Financing high medical risks

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1 Financing high medical risks

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3 Financing high medical risks Discussions, developments, problems and solutions on the coverage of the risk of long-term care in Norway, Germany and the Netherlands since 1945 in European perspective K.P. Companje (ed.) Amsterdam University Press

4 Volume 5 in the HiZ-series History of Healthcare Insurance Cover design: Coördesign, Leiden Layout: Crius Group, Hulshout Amsterdam University Press English-language titles are distributed in the US and Canada by the University of Chicago Press. ISBN e-isbn (pdf) NUR 686/695 K.-P. Companje / Amsterdam University Press, Amsterdam 2014 All rights reserved. Without limiting the rights under copyright reserved above, no part of this book may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise) without the written permission of both the copyright owners and the authors of the book.

5 Acknowledgements This book is the final part of the project Financing high medical risks in long term and international perspective. This project was initiated in 2007 by the Foundation for the History of Health Insurance (Stichting HiZ) and the Centre for the History for Health Insurance. The project was made possible by the generous subsidies of the Dutch Ministry of Health, Welfare and Sport, the Innovatiefonds Zorgverzekeraars, Zorgverzekeraars Nederland and Achmea. The first part of the project was the symposium on Insuring against high medical risks from an international historical and social political perspective which took place in Maastricht on 26 October The symposium was organised in cooperation with our esteemed colleagues from the Department of Health, Ethics and Society of Maastricht University. Many people and organizations deserve our greateful thanks for their valuable help, constructive suggestions and assistance during the planning and development of this research work. We would like to express our great appreciation to every author who contributed to this book. The book is based on their presentations and the debates that ensued as a result of the symposium. Without the fruitful discussions, helpful comments and valuable support this book would not have been possible. October 2013 E. Boer, Chairman of the Stichting HiZ, W. Annard, Secretary

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7 Content Acknowledgements 5 1 Introduction 11 1 Reforming welfare states and the sustainability of longterm care in the EU 11 2 Organising and financing long-term care: the long-term perspective 13 3 Long-term care as a catch-all term? 17 4 The contents of this book: the EU, case studies and a multi-pillar approach 20 2 Europe and healthcare including long-term care, who cares? 23 Jos G.H. Draijer 1 Introduction 23 2 EU Treaty provisions 25 3 Jurisprudence of the European Court of Justice 30 4 Economic government of the EU 37 5 Coordination of healthcare including long-term care at EU level 39 6 Conclusive summary 40 3 Sustainable Care? Norwegian long-term care in a European perspective 43 Svein O. Daatland 1 Introduction 43 2 Welfare state models 45 3 The Scandinavian model 48 4 Long-term care models 49 5 Recent trends and controversies 55 6 The sustainability issue 58 References 60 4 Fiscal and social policy: financing long-term care in Germany 63 Ralf Götze and Heinz Rothgang 1 Introduction 63 2 Institutions, actors, and interests in German LTC Policy 66

8 3 The stony road to long-term care insurance in Germany An uncontested task of the family (until 1974) Recognizing the long-term care problem ( ) Setting the political agenda ( ) Finding consensus in the decisive phase ( ) Features of the LTCI Act 81 4 Effects of the LTCI Act 86 5 Recent developments and unresolved issues 91 6 Conclusion 96 References 98 5 Financing high medical risks in the Netherlands: healthcare, social insurance and political compromises 101 Karel-Peter Companje 1 Introduction More than a century of cover for high medical risks: invalidity and old-age insurance in Germany and the Netherlands Invalidity insurance and medical care Problems with insuring high medical risks around From problem to solution: the Algemene Wet Zware Medische Risico s On healthcare, insurance and the AW(B)Z Foreign provisions for high medical risks Coherence between social insurance legislation and the AWZ The AWZ debate: hospital care as an insurable problem The AWBZ, Veldkamp, and insuring healthcare and security The AWBZ in 1968: finance, administration, provisions and recognition The AWBZ, structure, cost control and social insurance, The AWBZ as an instrument for system reform The AWBZ the binding agent in the reform of the healthcare system? The AWBZ after the Simons Plan: demand-driven care in the first compartment The AWBZ and personalised care: elderly care and home care The AWBZ and personalised care: administrative organisation, allocation and waiting lists 157

