Germany approves health insurance overhaul to cut costs by €16.3 billion

Germany’s lower house approved a bill on Friday to cut statutory health insurance costs by €16.3 billion, putting the first squeeze on a system where workers and employers share the bill. Lawmakers backed the overhaul 318 to 284, with four abstentions, and sent it to the Bundesrat, the chamber that represents Germany’s 16 federal states and could still force a mediation round if it balks.

For Chancellor Friedrich Merz, the measure is not just a health policy reset. The government has cast the reform as part of a broader push to lower financial and bureaucratic burdens on companies in an economy that has struggled for momentum, and the health ministry says the point is to limit spending growth so insured people are spared rising supplemental contributions. That makes the overhaul a labor-market issue as much as a medical one: lower contribution pressure would help employers and workers alike, but only if the savings hold.

The sharpest resistance has come from drugmakers, who say tougher pricing and reimbursement rules will hit profitability and deter investment. Alexandra Bishop, AstraZeneca’s Germany president, said the law penalises innovation and puts investment in Germany at risk, a warning that reflects a wider industry fear that Berlin is shifting costs onto the pharmaceutical sector to close the gap elsewhere in the system.

Officials in the Bundestag described the reform as a broad package touching hospitals, family doctors, specialists, psychotherapists and higher co-payments, with the goal of closing the GKV’s financing gap for 2027 and the years after. Health Minister Nina Warken said the reform was meant to stabilize contribution rates and keep the system affordable, while the ministry said the Bundestag’s approval would help secure stable financing for the coming years. If the Bundesrat follows through, the overhaul would become one of the clearest tests yet of Merz’s attempt to pair fiscal restraint with pro-business restructuring.