Money, Sex, Politics and a Timebomb

Germany’s state healthcare system faces a huge financial problem. They have too much money.

What are they going to do about it? Raise taxes.

Hang on... wait a second... what?

Let’s start with a quick background: most German employees are required to pay into two health-related state insurance funds. One is health insurance, so you are cared for when you are sick; the other is long-term care insurance, so you are cared for if you have a long-term disability and can’t take care of yourself.

Germany’s buoyant economy has left the various state insurance providers with a total surplus of around 4.2 billion euros. If this was Britain, it would be treated as a windfall – hundreds of hospitals would be built, everyone would get free breast implants. The Germans, however, are a more cautious folk. Not only is the surplus being kept aside for a rainy day, a number of junior MPs from the governing CDU raised the prospect of increasing the mandatory payments into the long-term care insurance fund.

You see, despite the short-term good news, Germany is sitting on a demographic timebomb. The population is simultaneously aging and shrinking – and unless that changes, the well-funded state healthcare system that Germans are accustomed to will collapse. The CDU’s suggestion was to force people without children to pay more into the long-term care funds – the logic being that those with children will be less of a burden as they grow older. It also acts as nifty little incentive for twenty and thirty-somethings to go home and breed the next generation of German taxpayers.

Of course, the idea was sharply criticised – it was seen as an unwarranted intrusion into family life and a punishment for those who are unable to have children. Chancellor Merkel swiftly rejected the idea – in this form, at least.

Unfortunately for policymakers, the timebomb is still ticking. Unless they dial back expectations for future care or attract new populations via immigration – not exactly popular policies – it might not be the last time Germany’s bedroom antics become subject to government involvement.