9 15 Cash on the nail is not enough to solve the problem of waiting lists Modernising the AWBZ: the relationship between forms of healthcare and information problems AWBZ and WMO: separating insured provisions and facilities provided The AWBZ and the healthcare system: financial manageability and spiralling costs The AWBZ and the healthcare system the end of budgets? Conclusions Towards multi-pillar financing of Dutch long-term care for the elderly? 177 Lou Spoor 1 Introduction Rising healthcare expenditure: what is the problem? Purpose of this section The Dutch healthcare system: an overview Dutch healthcare expenditure: long term estimates More expensive care: are we willing and able to pay for it? Risk of crowding-out Conclusion: sustainable healthcare expenditure is a real challenge Healthcare funding and solidarity: where does the Netherlands stand? Purpose of this section Healthcare expenditure and personal contributions, international The Dutch have a strong sense of solidarity Lifetime healthcare expenditure Lifetime dynamics of health, income and capital Conclusions Saving for healthcare: for what kind of care, why and how? Purpose of this section Saving for healthcare: what kind of care? Saving for healthcare: why? Capital formation for healthcare: how? Policy options Saving: starting at what age? Conclusions 207

10 5 Saving: via the pension or in the health insurance domain? Purpose of this section Differences between solidarity-based pension saving for care and LTC insurance Healthcare saving in the second pension pillar: some observations Capital-funded LTC insurance LTC insurance policies: examples from practice LTC insurance in the Netherlands? Practical and political obstacles A fund for LTC? Conclusion: weighing the options Care, pensions and housing Purpose of this section The Dutch housing market Care and housing: the rental sector Care and housing: as pension in kind? Using home equity to purchase care: not yet a success story Nursing home loan: an option for the Netherlands? Conclusion regarding care and housing What next? Conclusions, expectations and recommendations Conclusions drawn from the foregoing Policy expectations 239 References Conclusions Long-term care at the interface of care and the social domain The viability of long-term care Final remarks 251 List of contributors 255 List of figures, tables and boxes 257

11 1 Introduction 1 Reforming welfare states and the sustainability of longterm care in the EU Since , the post-war welfare states of Europe have been shif ting from covering the risks of life with stable family structures to new scenarios. The period of full employment and sustained economic growth is over. The combined effect of ageing, changing family patterns and an increasing female labour force, globalization and the political and economic integration within Europe has led to an activating role for the welfare state consumer 1 : social (self-)promotion instead of social protection. 2 Restructuring the welfare state by retrenchment meant not only ruthless cutbacks in social security, but also the reform of social politics. The sustainability of services and the financing of care in convalescent homes and residential homes for the elderly, home-help schemes, care for the physically handicapped and mental healthcare is one of the great social and medical problems of the modern welfare states. 3 These forms of care are considered as new social risks. 4 They are individually unaffordable because 1 P. Taylor-Gooby, Welfare state reform and new social risks (Kent 2005) 8-9. E. de Gier, Overpeinzingen bij een activerende participatiemaatschappij. Inaugurele rede door prof.dr E. de Gier (Nijmegen 2007) A.C. Hemerijck, Gebaande en ongebaande paden in sociaal Europa. Over de institutionele samenhang van de nationale verzorgingsstaat en het proces van Europese integratie (Rotterdam 2007) s.p. 3 A. Hemerijck, De andere verzorgingsstaat. Naar een sociale investeringsagenda, in: P. de Beer, J. Bussemaker, P.Kalma, Keuzen in de sociale zekerheid (Amsterdam 2005) 56, 57, 63, 66. OECD, Help wanted? Providing and paying for long-term care (Paris 2011) E. Pavolini, C. Ranci, Restructuring the welfare state: reforms in long-term care in Western European countries, in: Journal of European Social Policy 18 (2008) 236, European Commission, Long-term care in the European Union (Brussels 2007) 4, 5, H. Rothgang, Theorie und Empirie der Pflegeversicherung. Beiträge zur Sozial und Verteilungspolitik 7 (Berlin 2009) 5-6. C. Rodriguez-Garcia, A new syndrome challenging welfare states? New social risks, welfare modernisation and territorial reorganisation. The case of social services for the elderly in France. (Paper for the VII Congresso Español de ciencia politicay de la administracíon democracia y bien gobierno, s.a.) 167. N. Morel, Providing coverage against new social risks in Bismarckian welfare states: the case of long-term care (paper for the ESPAnet inaugural conference Changing European societies the role for social policy, Copenhagen 2003) 3, 5, 26. R. van der Veen, De toekomst van langdurige zorg. Achtergrondstudie ten behoeve van het College van Zorgverzekeringen (Rotterdam 2011) 12,

