Federal Government Initiates Significant Healthcare Overhaul

In a bid to address the escalating costs and growing demand for social care services, the German government is set to implement reforms starting July 2025. The proposed changes focus on consolidating benefits for respite care and short-term care into a single annual budget of €3,539, aiming to simplify access to care services and better allocate resources for caregiving needs.

The reforms are designed to address the challenges of increasing costs, a growing number of care recipients, and higher out-of-pocket expenses. By streamlining care benefits, the government hopes to reduce administrative complexity and provide a more flexible use of funds within the annual care budget. The reforms also aim to encourage more efficient use of support for family and short-term care needs by offering a combined budget rather than separate entitlements.

These changes, while not reducing the underlying cost pressures entirely, represent an effort to modernize the care benefits framework and help manage the financial sustainability of the social care system amidst demographic shifts and higher demand.

Last year, the expenses of the care insurance increased to 63.2 billion euros, up from 56.9 billion euros in 2023, 40 billion euros in 2019, and 24 billion euros in 2014. The number of people receiving care services is also increasing significantly, with 5.6 million recipients of benefits currently, compared to 4.0 million in 2019.

The financial situation in care has become chronic, with a deficit of 1.5 billion euros last year and another contribution increase expected in early 2025. To bridge the current deficit, the federal government plans to borrow 500 million euros this year and another 1.5 billion euros in 2026.

The constitutive meeting of the committee, led by Federal Minister of Health Nina Warken (CDU), is scheduled to take place today. The committee includes Federal Minister of Family Affairs Karin Prien (CDU) and other ministries from the federal government, as well as responsible ministers from the states. The goal of the working group of the federal and state governments is to develop proposals for a reform called "Future Pact for Care."

The German Foundation for Patient Protection has criticised the current situation, stating that nursing home residents currently pay for medical care out of their own pockets. Bavaria demands significantly more federal funds for healthcare insurance, with non-insurance-related services to be financed from tax funds.

For the approximately 800,000 care recipients in homes, additional costs include accommodation, catering, charges for investments in the homes, and training. On average, the first year of residence in a home cost almost 3000 euros per month at the beginning of 2025, according to data from the insurance companies.

The municipal associations and the black-red coalition factions in the Bundestag are also participating in the committee. Health Minister Judith Gerlach (CSU) stated that sustainable financing should not be postponed through loans. More money is still needed to prevent another contribution increase next year. Home residents now receive increased allowances to mitigate the increase in co-payments for pure care, which costs the care insurance billions each year.

The proposed reforms are a significant step towards adapting social care benefits to evolving needs and fiscal realities in Germany. However, further structural reforms or policy changes targeting cost control, broader funding mechanisms, or systemic redesign have not been detailed in the current available information from July 2025 sources.

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