German government revises GKV savings package, drops general sick-pay cut
German GKV savings package revised: broad sick-pay cut dropped; reductions only if employment ends during sick pay. Sugar levy from 2028 will now fund the GKV.
The federal government has reworked its GKV savings package, abandoning a blanket reduction in statutory sick pay and proposing that sick-pay be lowered to the level of unemployment benefit I only when a beneficiary’s employment terminates during their sick-pay period. The change appears in a draft bill from Health Minister Nina Warken (CDU) and narrows the scope of cuts that had met resistance from coalition partners and unions. The package still contains a mix of revenue measures and contribution adjustments designed to reduce pressure on health insurer finances through 2030.
Cabinet timetable and internal agreement
The draft bill is scheduled for cabinet consideration this week, with party and ministerial discussions concluding shortly before the cabinet meeting. SPD ministers, notably Labour Minister Bärbel Bas, had opposed a general reduction of sick pay and pushed for the narrower rule now in the draft. CDU and CSU representatives negotiated offsets elsewhere in the package to balance the ministry’s proposals and to secure parliamentary support.
Sick-pay change narrowed to employment termination cases
Under the newly framed proposal, general sick-pay levels would remain intact for most beneficiaries and would be reduced to the level of Arbeitslosengeld I only when the employment relationship ends while sick pay is being received. Supporters say this limits hardship for workers who remain employed, while critics warn that the narrower cut could still affect people who lose their jobs while ill. The measure is presented as a targeted fiscal relief rather than a blanket withdrawal of benefits.
Revenue measures including 2028 sugar levy
The package introduces a levy on sugar-sweetened beverages starting in 2028, with projected annual revenues of roughly €450 million earmarked for the GKV. Chancellor’s office and party leaders negotiated the use of those proceeds specifically for statutory health insurance rather than the general budget. The sugar levy had been controversial within the CDU; party bodies previously opposed a sugar tax, but some senior figures signalled shifts in position to accommodate coalition compromise.
Federal contributions, cost-sharing and budget impact
The federal government plans to increase its participation in health costs for people receiving basic social support, beginning with an additional €250 million in the initial phase. Offsetting that, the general federal subsidy to the GKV will be reduced by €2 billion per year through 2030. The revised package lowers the immediate relief to health insurers: the expected easing for 2027 is now €16.3 billion, down from an earlier estimate of €19.6 billion. Authorities say the measures are intended to limit planned increases in supplementary contributions for insured members.
Projected funding gaps and longer-term assumptions
Despite the revisions, forecasts show persistent financing shortfalls: a gap of about €15.3 billion is projected for 2027 and roughly €40.4 billion for 2030. Officials acknowledge that the current package will fully close the expected shortfall only in the initial years and that further structural reforms will be needed to address deficits in 2029 and 2030. The government frames the plan as a staged response that buys time for broader health-system reforms.
Adjustments to contribution rules and caps
The proposal reduces a planned surcharge on non-contributing spouses and partners from 3.5 percentage points to 2.5 points, easing the burden on families. At the same time, lawmakers preserved an extraordinary increase in the contribution assessment ceiling by €3,600 per year, a move that raises contributions for higher earners. Officials argue the combined adjustments distribute costs across income groups while preserving the system’s redistributive core.
Incentives for domestic pharmaceutical R&D and production
New exemptions to the dynamic manufacturer rebate for medicines are included where manufacturers conduct fresh clinical trials or start active ingredient production within Germany. The carve-outs aim to incentivize research and local pharmaceutical production, aligning industrial policy goals with health-care financing rules. Supporters say the change could bolster domestic supply chains and innovation, but opponents caution it may reduce rebate savings in the short term.
The revised GKV savings package represents a political compromise intended to protect core sick-pay entitlements for most insured people while steering new revenues and contribution changes into statutory health insurance. Lawmakers still face a choice between short-term fiscal relief and more comprehensive structural reforms to stabilize GKV finances over the coming years.
