Germany's health insurance austerity package becomes law

Higher co-payments for medicines, restrictions on free family coverage for spouses and partners, and capped reimbursements for doctors and hospitals are among the measures included in the coalition government’s controversial austerity package for statutory health insurance.

On the final day before the parliamentary summer recess, both the Bundestag and Bundesrat gave the reforms their final approval.

The opposition warned that the package would lead to a deterioration in care for Germany’s 75 million statutory health insurance members and could trigger a wave of hospital insolvencies.

Federal Health Minister Nina Warken (CDU) said the reform would “finally lay the foundation for stable finances in the statutory health insurance system”. She described it as a “herculean task” to stabilise premiums through the reform.

With almost €19 billion in savings required next year alone, she said it was inevitable that there would be “noticeable changes” and sacrifices from all sides.

Chancellor Friedrich Merz (CDU) also welcomed the legislation, describing it on the social media platform X as a “milestone for stable premiums”. The reform, he said, would help keep healthcare affordable.

The National Association of Statutory Health Insurance Funds (GKV) broadly backed the package, calling its approval “good news” for insured citizens. Although the law contains “many hardships”, it creates the conditions for stable insurance contributions, chief executive Oliver Blatt said.

He also praised the coalition for demonstrating its ability to act and criticised some opponents of the reform for spreading what he described as “baseless doomsday scenarios”.

The German Medical Association struck a similar tone. Its president, Klaus Reinhardt, said the reforms require a significant solidarity contribution not only from patients but also from doctors and other healthcare workers.

He stressed, however, that the savings package must now be followed by deeper structural reforms, including improvements to primary care, emergency treatment, hospital services, digitisation and the reduction of bureaucracy.

'Massive collateral damage'

The pharmaceutical industry was more critical. Pharma Deutschland, which represents the sector, warned of “massive collateral damage” from the planned cuts to medicine prices. The association said the reform sends “a devastating signal” to companies looking to research, manufacture and invest in Germany.

The social welfare association VdK also criticised the legislation as “socially unjust”. Its president, Verena Bentele, argued that the main financial burden falls on insured individuals.

SPD health policy spokesperson Dagmar Schmidt acknowledged in the Bundestag that this was not a law “that calls for champagne corks to pop”. However, she pointed to several concessions made during negotiations.

One change means that parents with children under the age of 12 can continue to benefit from free family coverage. Earlier plans would only have protected families with children up to the age of six.

Opposition parties remained unconvinced. Green parliamentary leader Britta Haßelmann accused the coalition of rushing the legislation through parliament and placing an additional burden on 75 million people.

She also warned that Germany’s roughly 1,850 hospitals would come under severe financial pressure, raising the prospect of further closures.

Left Party parliamentary leader Heidi Reichinnek called the law “an absolute disaster”. She renewed criticism of the speed with which the legislation was handled, noting that MPs had received dozens of amendments running to 279 pages only days before the vote. “With this law, you are endangering human lives,” she told the governing parties.

Earlier this week, MPs from The Left and the Greens filed urgent applications with Germany’s Constitutional Court seeking to halt the vote because of the compressed timetable. The court rejected the applications.

In the Bundesrat, several states continued to push for greater support for hospitals up to the last moment. Saarland, Lower Saxony, Mecklenburg-Western Pomerania, Bremen, Hamburg and Saxony-Anhalt sought to refer the legislation to a mediation committee, but failed to secure enough support.

As a result, the reform can now enter into force.