Economics Grimm: Nursing care insurance needs radical reforms!

Economics Grimm: Nursing care insurance needs radical reforms!

On May 22, 2025, Veronika Grimm, economist, reports a need for changes in statutory nursing care insurance. She calls for fundamental reform to address the increasing financial burden on society. Grimm criticizes the fact that contributions to long-term care insurance are currently rising too sharply and are not sustainable. To counteract this, she suggests increasing the financial deductible for care patients.

Grimm has a clear message: In order to improve the design of long-term care insurance, benefits should be reduced and contributions made more realistic. This must be accompanied by a means test that is based not only on the income of individual people, but on the economic situation of the entire household. In her argument, Grimm emphasizes that there cannot be fairness and equality in every area, but that the social security system must remain stable.

Overview of nursing care insurance

Long-term care insurance, which was introduced in 1995, represents the fifth pillar of the German social security system. Its aim is to cover the risk of need for care and the associated costs. It is compulsory insurance for all people with health insurance, both statutory and private. If there is a need for care, a benefit case is determined, although the care insurance only covers part of the costs.

The insured have the choice between benefits in kind, such as a nursing home, or care allowance that relatives can receive. However, long-term care insurance does not cover all care costs, so personal contributions are required. The care rate depends on the intensity of the care required: For care in homes, the amount is a fixed rate, which can vary from case to case.

Current challenges and forecasts

The financial situation of nursing care insurance is tense. Since the system was introduced, the number of people in need of care has increased. While there were 2.02 million people in need of care in 1999, this number had risen to almost 5 million by the end of 2021. Forecasts show an increase to 5.6 million by 2035 and even 6.7 million by 2050. This development goes hand in hand with the challenges of rising care costs, inflation and demographic change.

In 2021 and 2022, long-term care insurance recorded deficits of 1.35 and 2.25 billion euros. However, a surplus of 1.78 billion euros is expected for 2023. Current discussions about reforms are necessary to ensure financial stability. The contribution rates for those with statutory health insurance are 3.4% of gross income. Those insured without children even pay 4.0%. Since 1996, rates have increased from 1% to today's levels.

In international comparison, long-term care in other countries is often financed through general social security contributions or taxes, which is not the case in Germany. The diverse design of long-term care insurance and the upcoming reform discussion are at the center of current debates in the political landscape.

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