Chancellor Friedrich Merz said his Cabinet approved what he called a “historic” draft law on Wednesday designed to halt soaring costs in Germany’s health care system. The package, intended to curb rising health insurance premiums, still needs approval from the Bundestag, where lawmakers are expected to scrutinize it closely.
Merz’s center-right CDU governs in a tense coalition with the center-left SPD. Media reports of heated clashes in coalition meetings — which Merz denies — have circulated, and he is facing unusually low approval ratings, with one recent poll naming him among the least popular democratically elected leaders worldwide.
Presenting the proposal, Merz argued it demonstrates the coalition’s ability to compromise. SPD leader and finance minister Lars Klingbeil echoed that sentiment, saying that while discussions can be intense, the government can act when needed. Merz said the plan would save more than €16 billion and prevent premium increases for those in statutory health insurance.
Health Minister Nina Warken described the package as ambitious and swift, following recommendations from an expert commission that put forward 66 cost-saving ideas for insurers. The government says the measures are necessary because contributions have already risen — about a 3% increase this year — while statutory insurers face widening deficits. At current rates, the shortfall between income and expenses is projected to grow from €15.3 billion in 2027 to €40.4 billion by 2030. The draft law seeks to better align insurer spending with their actual income.
Key elements of the draft law include:
– A sugar tax: From 2028 a levy on sugary drinks is proposed, expected to raise roughly €450 million annually, with revenue earmarked for prevention programs rather than the federal budget.
– Higher patient contributions for some medicines: Prescription drugs that are currently subsidized by insurers would require greater co-payments from patients.
– Federal takeover of unemployment-related insurance costs: The costs state insurers currently cover for people on unemployment benefits — about €12 billion a year — would be gradually assumed by the federal government.
– Partial end to free coverage for non-working partners: A 2.5% contribution would be introduced for non-working partners, with exemptions for families with children under seven, parents of children with severe disabilities, family caregivers, pensioners, and partners with complete loss of earning capacity.
– Cannabis flowers and homeopathy excluded: Coverage for cannabis flowers and homeopathic remedies would be removed from statutory insurance.
– Cuts on extras and tighter caps: The draft targets administrative and marketing spending by statutory insurers and proposes caps on executive pay and compensation at insurers, state associations, medical services and doctors’ associations.
Reaction was mixed. Klaus Reinhardt, president of the German Medical Association, warned the package looks more like the biggest savings program in decades and said the burden risks falling disproportionately on insured people, even while acknowledging reform is needed. Verena Bentele of the VdK described the measures as austerity that reduces benefits and shifts costs onto patients. Eugen Brysch of the German Foundation for Patient Protection criticized the federal government’s reluctance to provide fuller support to state insurers, saying the plan leaves patients carrying an unfair share of the cost.
The draft now moves to parliamentary debate, where its backers must win over lawmakers across the political spectrum if it is to become law.