Healthcare Contributions

Splitting the Medical Check?

health insurance_gabriel_montage_Jens Wolf_dpa
Germany's Economics Minister, Sigmar Gabriel.
  • Why it matters

    Why it matters

    Employers in Germany may face millions of euros of extra annual costs if lawmakers force them to make higher health insurance contributions.

  • Facts


    • In Germany, employers and employees each make a contribution to health insurance. The employer contribution is currently frozen at 7.3 percent.
    • The public insurers ran a combined deficit of €500 million in the first half of 2015, despite Germany’s strong economy and labor market.
    • Due to the employer cap, employees and the state will have to make up for the shortfall.
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Germany’s public health insurers are running large deficits. When they come asking for more money to make up for the shortfall, employees and the German state currently have to shoulder the burden.

Under the current system, the health insurance contribution of employers is frozen at 7.3 percent of staffing wages. Employees on average pay 8.2 percent of their wages into the public funds.

The cap stems from an agreement reached in 2010 when the Christian Democrats and their then-junior partners, the Free Democrats, governed Germany in a center-right coalition.

With the public health insurers running a total deficit of nearly €500 million ($560 million) in the first half of 2015, the center-left Social Democrats are calling for an end to the employer cap. The party, the current junior partner in Chancellor Angela Merkel’s coalition government, wants Germany to return to a system in which both sides, the employer and the employee, make equal contributions.

Contributions from employers and employees run into billions of euros annually. Public health insurance funds spent €194 billion on healthcare last year, a 17 percent increase since 2010, data from the association of public health insurers GKV shows.

“Employees will not be able to carry the burden alone. Having employers contribute more is a question of fairness.”

Matthias Miersch, Spokesman, Social Democrats

“It’s foreseeable that guaranteeing sufficient healthcare in the future will result in higher costs,” Matthias Miersch, a spokesman for the left-wing faction of the Social Democrats in parliament, told Handelsblatt. “Employees will not be able to carry the burden alone. Having employers contribute more is a question of fairness.”

According to Mr. Miersch, all of society has a responsibility to the healthcare system and equal contributions are an expression of that responsibility.

He is not the first social democrat to sound the call. The party’s parliamentary leader, Thomas Oppermann, and its health policy expert, Karl Lauterbach, have also demanded a return to a system in which both employers and employees make equal contributions.

The party leadership sees an opportunity to mobilize voters, and vice chancellor and SPD leader Sigmar Gabriel could be tempted to play up the issue in the coming months. But they have a credibility problem. In the interest of building a coalition government with Ms. Merkel’s conservative Christian Democrats back in 2013, the Social Democrats agreed not to touch the employer cap.

Employers are wary of the Social Democrats’ rhetoric and have called on the party to stick to its agreements.

“The SPD should be reliable and uphold the agreements that they made,” said Alexander Gunkel, a member of the governing board of the National Association of Employers.


Cash-strapped health insurance firms-01


The Christian Democrats’ economic council reacted in a similar fashion, saying that there was a “clear commitment in the coalition agreement that the health insurance contribution would remain stable.” Germany’s health minister, Hermann Gröhe, said the employer cap had encouraged economic growth.

“The social welfare system is well financed due to the positive developments in the labor market,” said Mr. Gröhe, a Christian Democrat. “The decision to freeze the employer contribution is a decision to preserve these positive developments.”

Yet despite Germany’s strong economy and labor market, the public health insurers have been spending more than they bring in. In the first three months of the year, the insurers had already run up a combined deficit of €170 million and it has run up to €500 million at the end of June.

AOK ran a €110 million deficit, BKK ran a deficit of  €100 million, and IKK ran a deficit €118 millions. VDEK saw its deficit shrink, but this was primarily because it hasn’t been paying out dividends to those it insures since the beginning of the year.

Jens Spahn, deputy finance minister and the Christian Democrats’ former health policy expert, admits that a solution must be found over the medium term.

“We’ll have to consider whether rising health care spending should be financed more through taxes or wage-dependant contributions,” Mr. Spahn told Handelsblatt, adding that there will also have to be a stronger focus on controlling costs.

Employers also called for a more liberalized healthcare market to curb spending increases.

“Public health insurance funds need many more options to negotiate individually with hospitals and doctors. In addition, a fair analysis of costs and benefits, as exists currently for medicines in a limited way, should be introduced for all medical care,” said Mr. Gunkel of the governing board of the National Association of Employers.


Klaus Startmann is the deputy bureau chief of Handelsblatt in Berlin and covers the energy market. Donata Riedel covers economic policy for Handelsblatt. To contact the authors: and 

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