12 12 Introduction of the length of care and the costs involved, or are called long-term care for short. All member states of the European Union are faced with the same problems and challenges relating to the accessibility, quality and sustainability of these forms of care. 5 Demographic and non-demographic factors, leading to ageing costs, mean higher costs. 6 The growing prevalence of chronic illness, on the other hand, is resulting in an increasing demand for services, while government budget deficits, staff shortages and changing family structures are threats to adequate and sustainable care. Soaring costs, the lack of functional descriptions for healthcare, complex financing structures and the distribution of authority between different ministries and regional and local authorities mean that the countries view these social risks as problematic. 7 According to the principle of subsidiarity in the European Union, the organisation, implementation and financing of these forms of care belong to the domains of health and social security of each member State. 8 The ways in which these forms of care are organised and financed depend on the economic, cultural, social and historical background of each country. 9 The EU promotes coordination of care to support solutions for these problems at the national level. Various solutions are sought, such as 10 : 5 B. Przywara, N.D. Guardia, E. Sail, Future long-term care needs and public expenditure in the EU member states, in: CESifo DICE Report 2/2010 (Munchen 2010) 1-3. European Commission, Sustainability report European Economy 9(2009) (Brussels 2009) European Commission, 2009 Ageing report. Economic and budgetary projections for the EU-27 member states European Economy 2(2009) (Brussels 2009) 19, , R. Busse. E. van Ginneken, C. Normand, Re-examining the cost pressures of health systems, in: J. Figueras, M. Mckee, Health systems, wealth and societal well-being. Assessing the case for investing in health systems (Maidenhead 2012) C. Ranci, E. Pavolini, New trends of long-term care policy in Western Europe: towards a social care market? (paper; Milan 2007) European Commission, Long-term care in the European Union (Brussels 2007) 4. 9 A.A. de Roo, L. Chambaud, B.J. Güntert, Long-term care in social health insurance systems, in: Saltman, Busse, Figueiras, R.B. Saltman, R. Busse, J. Figueras, Social health insurance in Western Europe (New York 2004) 282. F. Colombo, Typology of public coverage or long-term care in OECD-countries, in: J.C. Font, C. Courbage (eds.), Financing long-term care in Europe. Institutions, markets and models (Basingstoke 2012) (March 28 th 2011). W.J.D. de Graaf, Achtergronden voor internationale vergelijking van langdurige zorg (Zoetermeer 2005) Rothgang, Theorie und Empirie der Pflegeversicherung Haut conseil de la santé publique, La prise en charge et la protection sociale des persones atteintes des maladie chronique (Paris 2009) 31,

