peter gonda conservative institute of m.r. Štefánik; socia fdn. slovakia financing of long term...

PETER GONDAConservative Institute of M.R. Štefánik; Socia Fdn.

SLOVAKIA

Financing of Long Term Care in Slovakia: Comparison with other

OECD Countries

„Development in Community-Based Care and 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, not clients and type of expenditure)

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 (Chart 1)

limited public sources for LTC financing, accompanied with public finance deficit and excessive and distorted public expenditure (high demands for other expenditures) – „crowding out in public expenditure“ – Chart 2

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


1. Economic and political framework

Chart 1 Level of GDP per capita Slovakia to EU-15 and real change of GDP Slovakia

0

25

50

75

100

1995 1996 1997 1998 1999 2000 2001 2002 2003

GD

P S

lov

ak

ia /

EU

-15

(%

)

0

2

4

6

8

Re

al

ec

on

om

ic g

row

th (

%)

GDP Slov akia / EU-15 (%) Real change of GDP Slov . (%)

Source: Eurostat, Statistical Office of the SR


1. Starting points

Chart 2 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%


1. Starting points

Political situation: health and social reforms inter alia have lead to:

• improvement in conditions for multi-source financing• more transparent financial flows• higher and more clear responsibility of stakeholders, but also• stronger pressure on people from LTC target groups

Commitment of the Slovak Government to create new (integrated) LTC system, but its implementation was postponed to 2006 = risk of non-acceptance by new government


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

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

Chart 3 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. Low expenditure on institutional care as % of total LTC spending (circa 38%) does not mean adequate domination home and community care

2. Expenditure on benefits (55% of total expenditure) 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 (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 expend.

- benefits no 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 but it is contrary in case „without all cash benefits“ (Chart 4)



Community – institutional mix

Chart 4 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

Chart 5 Comparing public and private expenditure (2002)

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

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 relevant clients in health care and social system, since:

- health care – almost „free of charge“ access to services (with marginal user fees for dental care, related services, issuing prescription, drugs...

- 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 taxes are 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 6 Comparison of 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)



Public-private mix in a social and health systemsChart 7 Example of structure of financing social and health facilities

Retirement Home

State

Budget

69%

Out of

pocket

23%

Local

Budget

s

8%

Geriatric departments

Other22,5%

Out of pocke

t0,1%

Social Health Insurance

77,4%

S OCIAL

HEALTH

Source: MoH SR, MLSaF SR, author



Chart 7

Approaches to the Application of Eligibility


Victoria (AUS) Austria Ontario (CAN) Netherlands Norway

Scotland (UK) SLOVAKIA

Institutional care UNIVERSAL

UNIVERSAL

UNIVERSAL

UNIVERSAL UNIVERSAL

MEANS TESTED

(by property)

- social services

UNIVERSAL

Home and community social care

UNIVERSAL

UNIVERSAL

MEANS TESTED BY PROVINCE

UNIVERSAL UNIVERSAL MEANS TESTED (not in Scotland)

UNIVERSAL

ELGI

BILI

TY

Home and community - health care

UNIVERSAL

UNIVERSAL

UNIVERSAL

UNIVERSAL UNIVERSAL UNIVERSAL UNIVERSAL



Chart 9 Approaches to the Application of Co-payments


Victoria (AUS) Austria Ontario (CAN) Netherlands Norway Scotland

(UK) SLOVAKIA

Institutional care

MEANS TESTED (income and assets)

MEANS TESTED Additional payments to cover real costs

MEANS TESTED

(over income limit)

- by province

MEANS TESTED (income) - for food and housing (nominal amounts)

MAX. 80% of client´s income

MEANS TESTED ( assets ) - social only (personal care)

MEANS TESTED (income

(in social facilities only)

Home and community social care

MEANS TESTED (income and paying capability)

Additional payments to cover real costs

MEANS TESTED (income) - by province

MEANS TESTED

(by income)

MEANS TESTED (so-called optimum payments)

MEANS TESTED By local administration

(not in Scotland)

MEANS TESTED (by income) C

O-P

AY

ME

NT

S

Home and community - health care

MEANS TESTED (income and paying capability)

-

-

MEANS TESTED (by income) nominal amounts

-

x (apart from

NHS)

-



Chart 10 Comparisons of Approaches to the LTC Integration

Victoria (AUS)

Austria Ontario (CAN) Netherlands Norway Scotland

(UK) SLOVAKIA

Social vs. Health LTC Services INTEGRATED

Separated by service types a

INTEGRATED within health sector

INTEGRATED within health sector (AWBZ)

INTEGRATED on local level

- separated (partially integrated in Scotland)c

- (diverse)d

LTC services providers INTEGRATED CONSISTENT

PRINCIPLES INTEGRATED within health sector

INTEGRATED

-

(partially in Scotland)c

- (diverse)

With

in th

e LT

C s

yste

m

Target groups INTEGRATED INTEGRATED -

INTEGRATED within health sector

-

LTC

sys

tem

com

pare

d to

Hea

lth a

nd S

ocia

l Se

ctor

s

LTC service vs. social and health sectors

INDEPENDENT.

INDEPENDENT. INTEGRATED

PART OF HEALTH SECTOR (AWBZ)

INTEGRATED on local level

INTEGRATED WITHIN SOCIAL SECTOR

-



2. Current LTC Financing Chart 11 Comparison of containing the costs of LTC

COST RESTRICTIONS Victoria (AUS)

Austria Ontario (CAN)

Netherlands Norway Scotland (UK) SLOVAKIA

- on demand side

x (by asses. committee

ACAT)

x

(stoppage of hospitalisation benefit disbursement)

x

-

x

(professional needs assessment)

x (budget limitation - UK)

x (e.g. by asses. committee)

- on supply side

x (number of places, level

resources, etc. restricted)

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. Companies)



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

excessive share of public financing and low pressure on personal responsibility (particularly marginal private financing in health part of LTC)

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

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 (but income support) in comparison with lack of services

low weight of home and community services and their problematic financing by Local and Regional Self-governments (with no clear responsibilities)

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



Community–institutional mix

Key problems of home and community care followed from:

• no strict responsibilities of local and regional self-governments for financing LTC (splited between them each other and between them and central government), e.g.

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 12) and earlier significant rising of number citizens over 80 years (Chart 13),

• 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 12 Year on year increase of Slovak citizens over 65 years

Source: Infostat (2003), Author, MoH SR

0

9000

18000

27000



Chart 13 Number of Slovak citizens over 80 years

120

170

220

2005 2010 2015 2020 2025

tis.

Source: Infostat (2002), Author, MoH SR


4. Systemic change of LTC financing

MAIN OBJECTIVE

= to create financially sustainable system, which will support overall goal of new integrated LTC system „improving quality, accessibility and effectiveness LTC for persons with functional disabilities and thereby improving quality of their life and quality of life their famililies and relatives“.


4. Systemic change of LTC financing KEY PRINCIPLES

= 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 (real need of) client and type of expenses

= preference 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 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; socia fdn. slovakia financing of long term...

Documents

system of ltc financing

financing of longterm

ltc clients

type of expenditure

community care

health care system

institutional care

multisource financing