The ‘Care Reform Act’ – a litmus test for people in care situations

The draft bill on care ‘reform’ has been available since 5 June, under the rather unwieldy title ‘Draft Act on the Reorganisation of Long-Term Care Insurance’ (PNOG). This draft is based on the report by a federal-state working group, which was presented last December. We have been following this process with articles that we have compiled in a dossier. We continue this series with this article. Readers will find the link to the collection of articles, now updated to include this piece, at the end of the article.

During the process of turning the draft bill into law, associations are to be given the opportunity to submit comments. The deadline for this was very tight: Ver.di, like us at ‘wie wir pflegen!’ e.V., criticised the fact that the draft was received on 5 June and comments had to be submitted by 10 June. To put this into context: the document in question is a 210-page PDF.

It was already clear from the Commission’s final report – indeed, from the moment the government commissioned the study – what the issue was: the financing of long-term care should not place a greater burden on businesses via social security contributions than at present, and the core issue underlying the underfunding should also remain unaffected: The contribution assessment ceiling for high earners was never in question, nor was there any provision for the comprehensive inclusion of income from capital and self-employment. Nor is there any intention to rectify the inappropriate use of long-term care insurance funds to finance tasks that should be funded by taxation, such as pension insurance contributions for unpaid carers. At the same time, the viability of the care system must be safeguarded. This is the classic dilemma of care work in ‘structurally care-indifferent’ capitalism: it is supposed to be as cheap as possible, yet the product of care work – the current and future workforce – is indispensable to the economy. In a liberal democracy, there is the added consideration that the level of provision must be such that public support for the government does not completely collapse.

However, the rhetoric of a ‘turning point’ and deindustrialisation is intended to foster acceptance of the erosion of social rights and established standards of care, as well as acceptance of the exclusion from care of people deemed unworthy. This rhetoric aligns with the neoliberal rhetoric of personal responsibility, which is embedded in the very structure of the long-term care insurance scheme since its establishment in 1995: from the outset, only a portion of care costs has been covered. The need for care has therefore never been comprehensively regarded as a societal responsibility, just as high earners contribute disproportionately little to long-term care insurance relative to their income. As a result, 37 per cent of those in need of care are now once again reliant on care assistance, i.e. social security.

At this ‘turning point’, the planned legislative changes will evidently place a greater burden on both family carers and care workers in various ways, whilst further reducing society’s responsibility for the well-being of those in care relationships. This paper aims to outline how this is happening – without claiming to be exhaustive, but focusing on what the author considers to be the key points. First, we will look at the changes affecting family carers, followed by restrictions on the quality of care, the burdens placed on care workers, and changes to the funding of the Social Care Insurance (SPV).

Unpaid carers

People who care for those in need of care free of charge – whether as relatives, friends or in some other capacity – often go above and beyond what could reasonably be expected of them. Their situation is essentially the same as that of hospital staff during the COVID-19 pandemic: they receive a great deal of praise, yet are largely left to their own devices. The entire structure of long-term care insurance, with its partial cost coverage and the enshrined priority given to home care, is designed with this in mind. This limitation on public support is now being enshrined even more firmly through the addition of a separate clause on ‘personal responsibility of those in need of care’ to SGB XI. In its statement, ver.di suggests that this “creates the legal basis on which private provision, including in the form of private supplementary insurance, will be established as an expectation”.

Perhaps the media gave the most coverage to the extension of the so-called ‘service surcharges’ for stays in care homes. This increase in the subsidies provided by long-term care insurance towards the costs of accommodation in care homes was only introduced in 2022, with the aim of limiting the ever-increasing financial burden on care home residents and their relatives resulting from the personal contributions they are required to pay. This measure had been particularly sharply criticised by business associations, which demanded that the PNOG reverse this relief. The draft bill has delivered, at least in part: The supplements continue to increase, as before, with the length of stay in a care home, but the thresholds for new residents have been pushed back by 50 per cent. For example, the 50 per cent benefit supplement now applies after 36 months’ stay rather than after 24 months as was previously the case. This will also lead to an increase in the number of care home residents who are dependent on care support from local authorities. Their numbers are already at their highest since the introduction of long-term care insurance in 1995.

The decision to scrap the relief payment for care level 1 and to halve it for the first three months for care levels 2 and 3 is justified on the grounds of prioritising the funding of preventive measures. For those affected, this simply amounts to a withdrawal of financial resources.

The situation is more complicated when it comes to the reorganisation of entitlements that replace benefits in kind (outpatient care) or care allowance, as well as the flat-rate allowance for assistive devices. These are now organised into three budgets. The situation remains that far more is paid annually for outpatient care services than when care is provided by relatives and family members. The advocacy group for family carers, ‘wir pflegen’, and the association ‘Pflegende Angehörige’ emphasise two points in their joint statement: By including subsidies for assistive devices in the calculations, the funds available to care households for care levels 2 and 3 are reduced, contrary to statements from the Ministry of Health that this would provide relief. Furthermore, this reduction is “significantly greater for those receiving care allowance than for those receiving benefits in kind”. The cuts therefore particularly affect the funds on which family carers rely.

The burden on family carers is also reflected in small expenses, which can nevertheless be a matter of survival for people in a care situation. One example of this is that respite care – intended, for instance, to allow a family carer to take a short break – is now only to be funded once a situation of overwhelming strain has already arisen, rather than as a preventative measure. Furthermore, only professional replacement care is reimbursed; care provided by family members, for example, is not covered. It is particularly insidious that, as in the case of the scrapping of the respite care budget for Care Level 1, prevention is cited as the justification for cost-cutting, whilst in this instance prevention is ignored in order to reduce costs. It is clear what the priority is.