13 Introduction 13 stimulating the price/quality ratio by introducing regulated competition between care providers and free choice of provider for the care client 11 more efficient and better-quality care by improved coordination or creating a continuum of care 12 substitution of expensive institutional care by less expensive forms of formal and informal home care 13 introducing private insurance complementary to compulsory public insurance or public financing schemes as in France 14 using home-equity release, pensions and savings as private insurance for the risks associated with ageing 15 The political and social debate about resolving contemporary and future problems with these new social risks aims at the evolutionary development of existing institutional and financial frameworks. It is important to gain insight into how the financial basis and the structure of insurance for these risks has evolved in order to fully understand the current problems. 2 Organising and financing long-term care: the long-term perspective There are many EU and non-eu reports and studies about organising and financing these social risks or long-term care in the member states, but EU-wide coordination requires comparative knowledge of how the national 11 Rothgang, Theorie und Empirie der Pflegeversicherung, , Ranci, Pavolini, New trends of long-term care policy in Western Europe, European Commission, Long-term care in the European Union, C. Ungerson, Commodified care work in European labour markets, in: European societies 5 (2003) Ranci, Pavolini, New trends of long-term care policy in Western Europe, 6. Morel, From subsidiarity to free choice. Child- and elder-care policy reforms in France, Belgium, Germany and the Netherlands, in: Social policy and administration 41 (2007) D.G. Stevenson, M.A. Cohen, E.J. Tell, The complementarity of public and private long-term care coverage, in: Health Affaires 29 (2010) D. Kessler, Confronting the challenge of long-term in Europe, CESifo DICE Report 2/2010 (Munich 2010), H. Gleckman, Long-term financing reform: lessons from the US and abroad (New York 2010) 3, 5, America s Health Insurance Plans, Guide to long-term care insurance (Washington 2011) 5. J. Costa-Font, C. Courbage, Financing long-term care in Europe. Institutions, markets and models (New York 2012) A. Laferrère, Housing wealth as self-insurance for long-term care, in: Costa-Font, Courbage, Financing long-term care in Europe, B.J.C. van de Gevel, Bouwstenen voor een toekomstbestendige zorg voor ouderen. Achtergrondstudie naar het financieel perspectief van de zorg voor ouderen (The Hague 2012) 22, 39.

14 14 Introduction systems were formed and how they function from a historical and socialpolitical perspective. 16 The history of financing healthcare through social health insurance funds, private health insurance companies and tax-funded systems in the form of National Health Services is described extensively in comparative international studies into financial systems for healthcare, such as those by J. Blanpain, L. Delesie and H. Nys, National Health Insurance and Health Resources. The European Experience 17, R.B. Saltman, J. Busse, J. Figueras (eds.), Social health insurance in Western Europe 18 and K.P. Companje, R.H.M. Hendriks, K.F.E. Veraghtert en B.G.E.M. Widdershoven, Two centuries of solidarity. German, Belgian and Dutch social health insurance In these studies, no clear distinction is made between cover for affordable healthcare such as the care provided by general practitioners (GPs) and specialists, paramedical care and hospital care, and cover for new social risks or unaffordable care such as mental healthcare, care of the physically handicapped and elderly care. In healthcare systems that are financed through taxes, i.e. the Beveridge systems such as Britain s National Health Service and the Scandinavian healthcare systems, the financial structure does not play a major role in the distinction between affordable care and long-term care as a new social risk. 20 However, this distinction is crucial for the way in which healthcare is paid for in systems in countries as Germany, the Netherlands, France and Austria, where the financial structure consists of a mix of social and private 16 Ranci, Pavolini, New trends of long-term care policy in Western Europe, 4. De Roo, Chambaud, Güntert, Long-term care in social health insurance systems, 284. Kessler, Confronting the challenge of long-term in Europe, J. Blanpain, L. Delesie and H. Nys, National Health Insurance and Health Resources. The European Experience (Cambridge, Massachusetts and London 1978). 18 R.B. Saltman, J. Busse, J. Figueras (eds.), Social health insurance in Western Europe (New York 2004). 19 K.P. Companje, R.H.M. Hendriks, K.F.E. Veraghtert en B.G.E.M. Widdershoven, Two centuries of solidarity. German, Belgian and Dutch social health insurance (Amsterdam 2009). Other similar studies include J. Rogers Hollingsworth, J. Hage, R.A. Hanneman, State intervention in medical care. Consequences for Britain, France, Sweden, and the United States, ( Ithaca 1990), M. Immergut, Health politics: interests and institutions in Western Europe (Cambridge 1992), R. Freeman, The politics of health in Europe (Manchester 2000) and H. Maarse, Privatisation in European healthcare. A comparative analysis in eight countries (Maarssen 2004). 20 G. Esping-Andersen, The three worlds of welfare capitalism (Oxford 1990) De Graaf, Achtergronden voor internationale vergelijking van langdurige zorg, 36, 48. D. Chinitz, M. Wismar, C. Le Pen, Governance and self-regulation in social health insurance systems, in: Saltman, Busse, Figueiras, Social health insurance in Western Europe, 155, 167.

