitals.
The promised four billion euros for hospitals will appear in a budget law in early autumn. Stella Merendino, spokeswoman for hospitals and emergency care for the Left faction, suggests introducing self-cost coverage instead of holding payouts. Each federal state can decide on exceptions to the reform, potentially slowing down the intended specialization and concentration.
Despite the criticism and delays, the Bundestag is expected to pass the law by the end of the year. The associations will be heard on the bill until August 21, and the cabinet draft of the law is expected to be completed in September. The solutions focus on systemic reforms, cost containment, and operational efficiencies to stabilize the industry financially and sustain social insurance systems.
