Incidence: who pays to hold Germany's health surcharge

On 24 February 2026 St. Elisabeth-Krankenhaus Salzgitter filed for insolvency. The hospital cites reimbursement that is insufficient to cover growing operating costs[1]. In July, Germany passed a reform to legally cap provider payment growth below cost growth.

The reform holds the surcharge rate by capping provider remuneration growth below the growth of provider costs. That cap does not close the financing gap. It relocates the adjustment onto healthcare providers. The rate it protects is a payroll charge. The shortfall is allocated to care capacity rather than to labour cost.

From 2019 onwards, employers and workers split a payroll surcharge that is additional to the shared general contribution rate. Individual insurers set their own surcharge; the national average has risen from 1.7% in 2024 to 2.9% in 2025 to 3.13% in January 2026[2]. The insurers' expenditure has increased 7.7% YoY in Q1 2026 against 4.1% YoY income growth[3]. That widening gap between spending and income produced a 2024 deficit of nearly €10bn[4]. The 10 July reform aims to stabilise the rate of surcharges at 2.9% by tying spending growth to income growth[4].

The reform links the growth of provider payments to the growth of contribution income, the Grundlohnrate, and excludes provider costs from the ceiling entirely. For 2027 to 2029 the cap is set at the Grundlohnrate minus one percentage point[4]. Hospitals are included in this cap until 2030; then the ceiling becomes the Orientierungswert, unless the Grundlohnrate is lower[4][5]. The growth in spending exceeded the growth in income by 3.6 points system-wide in Q1 2026[3]. The cap links payment increases to income, so it automatically falls behind faster-growing costs

Healthcare provider, manufacturer and insurer measures deliver €11.2bn of the 2027 relief and €28.7bn by 2030, 69% rising to 75% of the total[4]. Of that burden, the surcharge cap alone delivers €4.4bn in 2027 rising to €18.8bn in 2030[4]. That is a quarter of total relief in 2027 rising to half by 2030. As the provider share climbs, the patient share falls from 15% to 7%[4]. Each year the reform leans more heavily on the surcharge cap. The reform’s memorandum states that rate stability is not achievable by 2030 without this measure[4]. On the government's own account, holding the rate is the cap.

A cap on payment growth set below cost growth is a widening gap by construction. Each year, the distance between what hospitals spend and what they are paid compounds.  Hospitals feel it hardest: their cost base, largely personnel and energy, runs furthest ahead of the income-linked ceiling. The Bundesrat warned the reform structurally underfunds hospitals[6]. Hospital bodies size the 2027 cut at €4.6bn (DKG)[7] to €5.1bn (ver.di)[8]. These estimates predate the amendments made during debate, which eased the 2030 ceiling but left the 2027 to 2029 cap intact. The DKG projects a negative margin sector-wide, with one in two hospitals exposed to insolvency and 140,000 jobs at risk[7]. Salzgitter went insolvent under the current system. The reform now writes into law a mechanism that widens the gap further.

The fixed 2.9% payroll surcharge holds this non-wage labour cost constant. Without the reform, the memorandum puts the extra burden at €20bn on members and €14bn on employers by 2030[4]. That protected labour cost is what the provider squeeze funds. Holding the surcharge holds down non-wage labour cost, a competitiveness lever. The adjustment is allocated to hospital capacity.

Relief over-covers the gap in the near term: €16.3bn against €15.3bn in 2027[4]. The relief is front-loaded. The underlying divergence of spending growing faster than income does not stop. By 2030 relief falls behind at €38.1bn against a €40.4bn gap[4]. The cap slows the growth of payments but does not close the gap between costs and income. The memorandum concedes the gap is not fully closed in 2029 or 2030[4]. Structural reforms expected from 2029 are to close the residual[4]. Those reforms are not yet specified.

The fixed rate can only hold if hospitals can absorb it. Between 2027 and 2029 hospital finances will show the impact that this reform has. If hospitals absorb the squeeze, the rate holds and the relocation worked, its cost paid in capacity. If distress climbs and the 2030 gap reopens as projected, the relocation fails and the shortfall returns, as rising rates or lost capacity. The surcharge holds at 2.9%. The reform delivers a stable number by moving the instability to where the number cannot show it.

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Notes

[1] St. Elisabeth-Krankenhaus Salzgitter, “St. Elisabeth-Krankenhaus Salzgitter gGmbH beantragt Insolvenzverfahren in Eigenverwaltung,” 24 February 2026.

[2] GKV-Spitzenverband, "Zusatzbeitragssatz steigt zum Jahreswechsel auf 3,13 Prozent," 2 January 2026.

[3] Bundesministerium für Gesundheit, “Finanzentwicklung der GKV im 1. Quartal 2026,” 19 June 2026.

[4] Deutscher Bundestag, “Beschlussempfehlung und Bericht des Ausschusses für Gesundheit,” Drucksache 21/7016, 8 July 2026.

[5] Bundesministerium für Gesundheit, “Bundestag beschließt GKV-Beitragssatzstabilisierungsgesetz,” 10 July 2026.

[6] Bundesrat, “Stellungnahme des Bundesrates, GKV-Beitragssatzstabilisierungsgesetz,” Drucksache 256/26(B), 12 June 2026.

[7] Deutsche Krankenhausgesellschaft, “Politik-Anhörung,” Das Krankenhaus 469, July 2026.

[8] ver.di, “GKV und Pflege: ver.di mobilisiert gegen Spargesetze,” 10 July 2026.

Image credit: Julia Taubitz, Unsplash

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Continental is a biweekly column on European economics by Felix Schmidt. New issues appear on Substack first and on the International Economics Post within 48 hours.