15 Introduction 15 healthcare insurance companies, government contributions and personal contributions: the Bismarckian types of welfare state. 21 Cover for minor medical risks in the Netherlands, Belgium and Germany is provided by basic insurance policies for healthcare and by social healthinsurance funds. The history of these insurance schemes is described in detail and comparatively from an international perspective. 22 The history of cover for long-term care is much less well documented. 23 In 2004, De Roo, Chambaud and Güntert presented the first ever comparative study of long-term healthcare in EU member states. 24 In 2005, the Raad voor de Volksgezondheid en Zorg (Commission for Public Health and Healthcare) published a recommendation for reforms to the Dutch AWBZ (Exceptional Medical Expenses Act). It contained five country studies on long-term healthcare: Spain, Portugal, the United Kingdom, Germany and Sweden. 25 Rothgang and Morel studied the development of the international variety of insurance arrangements for long-term care from the theoretical perspective of the Bismarckian welfare state classification by Gosta Esping- Andersen. 26 Christensen described the Norwegian long-term care system as the model of the Scandinavian social democratic welfare regime, with public and private healthcare provision. 27 Gleckman wrote a paper about the development of and problems with reforms to the financing of long-term care in the Netherlands, Germany, Japan, France and the United Kingdom, with lessons for the US. 28 However, this paper was a brief outline and gives 21 M.J. Gibson, S.R. Gregory, S.M. Pandya, Long-term care in developed nations. A brief overview (Washington 2003) 21. B. Gibis, P.W. Koch-Wulkan, J. Bultman, Shifting criteria for benefit decisions in social health insurance systems in : Saltman, Busse, Figueiras, Social health insurance in Western Europe, 191. Taylor-Gooby, Welfare state reform and new social risks, 2. Esping-Andersen, The three worlds of welfare capitalism, B. Harris (ed.), Welfare and old age in Europe and North America. The development of social insurance (London 2012). Companje et al., Two centuries of solidarity, 288, 317, Insurance cover for high medical risks in the Netherlands was examined in 2008 by A.H.M.Kerkhoff and W.P.M. Dols, De Algemene Wet Bijzondere Ziektekosten. Debatten en ontwikkelingen, in: K.P. Companje, Tussen volksverzekering en vrije markt. Verzekering van zorg op het snijvlak van sociale verzekering en gezondheidszorg (Amsterdam 2008) De Roo, Chambaud, Güntert, Long-term care in social health insurance systems, in: Saltman, Busse, Figueiras, Social health insurance in Western Europe, De Graaf, Achtergronden voor internationale vergelijking van langdurige zorg, Rothgang, Theorie und Empirie der Pflegeversicherung, N. Morel, Care policies as employment strategie. The impact of Bismarckian welfare state institutions on child- and elderlycare policy reforms in France, Belgium, Germany and the Netherlands (paper; Florence 2007) K. Christensen, Beyond public care services. The case of Norwegian long-term care (paper; Bergen 2010), Gleckman, Long-term financing reform, 3-18.

