Renewed Financial Concerns in Long-Term Care Insurance: Contribution Increase in Sight

The long-term care insurance system is once again facing financial challenges. Gernot Kiefer, Deputy Chairman of the Board of the National Association of Statutory Health Insurance Funds (GKV), indicated worrying prospects on Wednesday. For the first quarter of 2024, the long-term care insurance reports a deficit of 650 million euros. Overall, this year is projected to see a shortfall of 1.5 billion euros, with an expected deficit of 3.4 billion euros in 2025. This might necessitate an increase in contribution rates by 0.2 points. Despite a recently implemented stabilization reform, the financial situation of the long-term care funds has not improved as hoped. A surplus of 1.79 billion euros last year was mainly due to a contribution increase by the traffic light coalition. Since July 1, 2023, childless individuals pay 4 percent, while parents with one child pay 3.4 percent in care contributions. Families with at least two children are granted some relief. Kiefer emphasizes the urgent need to secure the liquidity of the long-term care funds, which may require additional funds starting January 2025. The reason for the growing financial risks lies in the increasing number of beneficiaries and additional relief measures for those in need of care. By the end of 2023, the long-term care insurance counted over five million beneficiaries for the first time, an increase that has averaged 320,000 per year since 2017. However, in 2023, the increase was 360,000, which particularly strains the long-term care funds. These developments are increasingly putting the system in difficulty. Kiefer calls for a sustainable consensus and a fundamental financial reform, as solely raising contributions does not provide a long-term solution. A critical point is that while the surcharges for nursing home residents cost 4.5 billion euros, all income groups benefit equally. The German Foundation for Patient Protection also criticizes the latest long-term care reform by Health Minister Karl Lauterbach as inadequate. Chairman Eugen Brysch demands a tax-funded federal subsidy. Chancellor Olaf Scholz has also made it clear that a comprehensive long-term care reform is necessary, with new evaluations of funding and contribution levels. Kiefer is skeptical about the possibility of implementing a reform before the 2025 federal election. Nevertheless, it should be a top priority in the new legislative period. A survey by the opinion research institute YouGov shows that 79 percent of respondents support a federal subsidy for long-term care insurance. Only 12 percent oppose it. Increases in care contributions face majority opposition. A previously introduced federal subsidy of one billion euros was cut in the context of the 2024 budget consolidation.