Health insurance companies under pressure: Contribution spiral reaches new peak!

Health insurance companies under pressure: Contribution spiral reaches new peak!

The finances of statutory health insurance companies in Germany are under pressure. A recent report from Doctors newspaper shows that contribution rates are expected to continue to rise in 2025. This is happening against the background of a tense financial situation, which was already apparent in previous years.

The health insurance companies recorded an increase in insured people of 0.3 percent in 2024. Spending, on the other hand, increased by 7.7 percent, indicating accelerated spending dynamics. Compared to previous years (2023: +5.0 percent) and to the preliminary results from the first three quarters of 2024 (+7.5 percent), the development shows an alarming trend. These numbers come from Federal Ministry of Health.

Increasing performance expenses

The health insurance companies experienced a massive increase in expenditure, particularly in service expenditure. These increased by 8.1 percent, resulting in a total increase of 23.3 billion euros. Hospital treatment accounted for a significant share of this expenditure, with an increase of 8.7 percent or 8.1 billion euros compared to the previous year.

In the fourth quarter of 2024, hospital spending growth rates were a whopping 11.1 percent compared to the same period in 2023. This shows that the increases are not just temporary, but may develop into a longer-term problem.

Insight into drug spending

Expenditure on pharmaceuticals also increased significantly, by 9.9 percent, which corresponds to 5.0 billion euros. This increase is due in part to a one-time increase in the manufacturer's rebate in 2023. What is particularly disadvantageous is that gross expenditure on medicines without discounts increased by 7 percent - the strongest increase in over a decade.

Services in the context of outpatient specialist medical care even recorded an increase of 30 percent. There was also a noticeable increase of 59.7 percent in mail order sales for medicines and bandages.

Administrative costs and retirement provisions

Administrative costs, on the other hand, fell by 0.6 percent, even though net administrative expenses excluding retirement provisions increased by 641 million euros. This paradoxical development is another indication that health insurance companies have to respond to various challenges. Personal administrative expenses climbed 4.1 percent, while non-personal administrative expenses rose 6.3 percent.

The balance of additions and withdrawals for retirement provisions amounted to 57 million euros, significantly less than in the previous year, when it was 772 million euros.

The successive increases in various areas make it clear that statutory health insurance is facing greater financial challenges. Future reforms and solutions are necessary to keep contribution-financed health care stable and not to further increase the spiral of contributions. It remains to be seen how politicians will respond to these ongoing trends.