peter gonda conservative institute of m.r. Štefánik, member of socia fdn., slovakia financing of...

PETER GONDAConservative Institute of M.R. Štefánik, Member of

Socia Fdn., SLOVAKIA

Financing of Long Term Care in Slovakia: Comparison with other

OECD Countries

Session 24-E. Development in Community-Based Care & Public Policy

IAHSA Conference „Creative Solutions for an Aging Society: Sharing the Wisdom“ (Norway, 27-29 June 2005)

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 2

1. Starting points

Long term care in Slovakia = virtual „system“

! System of LTC financing LTC for relevant clients (frail elderly and severe disabled people) does not exist, since:

• financing a care for any such client has absolutely different arrangements in social and health care system,

• even same or similar services in social and health sectors are financed differently = financing according to sectors and type of institutions

Slovakia (similarly as other new EU members) needs to built a system of LTC, including system of LTC financing.


1. Starting points

Economic situation = still limiting factor of financing social and health systems, because:

growing, but still insufficient performance of economic entities (GDP per capita of Slovakia / EU-15 = 50%)

limited public sources for LTC financing, accompanied with public finance deficit and excessive and distorted public expenditure (high demands for other expenditures) – „crowding out effect“ in public finance – Chart 1

• growing, but still low income of many individuals (distinctively LTC clients: old age and disability retired)


1. Starting points

Chart 1 Government expenditure by functions in Slovakia (2003)

Source: Author, Ministry of Finance of the SR

Other5,9%

General Public Service 11,9%

Defense4,3%

Security4,8%

Education10,4%Health

20,0%

Economy11,1%

Social Security31,6%


2. Current LTC Financing Ratio of LTC expenditure to GDP (according to first

estimations for Slovakia) = circa 0.9% (2002)*

Chart 2 LTC expenditure to GDP

0,15

0,90

1,60

2,20

1,29

1,40

0,97

2,88

0,0 1,0 2,0 3,0

HU

SK

UK

NOR

NED

CAN

AUT

AUS

% HDP

Source: Author, OECD (2003), Gibson (2003), Howe (2003)* Preliminary data


2. Current LTC Financing Structure of LTC expenditure (2002)*:

1. Relatively low expenditure on institutional care (circa 38% of total LTC spending) does not mean adequate domination home and community care

2. Expenditure on benefits (55% of total LTC expenditures) exceeds the costs on services (45%)

3. Expenditure in social care (circa 90%) considerable dominate to the health care expenditure (10%)

4. Public expenditure (92%) significantly exceeds the private sources (8%).


2. Current LTC Financing

Community–institutional mix

REASON of this paradox (1): structure of „non-institutional“ care

- home and community care = 7% of total expenditure

- benefits intended to home care 21% of total expenditure

- benefits no directly intended to care 34% of total expenditure

Home and community care, incl. cash benefits, to home care, in SR > home and community share in many OECD countries, but it is contrary in case „without all cash benefits“ (Chart 3)



Community–institutional mix

Chart 3 Institutional vs. home and community care

Notes: (1) Expenditure on home/community care (and total expenditure) include also benefits directly related to care, but no „compensation benefits“.

(2) Expenditure on home/community care (and total expend.) do not include cash benefits

Source: Author, OECD (2003)

62

84 85 7969

58

84

38

16 15 2131

42

16

0%

50%

100%

G AUS CAN NED SCOT SK (1) SK (2)

Institution. Home / Community


2. Current LTC Financing Public-private mix of financing

Chart 4 Comparing public and private expenditure (2002)

Source: Autor, OECD (2003), Howe (2003), Huber (2004)

0% 50% 100%

Public Private



Public-private mix of financing

Predomination of public source (about 92% in 2002) is result of:

! significant difference between financing LTC in health and social system, since:

- health system for LTC clients – free of charge access to services

- social system – means tested payments for services in facilities (partially for lodging, boarding, maintenance and attendance care)


2. Current LTC Financing Public-private mix: financing

Predomination of public source is also result of:

! difference between type of public source

- health care – from mandatory and public social/health insurance (financed by public and private Health Insurance Companies)

- social system – from taxes (financed by central and local governments)

Since social system is dominant, thus main sources of (public) LTC are taxes (general taxation)

– similar as in Norway and UK, but in contrary to „contributions system“ in Netherlands (Chart 5)



Chart 5 Public sources in selected countries Victoria

(AUS)

Austria Ontario (CAN)

Netherlands

Norway Scotland (UK)

SLOVAKIA

Taxation

x

x

x

x

x

x

(in social sector)

Public

Mandat.

soc./health insurance

x

(negligible

)

x x

(in health sector)

Source: Author, OECD (2003), Howe (2003)



Chart 6 Approaches to the Application of Eligibility


Victoria (AUS)


Netherlands

Norway Scotland

(UK) SLOVAKI

A

Institutional care UNIVERS.

UNIVER

UNIVER

UNIVERS

UNIVER

MEANS TESTED - social services

UNIVERS

Home and community social care

UNIVERS

UNIVER

MEANS TESTED

UNIVERS

UNIVER

MEANS TESTED

(not in Scotland)

UNIVERS.

