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ENERGY

Good news for German households as energy prices set to drop

Residents in Germany are set to benefit with energy suppliers announcing price reductions for electricity and gas for December and January.

Good news for German households as energy prices set to drop
A photo shows a digital heating thermostat of a gas heating in a flat in Dortmund, western Germany, on October 4, 2022. (Photo by Ina FASSBENDER / AFP)

Millions of households are expected to benefit, bringing a bit of financial relief for many who have experienced increasing energy costs in recent years.

According to a recent report by Verivox, Germany’s largest independent consumer portal for energy, a number of electricity and gas providers in Germany will be cutting prices in the next two months, which will impact energy bills for some residential consumers.

“The turn of the year is regularly a time when energy suppliers adjust their electricity or gas prices,” explained a spokesperson for the municipal utilities association VKU (Verband kommunaler Unternehmen) in Berlin. “The current price reductions are mainly based on the lower purchase prices compared to last autumn and winter.”

Until 2022, more than half of Germany’s gas supply came from Russia. Most of it came through the Nord Stream pipeline, which was hit by sabotage in September last year.

Germany has since launched an ambitious strategy to reduce energy demands and source gas from other suppliers, such as Norway, the US and Saudi Arabia. The plan seems to have worked, with Germany’s gas reserves currently full.

With gas tanks full, and inflation down from last year, many energy companies have been able to secure their supplies at cheaper rates, allowing them to lower their prices for customers.

 
Electricity price cuts averaging 12 percent

According to Verivox, 83 electricity suppliers have announced electricity price reductions so far, averaging 12 percent. However, five suppliers have also announced minor increases. 

Verivox expects this to result in a future average electricity price of about 46 cents per kilowatt hour. In comparison, the electricity price cap, which the German government wants to remain in effect until the end of April, caps the price at 40 cents. 

There are 4.7 million households in areas affected by electricity price cuts, with 1.1 million households expected to pay an average of 12 percent less for electricity, and 900,000 households affected by price increases. 

Almost 100 basic gas suppliers to reduce prices

Natural gas price reductions have also been announced for December and January, by 15 percent on average. According to Verivox, 9.5 million households may be affected. About half of these homes have gas heating systems.

Verivox estimates the future average gas price to be 14 cents per kilowatt hour. This price is also above the current price cap, which is set at 12 cents.

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HEALTH

How much more residents in Germany might have to pay for health insurance

People in Germany saw an increase in health insurance costs at the start of the year. It's now expected that they will be hiked up again next year.

How much more residents in Germany might have to pay for health insurance

Health insurance organisations are warning that costs will be hiked up again soon due to concerns over funding. 

Doris Pfeiffer, CEO of the National Association of Statutory Health Insurance Funds (GKV-Spitzenverband), told Germany’s Tagesschau that insurance funds are expecting a billion-euro deficit.

She said it was a tough year “because we don’t have particularly good prospects”.

For people paying statutory health insurance, things could become more expensive next year. Around 90 percent of people in Germany are covered by statutory health insurance.

The contribution rate is fixed by law and stands at 14.6 percent. The additional contribution that the health insurance funds set for their members was raised to 1.7 at the start of this year. 

The latest increase gave statutory insurance funds the ability to charge up to 1.7 percent on top of the standard 14.6 precent contrinution, though not all insurance funds chose to do so.

The costs are split between the employer and employee, so workers in Germany would pay half of any increase. 

READ ALSO: Reader question: How can I change my German health insurance provider?

How much could additional costs rise next year?

Due to the funding issues, health insurers expect an increase of up to 0.6 percentage points to the additional contribution threshold. What this would mean for the insured depends on a few variables such as their income and their insurer.

Someone earning €2,000 gross per month, for example, would have to pay €6 extra per month if their insurer opted to increase additional contributions by this amount. Meanwhile, a gross income of €4,000 would mean €12 extra per month. The employer’s share would be added to this. 

health insurance cards

Many health insurance cards in Germany double as a European Health Insurance Card (EHIC), meaning that they can be used across Europe. Photo: picture alliance/dpa | Jens Kalaene

“That may not sound like much at first glance,” said Pfeiffer. “But there are people who earn very little for whom this is a lot – supermarket cashiers, lorry drivers.”

It comes following a rise in fees at the start of the year. From the start of 2024, additional contributions for statutory health insurance rose by around 0.1 percent in Germany.

Why are costs increasing?

The German healthcare system is one of the most expensive in the world.

As German society ages more, costs continue to rise – and the Covid pandemic didn’t help matters. The National Association of Statutory Health Insurance Funds estimates that this year alone it will cost around €314 billion to provide care for everyone who is insured. 

The money is mainly spent on hospitalisation costs and medical treatment.

READ ALSO: Why long-term care insurance fees are likely to rise in Germany next year

Health Minister Karl Lauterbach (SPD) has so far not presented any concrete proposals on how he intends to relieve the burden on health insurance funds in future.

Instead, the system is likely to face further expenditure. Lauterbach’s hospital reform is expected to drive up costs, while proposals to pay GPs more in order to combat the shortage of doctors would also push up expenses. 

READ ALSO: German ministers greenlight plan to improve healthcare at GPs

Pfeiffer called for a plan to tackle the rising costs.

“We now finally need an approach that puts this healthcare system on a new footing,” she said.

In the coalition government’s initial agreement back in 2021, the parties vowed to support health insurance funds with more tax revenue.

But as difficult budget negotiations take place, it doesn’t look like this will happen. 

This is causing friction among the coalition made up of the Social Democrats (SPD), Greens and Free Democrats (FDP). 

Green budget politician Paula Piechotta, for instance, is unhappy about this.

The opposition CDU/CSU also taken the opportunity to swipe at the government.

“This is not acceptable,” said CDU health politician Sepp Müller. “The tense situation in the social security system cannot continue to be ignored.”

However, it should be noted that there was no plan to help provide more money to statutory health insurance under the previous Health Ministry headed by the CDU’s Jens Spahn. 

When the SPD’s Lauterbach took over in 2021, there was already a funding gap of billions of euros. 

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