16 16 Introduction little insight in the political and social context in which the described arrangements were formed. In 2009, Rothgang published his Theorie und Empirie der Pflegeversicherung. As mentioned earlier, he classified cover for long-term care accor ding to Esping-Andersen s typology of welfare states. He described the German Pflegeversicherung and the way long-term care is covered as a new social risk in the Western European states and Japan. Rothgang analysed the long-term development of the Pflegeversicherung in terms of the tension between state, market and corporatism and the problems with financing and cover. In 2011, Costa-Font and Courbage published the study Financing longterm care in Europe. Institutions, markets and models. 29 Various authors have compared the financing of long-term care in the EU member states from an institutional perspective. Demographic ageing in Europe is described as a new financial risk, which calls for a response from the market, the member states and society. The authors describe how long-term care is financed, with the institutional mechanisms for financing old age. The objective is to try to understand the institutional, economic, cultural and behavioural constraints on the development of cover for long-term care, specifically with regard to the problems associated with ageing. Financing long-term care in Europe illustrates how long-term care is financed in Europe and the problems the EU member states face in terms of risk management relating to long-term care. The study is valuable for its international comparative perspective on the risks associated with ageing and its contemporary problems. Despite this list of studies, EU and Dutch national government policy workers, health insurers and experts on healthcare systems have confirmed that a lack of historical insight is hampering the formulation of new policies. There is still a need for an historical and international comparative study into the structure and financing of care in convalescent homes and residential homes for the elderly, home-help schemes, care for the physically handicapped and mental healthcare. In this book, the authors describe the systems of long-term care in the Netherlands, Germany and Norway as social and medical risks from the long-term perspective of the welfare state, while reviewing current and future problems and solutions. Despite the principle of subsidiarity, the EU influences the development of long-term care in the member states. How and why this is the case will be the subject of a separate chapter. But first a matter of definition. 29 J. Costa-Font, C. Courbage, Financing long-term care in Europe. Institutions, markets and models (New York 2012).

17 Introduction 17 3 Long-term care as a catch-all term? In social and political debates, the services providing elderly care, long-term nursing care, mental care and care of the handicapped are often grouped together as forms of long-term care. 30 The question is whether the concept of long-term care can be used to study these services from an historical and international socio-political perspective. Long-term care has increasingly become a catch-all term. The definitions vary from country to country. 31 There are wide variations in the descriptions of the length of stay and the care provided, and in the definitions of the care services themselves. The distinction between the domains of healthcare and social care is often blurred, which causes problems for the financing and structuring of care in terms of place and time. 32 The demarcation between curative care and the other forms of care mentioned is often indistinct, which adds to the problems with finance and structure. 33 In 2005, the Organization for Economic Cooperation and Development (OECD) defined long-term care as an issue that brings together a range of services for persons who are dependent on help with basic activities of daily living (ADLs) over an extended period of time or, in short, care for people needing daily living support over a prolonged period of time. 34 These include services for 35 : activities of daily living (ADL) such as rehabilitation, basic medical services, social care, home nursing and institutional care instrumental activities of daily living for occupational and empowerment activities related to independent living The OECD definition focuses on daily care activities and can be used to quantify care needs. 36 It is more difficult to use the ADL-based definition for qualitative social, political and historical research. It simplifies the care needs of people with complex conditions, and the difference between care for chronic physical and mental patients. 30 L. Salvador-Carulla, C. Romero et al., Classification, assessment, and comparison of European LTC services. Development of an integrated system, in: Eurohealth 17 (2011) Ranci, New trends of long-term care policy in Western Europe: towards a social care market, OECD, Help wanted?, Salvador-Carulla,Romero e.a., Classification, assessment, and comparison of European LTC services, OECD, Help wanted, 38. Costa-Font, Courbage, Financing long-term care in Europe, European Commission, Long-term care in the European Union, 3-4. OECD, Long-term care for older people, 2, Pzywara, et al., Future long-term care needs and public expenditure in the EU member, 4.

