Peter Katzenstein (1987, pp. 168–92) portrayed the West German welfare state as a highly segmented polity governed by consensual politics and providing generous social benefits. In fact, at first sight, not much has changed during the past two decades: compulsory insurance for all wage earners (sozialversicherungspflichtige Beschäftigung) is still provided by separate funds for pensions, health, unemployment, occupational accidents and – since 1995 – nursing care for the elderly (Pflegeversicherung). The system is still highly fragmented, and is administered according to a person's region of residence as well as that person's occupation. Thus, several regional funds are in charge of pensions for blue-collar workers (Arbeiter), whereas pensions for white-collar employees (Angestellte) are funded on a national basis. Civil servants (Beamte) receive their old-age benefits from current state budgets, while other public-sector employees are covered by the national white-collar workers' insurance scheme, supplemented by a complementary insurance which puts them on a par with civil servants. There is an entirely separate pension scheme altogether for miners, and finally, self-employed persons (Selbstständige) are allowed to opt out of the system altogether, which they normally do, since private pension and medical providers normally offer better levels of cover at lower costs than the statutory schemes.

Health insurance too still rests on a multitude of local, regional and national institutions. Although employees have been free to choose their health insurance fund since 1996, which has inevitably weakened the linkage to occupational status, the federal government has introduced a portfolio balance system to support those funds with bad risks.