Financing Long-Term Care International Comparisons Academy Health

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					Financing Long-Term Care:
International Comparisons
        Academy Health 2004
       Annual Research Meeting
         San Diego June 6-8


   Manfred Huber, Patrick Hennessy
OECD, Directorate for Employment, Labour
           and Social Affairs



                                           1
     Scope and purpose of a study of 19
             OECD countries
   To analyse recent long-term care reforms and
    structural changes, including questions of
    – Sustainability of financing long-term care services
    – More responsive services and consumer choice
    – Better quality services
   To improve the quality of comparative data on
    long-term care expenditure, financing and
    recipients

                                                       2
    Sample of 19 OECD countries studied:

   Countries covering a heterogeneity of health
    and long-term care systems:

  Canada          Austria         Norway        Australia
   Mexico        Germany          Poland         Japan
United States     Hungary          Spain         Korea
                  Ireland         Sweden       New Zealand
                Luxembourg     Switzerland
                Netherlands   United Kingdom




                                                       3
                       Study methods

       Network of experts in member countries
       Review of the literature and of national
        assessments of aged care policies
       Data and policy questionnaire with guidelines
        and detailed data definitions
       Own estimates based on country submissions
        and national statistics and reports*
*All estimates in this presentation are preliminary and
may be subject to further revision
                                                          4
          Chart 1. Public and private expenditure on long-term care as per
                                  cent of GDP, 2000

3.5

  3
                                                         Private
                                                         Public
2.5
                      Median of 14
  2
                        OECD
1.5                    countries
  1

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                                                                             5
       Expenditure on Long-Term Care

   Varies from below 0.2 to around 3% of GDP –
    a wider dispersion than acute health
    spending
   Factors in variation include population
    ageing, the role of family care, scope of
    public coverage, and quality of services
   Expenditure is projected to grow by between
    1 and 1.5% of GDP by 2050 (OECD average)

                                             6
                                      Chart 2. Countries with older populations spend more on
                                                        long-term care, 2000

                                3.5
Expenditure on long-term care




                                 3                                                                                        Sweden
     as per cent of GDP




                                2.5
                                                                                                     Norway
                                 2

                                                          Netherlands                        Switzerland
                                1.5
                                                                            USA
                                                                                                             y = 0.77x - 1.46
                                                    Australia                       Germany
                                 1
                                                                   Canada                 UK                    R2 = 0.58
                                           New Zealand                                Japan
                                          Ireland                                       Spain
                                0.5
                                                       Hungary
                                 0
                                      2         2.5               3           3.5        4             4.5            5            5.5
                                                                Per cent of persons of 80 years and older
                                                                                                                           7
Expenditure mix differs across countries
      and is changing over time
   Expenditure on LTC institutions is stable or
    declining in most countries as % of total
    health spending
   Expenditure on home care services and
    allowances is increasing in several countries
    as % of total health spending
   This is in line with stated policy preferences


                                                 8
          Chart 3. Public expenditure on long-term care in institutions
                    and home care as per cent of GDP, 2000

   3



  2.5                        Home care (including services in
                             support of informal care)
                             Care in institutions (nursing homes
   2
                             and the like)

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                                                                                     9
      The public-private mix of financing

   Private cost-sharing and out-of-pocket expenditure
    play an important role, in particular for care in nursing
    homes..
   ..but the overall share of public financing of long-term
    care is larger in many countries than that of acute
    health care
   ..however, acute health co-payments are usually
    fairly low and widely diffused; long-term care private
    payments for the families concerned can be very high
    in many countries

                                                          10
                                          Chart 4. The public private mix of financing of health and long-term
                                                                           care, 2000

                                        100
                                                                                    Netherlands                     Sweden
                                        90          Public share of                               Canada          Japan
Per cent of public financing of total




                                                    financing long-                                     Ireland
                                        80         term care bigger                                           Germany
      long-term care spending




                                                                                                                             UK
                                                    than for health                           Australia
                                        70
                                                                                                                        NZL
                                        60                                 USA
                                                                                                                            Public share of
                                        50                                                                                  financing long-
                                                                                          Switzerland                     term care smaller
                                        40                                                                                  than for health

                                        30
                                                                  45                                            Spain

                                        20
                                              20        30            40       50            60            70           80           90            100
                                                             Per cent of public financing of total health spending
                                                                                                                                              11
    Universal public schemes for funding
       long-term care are spreading
   Number of countries with universal public schemes to
    cover long-term care (Austria, Germany, Japan,
    Luxembourg, Netherlands) is growing
   ..providing coverage to the whole population
   ..and reducing the need for social assistance and
    means-testing.
   Universal schemes are driving forces of growth of
    private provider markets in these countries.
   Some other countries provide universal coverage
    through public services (e.g., Norway, Sweden)
                                                     12
    Reforms of long-term care financing in
     countries with tax-funded services
   Reforms in Australia, New Zealand, Sweden, United
    Kingdom all aim at targeting more expensive services
    on those with most severe disabilities…
   ..and adjusting the level of personal contribution to
    achieve a “fairer” balance of public and private – but
    in Australia the personal share has gone up and in
    NZ and UK it has gone down..
   ..Australia, NZ, UK all accept means-testing to set the
    personal share – Sweden prefers to maintain
    universal scheme but with much tighter targeting

                                                        13
    Long-term care expenditure will rise in
               future decades
   The trend in disability in old age is down and
    continuing – with fewer disabled at each age over
    time…
   ..but we are living longer lives, so higher % of
    national expenditure on long-term care is highly
    likely..
   ..especially in view of the need to raise quality..
   ..this calls for collective risk sharing through a
    combination of public and private insurance – the
    public/private balance will differ between countries
                                                           14
       Chart 5. Growth of private voluntary
    complementary long-term care insurance in
              Germany, 1985-2001
 Number of contracts as percentage of population
   0.90


   0.80
             Time of public debate
   0.70      about introduction of social
   0.60
             long-term care insurance
   0.50


   0.40


   0.30
                                                   Introduction of
   0.20                                            social long-term care
   0.10
                                                   insurance
                       German reunification
   0.00
      1985     1987   1989   1991    1993   1995    1997   1999   2001


Source: PKV Verband (Association of private health insurance)
                                                                         15
      Strategies to make long-term care
          financing more sustainable
   Reinforce impact of lowering disability levels by…
   ..better prevention of, e.g., stroke, falls..
   ..better rehabilitation..
   ..more support to family carers and more intensive
    home care for most disabled..
   ..to maintain people longer at home and further
    shorten nursing home stays.




                                                         16
                   Conclusions

   No cost “explosion” in long-term care
    financing so far – but expenditure likely to rise
    over time
   Better protection against very high personal
    costs is needed in many countries
   A better mix of acute and long-term care
    services can help to make expenditure more
    effective and sustainable

                                                  17
International reporting on long-term care
          financing: tasks ahead
   Report on trends and policies in preparation for
    publication in 2004
   Methodological paper by end of 2004
   Statistical publication on long-term care financing in
    2006
   Long-term care to be integral aspect of OECD Health
    Data in future




                                                       18
         A guide to further information
   OECD (2004; forthcoming) Long-term care policies in
    OECD countries, Paris
   OECD (2004; forthcoming) Services for persons with
    dementia, Paris.
   Huber et al. (2004; forthcoming) Expenditure on long-
    term care, OECD Health Working Paper Series
   Lundsgaard (2004; forthcoming) Consumer direction
    and choice in long-term care for older persons,
    including payments for informal care, OECD Health
    Working Paper Series

               www.oecd.org/health
                                                      19