18 18 Introduction In 2010 Kraus, Riedel et al. presented an extensive classification of longterm care systems in Europe for the EU project ANCIEN (Assessing Needs of Care in European Nations). 37 They describe different typologies as: the organisational typology, or the distinction between the Beveridge and Bismarckian systems. 38 The distinction between tax-funded and premium-based medical and social care does not fit well with the funding of long-term care, because in Bismarckian states such as Austria, the Netherlands, France and Belgium, long-term care is financed through taxation or a hybrid structure of taxes and premiums. the use and financing typology. 39 Clustering according to the level of public and private spending, the level of use of formal and informal care and the degree of accessibility as a large set of explanatory variables leads to various forms of clustering countries. For the ANCIEN project, Kraus et al. concluded that it was difficult to collect precise quantitative information on long-term care. They combined the two typologies to focus on system characteristics, use and financing of care to derive a broad classification of organisation and funding. 40 This classification differentiates between states in terms of access to care and state subsidy. This differentiation is useful for describing the actual status of long-term care in the EU member states, but provides no tools for qualitative research from a historical, political and cultural long-term perspective. Rothgang combines the differentiation in tax-based and premiumbased funding of long-term care with Esping-Andersen s notions of decommodification and stratification. 41 He distinguishes five types (or Pflegeversicherungstypen) for the fifteen old EU states: the Scandinavian welfare states the European countries with separate long-term care insurance (Germany, Austria, Luxemburg and the Netherlands) the European states without separate long-term care insurance (Belgium, France and Italy) the Anglo-Saxon welfare states (Ireland, the United Kingdom) the South European countries as Rudimentärer Sozialstate (Spain, Portugal and Greece) 37 M.. Kraus, M. Riedel, E. Mot, P. Willemé, G. Rörhling, T. Czpyonka, A typology of long-term care systems in Europe, Enepri research report 91/2010 (Brussels 2010) 2-4, Ibidem, Ibidem, Ibidem, Rothgang, Theorie und Empirie der Pflegeversicherung, 3-31.

19 Introduction 19 The classifications by the OECD, Kraus and Riedel et al. and Rothgang are methods for quantifying care needs and studying the contemporary status of long-term care in different states. The lack of reliable and sufficient quantitative data for comparing national long-term care systems poses a problem for contemporary research. 42 The question is whether long-term care is really a useful term for describing the cluster of services and the financing of elderly care, long-term nursing care, mental healthcare and care of the handicapped, in order to: characterise the social and medical problems of the welfare state study the social, medical and political context of elderly care, long-term nursing care, mental healthcare and care for the disabled as part of the national healthcare and social systems describe the increasing complexity of the integration of social and care arrangements The financing and organisation of the forms of care mentioned, as problems of the welfare state, are characterised as a new social risk, but they are also a medical risk: 43 a social risk because it covers the income and social consequences of chronic mental and physical disability a medical risk, since the way in which care is provided, in terms of quality and quantity, depends on the level and status of care and the capacity of labour and care institutions Looking at these forms of care as social and medical risks makes it possible to study them from an historical and international perspective, for example the study of financing and structuring curative care as a medical and social risk. 44 In the historical perspective of the welfare state, curative care is defined as a minor medical risk because it can be financed by social or private health insurance, co-payment and private means. 42 Kraus, Riedel, e.a., A typology of long-term care systems in Europe, 39, G. Bonoli, Modernising post-modern welfare states. Explaining diversity in patterns to adaptation to new social risks (paper; Fribourg 2004) 2,18. B. da Roit, B. le Bihan, A. Österle, Long-term care policies in Italy, Austria and France: variations in cash for care schemes, in: Social policy and administration 41 (2007) AARP, European perspectives on LTC are a largely untapped resource for examining the ways to improve the financing and delivery of LTC in the US (s.l. s.a.) 8. AARP, European experiences with long-term care. France, the Netherlands, Norway and the United Kingdom (s.l. 2006). N. McCall, Long-term care: definition, demand, cost and financing. Who will pay for the long-term care? (Chicago 2001) Companje, Tussen volksverzekering en vrije markt,

