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Court Orders to Lower Nursing Insurance Tax Paid by Parents
By: Reinhard Müller
Frankfurter Algemeine Zeitung, April 3, 2001
In a decision which may have major implications for other social programs, the German government was ordered by the nation's highest court on Tuesday to lower premiums paid to the compulsory nursing insurance program by parents.
The Federal Constitutional Court accepted arguments brought by family groups and a father of 10 children that the program, as currently operated, failed to meet the German Constitution's requirement that the state ensure equality and promote the family.
It was therefore unconstitutional, the Karlsruhe-based court ruled, for people who are bringing up children to be required to pay the same premiums as insured persons without children.
Currently, a standard premium of 1.7 percent of gross income is deducted from all German pay packets to pay for a system, in place since 1995, which provides for long-term and intensive nursing care for elderly and sick people.
But the justices noted that future beneficiaries would be dependent on contributions from coming generations of adults, and ruled that childless people who made no contribution toward maintaining the number of active contributors were receiving an unfair financial advantage.
The justices said this "system-specific advantage" might have been tolerable in an earlier era, when relatively few adults remained childless. But by the mid-1990s, when the compulsory nursing insurance system was being drawn up by the then-Christian Democratic Union-led government, it should have been clear to officials that more adults were opting not to have children, thereby causing an excessive share of the burden to be shifted to parents and, ultimately, their children, the court said.
The court allowed the current premium formula to remain in place until the end of 2004. From then on, it said, parents must be charged lower premiums than childless contributors, although it did not say how much lower.
In specifying the length of the transitional period, the court said it had taken into account "the ruling's significance for other branches of social security" that lawmakers would have to review.
Among them may be the existing pension contribution system, and the CDU_Christian Social Union bloc was quick to call on the Social Democratic Party-led federal government to put its pension reform legislation on hold.
"After this decision, I see no possibility of the government maintaining its position in the mediation committee," Hesse's CDU premier, Roland Koch, said, referring to the body now trying to negotiate a compromise on pensions between the federal government and the states.
The government reacted with disappointment to the prospect of being forced to make major changes in the way that social programs are financed, but Labor Minister Walter Riester ruled out any changes to his pension package.
Health Minister Ulla Schmidt said the decision "didn't come as a surprise to me, although it was not what I would have wished."
But apart from the Social Democrats, all the major German political parties -- including the Social Democrats' junior coalition partner, Alliance 90_The Greens, as well as some charity groups -- said the court had made the right decision.
On the peripheral issue of people with private insurance for long-term nursing care, whose lawyers argued that they should not be forced to pay for a state system they are unlikely to ever use, the court said that "at present at least" it saw no breach of the constitution.
The reason: According to the court, these contributors are not dependent on premiums to be paid by the next generation and are choosing freely to obtain the extra insurance.
Private nursing insurance does continue to be taken out in Germany, but it is mostly by affluent individuals, the court said. While people have this choice if they are willing to pay for it, it does not free them from the obligation to support the state system.
The court did, however, see a breach of the constitution in the present practice of excluding individuals "in need of care" who have not paid into private nursing insurance or the compulsory program from directly benefiting, and instead being forced to turn to nursing provided by the welfare system.
The court ordered the government to find a way to include non-contributors -- welfare recipients, mostly -- in the larger nursing system, and gave it only until the end of this year to do so.
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