Merz Coalition Anniversary: Care Insolvency, Mittelstand Revolt

Germany's Medical Service of the Statutory Health Insurance Funds (MDK) released its annual report on Tuesday and warned that without federal loans the long-term care insurance fund will not be able to meet obligations -- one piece of an uncomfortable set of readings on the first anniversary of the SPD-CDU coalition under Chancellor Friedrich Merz, which took office on 6 May 2025.

Spending on care exceeded EUR 70 billion in 2025 to cover six million recipients -- double the figure from a decade ago -- and the MDK assessed three million applicants last year, granting almost 80 per cent a care grade. About one in five recipients are in stationary care, which costs the fund roughly EUR 20 billion a year and leaves residents with an average EUR 3,245-per-month co-payment in their first year. A DAK study projects 46.2 per cent of nursing-home residents in 2035 will need municipal welfare to bridge the gap. GKV-Spitzenverband chairman Oliver Blatt called for "financial honesty" from Berlin, demanded that the federal states take over Heim investment costs -- a transfer he said would cut resident co-pays by roughly EUR 500 a month -- and criticised the insurance fund's use to cover COVID-era benefits and family-caregiver pension contributions that should sit with the wider tax base. The May 12 Care Day fact sheet had already mapped six million current recipients rising to 6.8-7.6 million by 2055, with a Zweibruecken case study showing residents on EUR 3,233-per-month tariffs depleting savings into municipal welfare.

Leaders of the German Mittelstand published a notably blunt verdict on the same anniversary. Trust in Chancellor Merz, they said, has been broken. The Mittelstand is treated in Berlin as a sentiment barometer for German capitalism, and the unusually direct statement raises questions about political and social stability the coalition will struggle to set aside ahead of the autumn budget cycle.

Police data released the same day catalogued a step change in political violence. Politically motivated crimes against representatives and members of parties rose 40 per cent in 2025 to 5,140, against 3,690 in 2024, according to a government response to a parliamentary inquiry from the AfD. The AfD itself was the most-targeted party with 1,852 attacks, followed by the CDU with 1,171; the rise is partly attributed to the heated early-2025 election campaign. Interior officials told reporters the trend in physical assaults, threats and property damage continues into 2026.

The coalition's planned income-tax cut, due to take effect on 1 January 2027, hit its own funding wall in parliament. The relief targets workers earning between EUR 2,500 and EUR 3,000 gross per month, with annual savings of EUR 100-200 for low earners and up to EUR 400 for those in the middle bracket, according to DIW economist Stefan Bach. Revenue losses are estimated at EUR 20-30 billion a year, and the coalition partners remain divided over whether to finance the cut through borrowing, expenditure cuts, or upper-income surcharges. The cabinet says a financing package will be presented before the autumn budget.

Three further national stories anchored the landscape. Youth-protection regulator jugendschutz.net reported more than 15,000 online youth-protection violations in 2025, with the majority being child sexual abuse material; AI-generated chatbots and synthetic imagery are now a primary risk driver, the regulator said. A second report mapped the surge in care recipients to ADHD diagnoses among children, against Health Minister Nina Warken's warning of a EUR 7.5 billion long-term-care deficit by 2027. And in Goerlitz, in Saxony, a residential building collapsed on May 18 -- police suspect a gas explosion -- leaving three people missing as emergency services worked the rubble cautiously with gas detectors.