The fact that pension insurance contributions for family carers are to be reduced by around 30 per cent has been described by social scientist Heinz Rothgang as “the worst of the terrible provisions in this draft bill”. A number of factors come together here: the moral and very tangible devaluation of unpaid work; the disregard for people who reduce their paid work in favour of providing care at home and are punished for this not only with a direct drop in income but also with lower pensions. Furthermore, the burden is first placed on the SPV in the form of non-insurance-related payments such as pension contributions; this burden on the SPV is then used as a justification for reducing the pension contributions, which ought to be tax-funded.

Quality of care

It has already been mentioned here that families and households of people requiring care up to care level 3 are affected by de facto cuts to their budgets. It is important to bear in mind that it is precisely people in these low and medium care levels who are overwhelmingly cared for at home. Some of the deterioration in care – and is this the intention? – will remain hidden from view. For whilst care homes are subject to regular inspections and reviews in the event of complaints, and whilst the services provided by outpatient care services are recorded in detail, it remains entirely unclear what the impact will be if family carers are less able to afford to give up paid work. Even before now, they were left very much to their own devices to deal with the consequences of this choice. Now the pressure is being turned up once again.

However, it is not only the benefits paid to recipients of care allowance that are being reduced; the criteria for classification into care levels are also being tightened. This was already a key element in the federal-state working group’s proposals for achieving the cost-cutting target, although it was not explicitly referred to anywhere as a tightening of the criteria: one still had to read between the lines. This ‘adjustment to the assessment system for care needs’ is now the single measure from which the Ministry of Health expects the greatest savings. Here, too, it is worth looking at the ‘small print’ – the rationale behind this tightening: the actual care levels assigned are reportedly higher than those anticipated when the care level system was introduced; this has led to unexpected costs. Support for those in need of care is therefore explicitly not to be based on the experience gained since the system’s introduction regarding care needs. We, as carers and family carers, therefore also conclude that ‘the need for care is being artificially reduced in order to save costs’.

The expected cost savings resulting from capping price rises for services are roughly the same. In future, these may not rise by more than the average inflation rate over the last three years or gross wages – whichever is lower applies. This also affects employees, as it makes a general wage increase in this labour-intensive sector – or a reduction in labour intensity – vastly more difficult. This is because such increases can no longer be financed. It is generally recognised as the ‘Baumol cost effect’ that the costs of services – such as those in the care sector, where labour productivity can hardly increase – rise faster than the economic average. What is presented in the draft bill as cost containment is therefore an additional burden on employees.

Staff in care homes and care services

The draft bill focuses far less on the pay and working conditions of employees in elderly care than on family carers and care recipients. This is hardly surprising, given that these issues are not directly covered by the provisions of the Social Code (SGB). Nevertheless, there are some elements of the draft bill that have a direct impact on employees.

This primarily concerns the aforementioned tightening of the criteria for classification into a care level. As the number of working hours allocated to and reimbursed for care homes in care rate negotiations is based on the care levels of the residents, a general downward reclassification means: For care recipients who continue to have high care and support needs, but whose average care level has been lowered, fewer working hours will be reimbursed. This means either a lower standard of care or an increased workload for staff.

It has almost gone unnoticed that the obligation on care homes to pay collectively agreed wages or ‘locally customary’ wages is to be suspended until the end of 2030. The draft bill succinctly justifies this as “a contribution to reducing bureaucracy and a sign of a new culture of trust in the care sector”. According to ver.di, this simultaneously overturns the regulation introduced by law in 2015, which stipulates that collectively agreed wages cannot be rejected as uneconomical in care rate negotiations. It is difficult to imagine that this measure – which is also clearly intended to cut costs – will be reintroduced once it has been suspended. This, too, appears to be a trial balloon to gauge how those affected will react without protesting or leaving the care sector.

All those with statutory health insurance

This text is intended to help readers better understand who will be affected by the proposed legislation. However, the burden does not lie solely in restricting the support people need, but also in the funding arrangements. As part of our dossier, we have already highlighted a number of proposals aimed at improving the SPV’s revenue base by involving high earners and recipients of investment income more extensively. The decision not to pursue these avenues was already set out in the terms of reference that preceded this draft bill. Consequently, the draft bill proposes only a 0.1 per cent increase in the contribution rate for childless SPV policyholders. The contribution does not increase for employers. As a result, the equal sharing of long-term care insurance contributions between employers and employees – which was the case when the scheme was introduced – has now shifted to such an extent that childless employees pay 2.5 per cent of their gross wages, whilst employers pay 1.8 per cent.

The draft also provides for a slight increase in the contribution assessment ceiling in line with the statutory health insurance scheme (GKV), mandatory contributions to the supplementary pension scheme (SPV) for those in mini-jobs, and a restriction on the option to co-insure spouses and children free of charge. The draft does not address the major issues that could genuinely strengthen the care infrastructure: the assumption of non-insurance-related benefits by the federal and state governments; risk-sharing between the SPV and PPV (private long-term care insurance); and broadening the revenue base by removing the assessment ceiling and including income from profits.

Conclusion

This draft PNOG forms part of the attacks on social security and social rights at all levels. It goes without saying that it is important to fight back and try to prevent this further deterioration of conditions that are already unacceptable. However, we must not fall into the ‘Fridays for Future trap’ and hope that the government will reconsider if we simply explain the problems with the draft sufficiently and put forward well-thought-out counter-proposals. There is certainly no interest in this: the short deadline for submitting comments, which ver.di criticised, can be seen as a clear warning in this regard. The tightening of the rules on long-term care insurance, like those on healthcare, unemployment benefit, working time legislation, etc., can be seen as a test from above: how much will people put up with? It is now up to us to provide an answer to this.

An article by Matthias Neumann