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EASPD CONFERENCE 2006EASPD CONFERENCE 2006
FINANCING STRATEGIES AND THEIR EFFECTS ON EQUITY, CHOICE,
EFFECTIVENESS AND SUSTAINABILITY
RAPHAEL WITTENBERG
8 JUNE 2006, GRAZ
ACKNOWEDGEMENTS
• STUDY FOR DEPARTMENT OF HEALTH– ADELINA COMAS-HERRERA– DEREK KING– JULIETTE MALLEY– LINDA PICKARD
• STUDY FOR JOSEPH ROWNTREE FOUNDATION– BLEDDYN DAVIES– CAROLINE GLENDINNING– ADELINA COMAS-HERRERA– LINDA PICKARD
LONG-TERM CARE
• INFORMAL (FAMILY) CARE AND FORMAL SERVICES
• SOCIAL CARE, HEALTH, HOUSING AND OTHER SERVICES
• HOME-BASED AND RESIDENTIAL CARE SERVICES
• CASH AS ALTERNATIVE TO CARE
FINANCING STRATEGIES COVER:
• THE WAY RESOURCES ARE RAISED– GENERAL TAXATION, – INSURANCE CONTRIBUTIONS, – USER PAYMENTS;
• THE WAYS RESOURCES ARE SPENT– ELIGIBILITY CRITERIA, – CASH PAYMENTS OR SERVICES.
KEY POINTS
• DIFFERENT COUNTRIES HAVE ADOPTED DIFFERENT APPROACHES TO FUNDING LONG-TERM CARE
• A KEY ISSUE IS THE BALANCE BETWEEN PRIVATE FUNDING AND PUBLIC FUNDING FROM TAXES OR SOCIAL INSURANCE.
• FINANCING ARRANGEMENTS CAN BE ASSESSED IN RESPECT OF THEIR LIKELY IMPACT ON EQUITY, CHOICE, EFFICIENCY AND SUSTAINABILITY.
RISING DEMAND: EXTERNAL DRIVERS OF DEMAND
• DEMOGRAPHY: RISING NUMBERS OF OLDER PEOPLE
• DISABILITY: UNCERTAIN TRENDS
• AVAILABILITY OF INFORMAL CARE: CONCERN ABOUT POSSIBLE DECLINE
• REAL UNIT COSTS OF CARE: RISING
OTHER DRIVERS OF DEMAND
• EXPECTATIONS OF FUTURE COHORTS OF OLDER AND YOUNGER DISABLED PEOPLE
• FUTURE PATTERNS OF CARE
• FUTURE FUNDING ARRANGEMENTS
PROJECTIONS OF LONG-TERM CARE FOR OLDER PEOPLE, UK
YEAR %GDP2002 1.5%2012 1.6%2022 1.9%2031 2.3%2041 2.7%2051 3.1%ON BASE CASE ASSUMPTIONS ABOUT TRENDS
IN DRIVERS OF DEMAND
AIMS OF THE WELFARE STATE
• INSURANCE AGAINST RISKS• REDISTRIBUTION TOWARD THOSE WITH
GREATER NEEDS• SMOOTHING RESOURCES OVER THE
LIFE CYCLE• STEPPING IN WHERE THE FAMILY FAILS
Source: Hills et al, 1997
ROLE OF INFORMAL CARE
• MOST CARE IS PROVIDED BY UNPAID FAMILY CARERS
• SOME COUNTRIES STRESS PRIMARY RESPONSIBILITY OF FAMILES
• OTHER COUNTRIES STRESS SOCIETAL RESPONSIBILITY
DIFFERENT COUNTRIES HAVE DIFFERENT FUNDING SYSTEMS
• SOCIAL INSURANCE –– GERMANY, NETHERLANDS
• TAXATION AND MEANS-TESTED CHARGES– USA, ENGLAND
• TAXATION– AUSTRIA, DENMARK, SCOTLAND
• TAXATION AND SOCIAL INSURANCE – JAPAN
BALANCE OF FUNDING
A KEY ISSUE IS THE BALANCE BETWEEN – PRIVATE FUNDING, FROM PEOPLE’S OWN
RESOURCES OR PRIVATE INSURANCE, AND– PUBLIC FUNDING, FROM TAXES OR SOCIAL
INSURANCE.
