German public health insurance funds closed the 2025 fiscal year with a billion-euro financial surplus amounting to €3.5 billion. Despite this, these organizations are announcing the necessity of raising health insurance premiums next year, citing rising treatment costs, pharmaceutical expenses, and the consequences of an aging society. The surplus arose primarily due to lower-than-expected pandemic-era expenditures and higher premium contributions from employees. The decision on a potential premium increase will fall to the new federal government.

Record Financial Surplus

Public health insurance funds in Germany recorded a surplus of €3.5 billion in 2025. This is the result of higher premium revenues combined with relatively lower expenditures, partly caused by treatment delays from the pandemic period.

Announcement of Premium Hikes

Despite the surplus, the boards of health insurance funds signal the necessity of raising the premium rate in 2027. They cite rising costs of medical personnel, expensive drugs, and treatment of chronic diseases in an aging society as reasons.

Political Dilemma for the Government

The final decision on premium levels belongs to the federal government, which must balance the needs of the healthcare system with the burden on payers. The surplus could be used to mitigate potential increases or finance investments in the sector.

Structure of Revenues and Expenditures

Fund revenues increased thanks to a good labor market situation and higher wages, which automatically increases premiums. Expenditures were lower than forecast, among other reasons due to a lower number of hospitalizations after the COVID-19 pandemic period.

The German public health insurance system recorded a significant financial surplus last year. According to media reports based on preliminary data from the Federal Statistical Office, public health insurance funds (health insurance funds) closed 2025 with a surplus reaching €3.5 billion. This positive result is the net effect of two main factors. On one hand, premium revenues were higher than projected, a derivative of a stable labor market situation and rising average wages. On the other, spending on health benefits turned out lower than forecasts, partly because many planned procedures and hospitalizations, postponed during the pandemic, have still not been fully realized.

Paradoxically, despite such an impressive surplus, the boards of the health insurance funds are already announcing the need to raise premiums in the near future. They argue that the current cash injection is only temporary relief. The long-term financial challenges facing the system are enormous and stem from structural problems. These include the rapidly rising costs of modern, often very expensive drug therapies and medical technologies. Another burden is the ongoing process of aging in German society, which leads to an increase in patients with chronic diseases requiring costly, long-term treatment. Also significant are pressures to raise wages for medical staff, including nurses and doctors, which directly translates into the operating costs of hospitals and clinics.

The German health insurance system, based on the Bismarckian solidarity model, has been functioning since the late 19th century. Premiums, split equally between employee and employer, finance universal access to medical care. In the 21st century, this system faces challenges related to increasing life expectancy, the costs of technological progress in medicine, and pressure to maintain high-quality services.

The final decision on a potential change in the premium level does not belong to the funds themselves but is the prerogative of the federal government. However, the €3.5 billion surplus creates room for maneuver for the ruling coalition. These funds could be used to mitigate the scale of necessary increases, postpone them, or finance specific investments in healthcare infrastructure. The debate on this topic will be one of the key political issues in the coming months, especially in the context of concerns about additional burdens on households amid uncertain economic conditions. „Der Überschuss ist ein Signal, dass das System kurzfristig stabil läuft. Aber er ändert nichts an den gewaltigen finanziellen Herausforderungen mittel- und langfristig.” (The surplus is a signal that the system is stable in the short term. But it does not change the enormous financial challenges in the medium and long term.) — Doris Pfeiffer, head of GKV-Spitzenverband

Mentioned People

  • Doris Pfeiffer — Head of GKV-Spitzenverband, the main association of public health insurance funds in Germany.