ELIG

IBIL

ITY

Home and community - health care

UNIVERS

UNIVER

UNIVER

UNIVERS

UNIVER

UNIVERS

UNIVERS



Chart 7 Approaches to the Application of Co-payments


Victoria (AUS)


Netherlands

Norway Scotland

(UK) Slovakia

Institutional care MEANS TESTED

MEANS TESTED

MEANS TESTED

MEANS TESTED

MAX. 80%

of client´s income

MEANS TESTED

MEANS TESTED

((in social)

Home and community social care

MEANS TESTED

Addition. payments to cover real costs

MEANS TESTED - by province

MEANS TESTED (by income)

MEANS TESTED

MEANS TESTED

(in UK, not in

Scotland)

MEANS TESTED C

O-P

AY

ME

NT

S

Home and community - health care

MEANS TESTED

-

-

MEANS TESTED

-

x (apart

from NHS)

-



Chart 8 Comparisons of Approaches to the LTC Integration


Victoria (AUS)


Netherlands

Norway Scotland

(UK) SLOVA

KIA

Social vs. Health LTC Services INTEGR.

Separated by service types

INTEGR. within health s.

INTEGR. within health s.

INTEGR. on local level

(partially integrated in Scotland)c

-

LTC services providers

INTEGR. CONSISTENT PRINCIPLES

INTEGR. within health sector

INTEGR.

(partially

in Scotland)

-

With

in th

e LT

C s

yste

m

Target groups INTEGR. INTEGR. - INTEGR. within health s.

-

LTC

sys

tem

co

mpa

red

to

Hea

lth a

nd

Soci

al S

ecto

rs

LTC service vs. social and health

sectors

INDEPENDENT.

INDEPENDENT.

INTEGRATED

PART OF HEALTH S.

INTEGRATED on local level

INTEGRATED WITHIN SOCIAL S.

-


2. Current LTC FinancingChart 9 Comparison of containing the costs of LTC


COST RESTRICTIONS

Victoria (AUS)


Netherlands

Norway Scotland

(UK) SLOVAKIA

- on demand side

x (by asses. committee

x

(no indexation of LTC allowance)

x

-

x professional needs assessment

x (budget limitation - UK)

x (partially)

- on supply side

x (number of places, level resources. )

x (benefit reduction in certain client categories)

x

-

x

(partially, on the basis of resource availability on local level)

x

x (budget

limitations on local level and

hard budgetary constraints health ins.

Comp.)


3. Current problems and future risks General problems of current financing:

excessive share of public financing and low pressure on personal responsibility

absolutely different arrangements of LTC financing in social and health parts (sector-based financing)

financing does not correspond to character of expenses (nursing care, related services...) and to different responsibilities of payers

insufficient focusing on real needs clients, their families and relatives as part of home and community care.


3. Current problems and future risks General problems (continuation)

insufficient cost restrictions, e.g. on demand side followed from no strict „gate-keeper“ (missing clear link between assessment and financing)

huge portion of cash benefits, mainly allowances does not relating to care in comparison with lack of services

low weight of home and community services and their problematic financing by Local and Regional Self-governments

inefficient financing with additional costs and negative impacts on quality and efficient accessibility of services.


3. Current problems and future risks

Key problems of home and community care followed from:

• no strict responsibilities of local and regional self-governments for financing LTC

Example: contradictory responsibility in providing attendance care by Local Governments and cash Home Care Benefit (HCB) by Central Government

RESULT: rapid increasing of recipients of HCB, thereby increasing also costs = risks for financing in future


3. Current problems and future risks Pressures on the increase of LTC expenses due to:

• ageing of population – considerably increasing population over 65 after 2011 (Chart 10) and earlier significant rising of number citizens over 80 years (Chart 11),

• rising requirements of clients, their families and client organizations to acquire more services with higher quality,

• expected increase in difficult diseases, incl. chronic diseases various forms of handicaps...

• new, more expensive, technologies, devices...



Chart 10 Year on year increase of Slovak citizens over 65

Source: Infostat (2003), Author, Ministry of Health of SR

0

9000

18000

27000



Chart 11 Number of citizens over 80 years

120

170

220

2005 2010 2015 2020 2025

tis.

Source: : Infostat (2003), Author, Ministry of Health of the SR


4. Systemic change of LTC financing MAIN PRINCIPLES (in consistency with MAIN

OBJECTIVE - financial sustainability)

= universal entitlement of assessed individuals to care on standard level with strictly controlled expenses limited by the budget and with requirements of means tested co-payments

= multi-source financing (public-private mix) with same setting of conditions for all entities

= strict link between assessment and financing

= financing according to client and type of expenses

= priority financing of home and community-based care in comparison with financing of institutional care


4. Systemic change of LTC financing

PROPOSED FINANCING – conceptual framework

1. Public sources = financing LTC on a standard level for assessed clients

1.1 Taxes – intended for financing social part of LTC

- State Budget: cash benefits (also for aids and equipment)

- Local and Regional Budgets: financing social LTC services in home, community, and residential care

1.2 Public health insurance – intended for financing health part of LTC (mainly nursing care)


4. Systemic change of LTC financing2. Private sources

2.1 Client = financing of costs on related services (total cost of boarding and housing), but with regard his/her

financial possibilities

- responsibility of Local Government to finance part of payment for client, who is not able to pay full costs

2.2 Other (voluntary) – from clients, relatives, sponsors...

DESIRABLE RESULTS:

shifting weight of responsibility from Central Government to clients and Self-Governments

shifting weight of LTC expenditure from cash benefits to home and community services...

peter gonda conservative institute of m.r. Štefánik, member of socia fdn., slovakia financing of...

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