Despite the increase in the contribution, the money in the nursing care insurance fund is not enough: residents of nursing homes had to pay 13 percent more money last year. Why the trend looks bleak and what options remain.

It’s a serious topic, but a large German insurance company tries to do it with humor on its own website: “For example, how likely is it to be kidnapped by a UFO? Or spotting the Loch Ness Monster? Really very unlikely! Nevertheless, there are people who take out insurance for it. Absurd, isn’t it?” Three out of five Germans would need care, but only a few would have appropriate supplementary insurance – that is the point of the comparison. Next to it, smart Dieter Hallervorden smiles – the actor and cabaret artist is the insurer’s “care ambassador”, which probably sounds better than an advertising testimonial. His message: take out supplementary long-term care insurance!

Now not everyone can afford that and actually there is a health system in Germany that should not make private provision necessary for care. But the current figures show why so many people are concerned about their status in old age. A current evaluation by the health and nursing care insurance association VDEK shows an enormous increase in the costs for residents: they have risen by 36 percent since 2018. From January 2022 to January 2023 alone, the increase was 13 percent. For comparison: the inflation rate in Germany was 7.9 percent last year, and the increase in salaries was around five percent.

Specifically, this means the personal contribution for full inpatient care that residents of retirement homes have to pay in addition to the social security benefits. They recently rose to an average of 2411 euros per month, which is 278 euros more than in January 2022 – just 13 percent. “Residents are financially pushed massively under water,” says Eugen Brysch from the Patient Protection Foundation. The financial benefits of long-term care insurance have already risen, because they now pay an additional five percent of the personal contribution for the first twelve months in the home. Without this measure, the costs would have increased even more. If someone cannot pay the deductible, he or she must apply for social assistance. The number of people over 80 who had to do this jumped by a fifth between 2017 and 2021. More recent figures are not yet available.

According to the health and care insurance association VDEK, the reason for the increase is not that the care homes are greedy. On the contrary: In view of the rising costs, more and more home operators are coming under pressure. The nursing employers’ association warns of a wave of insolvencies this year and sees security of supply at risk in the medium term. On the one hand, the facilities pass on part of the increased costs for food and heating – and on the other hand the higher wages of the employees. Last but not least, the wages of the nurses were adjusted by law from the grand coalition.

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And that should not have been the end of the increases: Since the homes are to be better staffed – new regulations on staffing in homes will apply from July – staff costs will continue to rise. The better care benefits the residents, of course, but it has to be paid for. But it remains to be seen whether the government can and wants to arrange a renewed increase in contributions. Because the contribution to long-term care insurance has already been increased: it has increased by half a percentage point of gross wages to 3.05 percent since 2018. Childless pay 3.4 percent. That alone flushed an additional eight billion euros per year into long-term care insurance. It seems far from enough.

Experts estimate that the contribution rate will rise to six percent by 2045. No politician wants to convey that to the citizens. One option is to freeze the rate between four and 4.5 percent and add the missing money from taxes. That should be around 18 billion euros in 2045. Citizens have to pay for it one way or another. However, the tax subsidy is politically more pleasant, because people don’t feel it as directly as increasing contributions. Minister of Health Karl Lauterbach (SPD) is required and is currently drafting a reform of care. A central point is who takes on the cost risks.

If Dieter Hallervordens has his way, we should all treat ourselves to supplementary long-term care insurance. Only that has it all: Even a perfectly healthy 40-year-old has to pay in between 41 and 67 euros per month, depending on the service package, in order to receive 1,500 daily care allowances in the event of need, a 50-year-old between 62 and 103 euros. How far you can get with inflation in 30 or 40 years is another piece of paper. Private provision can quickly become very expensive and does not make sense for everyone. And in any case, it cannot absorb an increase in costs of 13 percent per year.

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The article “”Residents are financially massively squeezed under water”” comes from WirtschaftsKurier.