MODELS OF FINANCING
• PRIVATE SAVINGS
• PRIVATE INSURANCE
• PRIVATE INSURANCE WITH PUBLIC SECTOR SUPPORT
• TAX-BASED PUBLIC SECTOR SCHEME
• SOCIAL INSURANCE
CRITERIA FOR EVALUATION
• EQUITY
• EFFICIENCY AND EFFECTIVENESS
• INDEPENDENCE, DIGNITY, CHOICE
• AFFORDABILITY, SUSTAINABILITY
PRIVATE INSURANCE
• ADVERSE SELECTION
• RISK UNCERTAIN
• EXPENSE
• INADEQUATE INFORMATION
• LOW UPTAKE IN MOST COUNTRIES
TAX-BASED PUBLIC FUNDING SYSTEM
• PROGRESSIVE, DEPENDING ON TAX SYSTEM
• WIDE RISK POOLING, DEPENDING ON MEANS TEST FOR USER CHARGES
• HYPOTHECATION UNLIKELY
NATIONAL ELIGIBILITY CRITERIA OR INDIVIDUAL NEEDS ASSESSMENTS
• NATIONAL ELIGIBILITY CRITERIA– CONFER ENTITLEMENT TO CARE– MAY CREATE DIAGNOSTIC INEQUALITIES– MAY DISADVANTAGE THOSE ON THE MARGINS
• INDIVIDUAL NEEDS ASSESSMENTS– MAY NOT CONFER ENTITLEMENT TO CARE– MAY LEAD TO LOCAL VARIATIONS IN ACCESS– MAY BE MORE FLEXIBLE IN MATCHING
RESOURCES TO NEEDS
CASH OR SERVICES: CONSUMER DIRECTED CARE
• CASH BENEFITS– OFFER MORE USER CHOICE IF SUPPLY AND
INFORMATION AVAILABLE
– MAY CONTAIN EXPENDITURE
• SERVICES IN KIND– MAY REDUCE PRESSURES ON INFORMAL CARERS
• INDIVIDUAL BUDGETS– INTERMEDIATE APPROACH – ENGLISH PILOTS
INFORMAL CARE
• MOST CARE IS PROVIDED BY UNPAID FAMILY CARERS
• CASH BENEFITS PROVIDE AN INCENTIVE TOWARD INFORMAL CARE
• IMPORTANCE OF SUPPORT FOR CARERS• TENSION BETWEEN PROMOTING
INFORMAL CARE AND PROMOTING LABOUR MARKET PARTICIPATION
USER CHARGES
• USER CHARGES MAY CONTAIN DEMAND OR RAISE REVENUE
• DIFFERENT RULES TEND TO BE APPLIED FOR DIFFERENT SERVICES
• CHARGES MAY TAKE VARIOUS FORMS:– WEALTH TEST - CAPITAL LIMIT– DISPOSABLE INCOME CONTRIBUTED– COPAYMENTS– TOPPING UP OF PUBLIC FUNDING
WANLESS SOCIAL CARE REVIEW
WANLESS REVIEW EXAMINE THREE APPROACHES IN DETAIL:
• MEANS-TESTED SYSTEM (POSSIBLY WITH LIMITED LIABILITY)
• FREE PERSONAL CARE• PARTNERSHIP, UNDER WHICH USERS
MAKE 50% COPAYMENTS FOR SERVICES ABOVE A FREE MINIMUM
FREE PERSONAL CARE
• WIDER POOLING OF RISKS THAN MEANS-TESTED SYSTEM
• PROMOTES DIGNITY• POTENTIALLY COSTLY, DEPENDING ON
IMPACT ON DEMAND• BENEFITS WEALTHIER PEOPLE AND
THEIR HEIRS RELATIVE TO MEANS-TESTED SYSTEM
PARTNERSHIP
• WIDER POOLING OF RISKS THAN MEANS-TESTED SYSTEM
• PROMOTES CHOICE• LESS COSTLY THAN FREE PERSONAL
CARE, POTENTIALLY MORE AFFORDABLE
• BENEFITS WEALTHIER PEOPLE BUT LESS THAN FREE PERSONAL CARE