Healthcare Reform: Proposals, Objectives, and Current Debates
The German healthcare system is under considerable pressure to reform. High healthcare expenditure, structural problems in the organisation of care and increasing strain on statutory health insurance are leading to the need for concrete reforms in several areas.
We examine key reform proposals. The focus is on legally anchored changes in hospital care, adjustments to remuneration and structural problems described in scientific reports..
Healthcare Reform: Structural Cost Drivers in the Healthcare System
The reform debate is closely linked to the development of healthcare expenditure.
According to the OECD, healthcare expenditure in Germany amounted to 12.3 percent of gross domestic product in 2024 (OECD, 2025).
The Federal Statistical Office reports healthcare expenditure for 2022 at around €498 billion (Federal Statistical Office, 2024).
Another structural aspect concerns the organisation of statutory health insurance. In our article on health insurance costs, we discuss these issues in detail. Among other things, higher health insurance contributions and reduced benefits packages are (in part) already being implemented. Among other things, higher health insurance contributions and reduced benefits packages are (in part) already being implemented. In addition, co-payments for medicinal products are to be increased and, in future, linked to overall cost developments in the healthcare system. An increase to up to €15 per medication is currently being discussed. The existing caps — 2% of annual gross income, or 1% for chronically ill patients — are, however, to remain in place (Federal Ministry of Health, 2026). To be continued …
In Germany, there are more than 90 statutory health insurance funds. This considerable number has already been reduced in recent years through mergers (Federal Ministry of Health, 2025).
A German Council of Economic Experts on Health Care (SVR) points out that existing structures in the healthcare system may be associated with efficiency problems (SVR, 2023). The question arises as to how reform measures can lead to cost reductions and improved efficiency.
In addition, the Council identifies further structural factors that influence expenditure trends. These include demographic change, as an ageing population places additional strain on the healthcare system, as well as costs associated with medical progress and the development of new drugs, and general price developments (SVR, 2023; SVR, 2024; SVR, 2025).
These factors are described as key drivers of long-term healthcare expenditure and, together with organisational structures, form the financial background of current reform measures.
Hospital Reform: Capacity-Based Funding for Service Groups Instead of Case-Based Payments
The current hospital remuneration system is largely based on case-based payments.
Here, remuneration is linked to the number of cases treated, which is often criticised (SVR, 2023). This form of payment can create perverse incentives, potentially leading to examinations or procedures that are not medically necessary. The underlying logic could be summarised as: “The procedure may not be strictly necessary, but it is well reimbursed.” Such practices can of course have serious consequences and are intended to be prevented. (This clear wording is, of course, an editorial note.)
Although the issue is not articulated by policymakers with the same degree of clarity, there is a statutory entitlement to an independent medical second opinion for certain planned procedures (German Bundestag, 2021; Federal Joint Committee, 2024). For some procedures, this entitlement is intended to become mandatory (Federal Ministry of Health, 2026).
A central element of the current reform is the reorganisation of hospital financing: A draft provides for the existing case-based system to be supplemented by additional capacity-based payments.
Hospitals are to receive remuneration for maintaining certain services, which is not directly linked to the number of cases treated with these services. The draft law also includes provisions for the introduction of service groups assigned by the responsible planning authorities, for which hospitals must meet defined quality criteria (German Bundestag, 2024).
Outpatient and Inpatient Care: Reduced Sectoral Separation Through Uniform Remuneration
Another reform approach concerns the separation between outpatient and inpatient care.
The Council of Experts describes this separation as a structural problem that can lead to coordination issues and efficiency losses (SVR, 2023).
Uniform remuneration across sectors has been introduced for certain services. Some services can now be provided both on an outpatient and inpatient basis under the same remuneration conditions (German Bundestag, 2022). Since 2024, the specific implementation has been based on the so-called Hybrid DRG system (“Hybrid Diagnosis Related Groups”). (Federal Ministry of Health, 2023).
Reform Pressure in Healthcare: No Mere Symptom Treatment, Please!
Current reform approaches in the German healthcare system make it clear that the focus is not only on rising expenditure, but also on the underlying structural causes. High healthcare costs, the organisation of statutory health insurance, as well as factors such as demographic change, medical progress and the utilisation of services interact and play a decisive role in shaping the need for reform.
The planned measures — particularly in the hospital sector and in the remuneration of services — address these structural aspects. It remains to be seen how successful they will be.
However, this article, like others on our blog, may also be of interest to you if you wish to follow the money more closely.
FAQ – Frequently Asked Questions About Reforms in the Healthcare System
1. What practical change results from capacity-based payments for hospitals?
The additional funding for maintaining services means that part of hospital revenue is decoupled from the actual number of cases. This changes the financial basis of hospital care (German Bundestag, 2024).
2. Why is the introduction of service groups relevant for the structure of hospital care?
Service groups link specific hospital services to assignment by the relevant state planning authority and to defined quality criteria. Hospitals receive capacity-based payments for those service groups assigned to them, provided they meet the relevant quality standards and minimum service volumes (German Bundestag, 2024).
This more clearly defines which hospitals are authorised to provide and be reimbursed for certain services. As a consequence, certain services will no longer be provided and billed in the same way by all hospitals, but primarily by those institutions that meet the required criteria and have been assigned the corresponding service group (German Bundestag, 2024).
3. What is the structural significance of uniform cross-sector remuneration?
Uniform cross-sector remuneration applies to services that can be provided both on an outpatient and inpatient basis and establishes a standardised payment system for these services (German Bundestag, 2022).
4. What does the criticism of case-based payments mean in practice for healthcare provision?
The criticism focuses on the fact that remuneration is tied to the number of cases treated. The Council of Experts notes that this may create incentives to expand the volume of services (SVR, 2023).
If remuneration depends largely on case numbers, this may lead to more examinations or procedures being carried out than are medically necessary (our wording — the Council would likely express this more diplomatically).
The criticism of case-based payments therefore aims to highlight that the remuneration system can influence the volume of services provided and, consequently, the type and scope of care (SVR, 2023).
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Sources:
· OECD (2025): “Health at a Glance 2025: OECD Indicators.”
· Federal Statistical Office (2024): “Healthcare expenditure rose to €497.7 billion in 2022.”
· Federal Ministry of Health (2026): “Draft bill of a law to stabilise statutory health insurance (Statutory Health Insurance Stabilisation Act – GKV Stabilisation Act).”
· Federal Ministry of Health (2025): “Statutory health insurance. Members, co-insured dependants and sickness rates. Monthly figures January to December 2025 (results of GKV statistics KM1).”
· German Council of Economic Experts on Health Care (2023): “Report 2023: Resilience in the healthcare system. Pathways to coping with future crises.”
· German Council of Experts on Health and Care (2024): “Healthcare workforce. Sustainable use of a scarce resource.”
· German Council of Experts on Health and Care (2025): “Prices of innovative pharmaceuticals in a learning healthcare system.”
· German Bundestag (2021): “Act to Further Develop Healthcare Provision (Healthcare Provision Further Development Act – GVWG)”.
· Federal Joint Committee (19 September 2024): Treatment of localised prostate cancer without metastases: “Patients are entitled to an independent medical second opinion.”
· German Bundestag (2024): “Government draft bill. Draft Hospital Care Improvement Act,” printed paper 20/11854.
· German Bundestag (2022): “Government draft bill. Draft Act on nursing staff measurement in hospitals and on the adjustment of further regulations in hospital care and digitalisation (Hospital Care Relief Act – KHPflEG),” printed paper 20/3876.
· Federal Ministry of Health (2023): “Regulation on defining services for uniform cross-sector remuneration (Hybrid DRG Regulation).”