Germany Passes Major Healthcare Reform to Control Insurance Costs
By Andreas Rinke and Maria Martinez
Key Details of the Healthcare Reform Bill
BERLIN, July 10 (Reuters) - Germany's lower house of parliament approved a bill on Friday aimed at reining in health insurance costs, despite fierce criticism from drugmakers who say tougher pricing measures could hurt profits and deter investment.
The bill now goes to the upper house representing Germany's federal states, where sources familiar with the matter told Reuters approval was likely. Failure to secure a majority in the Bundesrat could send the legislation to a mediation committee.
Economic and Political Implications
Containing health insurance costs, which are shared by workers and employers, is a key part of Chancellor Friedrich Merz's effort to revive Germany's economy by reducing financial and administrative burdens on businesses.
Government Perspective
"After years of rising health insurance contributions, we have finally created the basis for stable finances in the statutory health insurance (system)," Health Minister Nina Warken said.
The system covers most of the population and is funded primarily through payroll contributions, split between employees and employers.
Impact on Employers and Employees
As costs rise, higher contribution rates increase labour costs for companies and reduce workers' take-home pay, making healthcare financing both an economic and political issue.
"In short: We are not cutting across the entire system, but limiting future increases to the development of the overall economy," Warken said. "That is a responsible way to handle insured persons' contribution money."
The healthcare reform is part of a long-awaited broader economic package announced by the government last week.
Industry Response and Opposition
Drugmakers Oppose the Change
The legislation aims to narrow a growing funding gap in the health system through higher mandatory rebates from drugmakers, tighter limits on hospital cost increases and changes to payments for a range of health services.
Criticism from Industry Leaders
"The law in its current form will become a political boomerang," said Wolfgang Grosse Entrup, head of Germany's VCI chemical industry association.
"In an economically difficult phase, the competitiveness of Germany as a pharmaceutical location is being deliberately put at risk because the fear of genuine reforms of the welfare state is too great," he added.
The pharmaceutical industry has objected in particular to an increase in the statutory manufacturer discount to 15.5%, a higher rebate on patented vaccines and a price freeze for those vaccines from 2027 to 2030.
German drugmaker Merck KGaA called the legislation "a hard blow to Germany's pharmaceutical sector".
Concerns Over Innovation and Investment
"It endangers patient care, harms the development of new medicines, and weakens Germany's position as an innovation hub," the company said in a statement.
Alexandra Bishop, AstraZeneca's president for Germany, said the measures penalise innovation and put investments in Germany at risk.
"This is not a signal for the future," Bishop said. "What we need is a policy that treats health and economic strength as one – and recognises innovation as a competitive advantage, not a target for cuts."
Additional Information
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(Reporting by Andreas Rinke and Maria Martinez;Additional reporting by Maggie Fick; Editing by Linda Pasquini, Mark Potter and Helen Popper)