20 20 Introduction Forms of care such as care for the elderly, physically handicapped and the mentally ill, long-term nursing care and rehabilitation programmes can be seen as expensive medical risks. For the majority of the population, these risks can only be financed with state support or by collective social insurance: they are unaffordable or uninsurable high medical risks. 45 Defining these care services as high medical risks makes it possible to combine the social and medical domains in order to carry out research and find answers to questions such as the following: How did the debate develop about recognising forms of care for social means, such as covering the costs of disability and chronic care and loss of income? Which problems were perceived or occurred over time with financing and organising high medical risks? Which solutions were chosen? 4 The contents of this book: the EU, case studies and a multi-pillar approach The authors of this book aim to address the cover for high medical risks in the Dutch, German and Norwegian welfare states from the European perspective. The first objective is to explain the different paths of development. The second objective is to understand the problems that the public and private parties have faced, and still face. The third objective is to discuss possible solutions from the public or private domain. The Dutch, German and Norwegian systems have been chosen as case studies because their character and history differ from each other. In the Netherlands and Germany, high medical risks are covered by various forms and mixes of public and private health insurance and social security schemes. In addition to these countries that finance high medical risks through insurance, Norway is added as a model of a state where these risks are part of the tax-funded benefits of the welfare state. In Chapter 1, Jos Draijer poses the question Healthcare in Europe: who cares? According to the principle of subsidiarity in the European Union, covering high medical risks belongs to the domains of health and social security in the member states. The Dutch, German and Norwegian systems are independent, but EU influence is growing. It is difficult to find a single generic definition of long-term care that applies to all EU member states. 45 SER, Advies inzake een verzekering tegen zware medische risico s aan de minister van Sociale Zaken en Volksgezondheid (Den Haag 1965).

21 Introduction 21 History can teach us a great deal about the differences and similarities between healthcare and long-term care services in the EU member states, but what about the present and the future? Draijer looks at the future of healthcare and long-term care in the light of developments that are increasingly affecting the national competence of governments. In Chapter 2, Svein O. Daatland focuses on the development of Norwegian long-term care from a European perspective. Long-term care needs were included in the Norwegian welfare state by redefining them as medical needs rather than social needs. Daatland discusses the possibility of a distinct Scandinavian model for long-term care. There is indeed such a model, with a small number of contrasting models. He describes the Norwegian model in terms of volume and the profile of services, access and standards. What are recent trends and controversies in adapting policies to an ageing population? From the perspective of sustainability, how adequate are these long-term care models for an ageing society? What are the dilemmas and challenges? In Chapter 3, Heinz Rothgang and Ralf Götze present cover for longterm care as a result of the interplay between social and fiscal policy in Germany. To mask their financial interests, municipal authorities and charities acted as advocates for the elderly in need of long-term care. In 1994, after twenty years of discussion, the German parliament accepted the Pflege-Versicherungsgesetz. 46 This act introduced two-tier mandatory longterm care insurance for the whole German population. 47 Summarising the effects of the Pflegeversicherung, Götze and Rothgang identify unresolved issues and the further need for reform. The reform debate is overshadowed by a revival of ideological debates about private versus public provision. In Chapter 4, Karel-Peter Companje describes the development of finan cing high medical risks in the Netherlands. The first public insurance for high medical risks was the Dutch Exceptional Medical Expenses Act (AWBZ), which dates from The AWBZ is still a unique social health insurance that provides almost entirely in kind for high medical risks. 48 In 46 M. Arntz, S. Thomsen, The social long-term care insurance: a frail pillar of the German social insurance system, in: CESifo DICE Report 2/2010 (Munich 2010) R. Gradus, E.J. van Asselt, De langdurige zorg vergeleken in Nederland en Duitsland, in: ESB 96 (2011) E. Schulz, The long-term care system for the elderly in Germany, Enepri research report 78 (Brussels 2010) 7-8. H. Rothgang, Social insurance for long-term care: an evaluation of the German Model, in: Social policy and administration 44 (2010) R. Busse, A. Riesberg, Gesundheidssysteme im Wandel. Deutschland (Berlin 2005) 29-30, , Companje e.a., Two centuries of solidarity, Companje et al., Two centuries of solidarity,

22 22 Introduction 1968, the AWBZ covered uninsurable care such as residential nursing care, intramural mental healthcare and care for the physically handicapped. With the AWBZ and public and private social health insurance, every Dutch citizen had full access to curative care and cover for high medical risks. For the first time, a system of quality standards for the recognition of intramural care had to be developed. From the beginning, the AWBZ had several structural flaws: open-ended financing. Despite many efforts to maximise the AWBZ budget, it was always exceeded. from 1974 on, the AWBZ was used to realize political compromises In the period , the AWBZ was used as an instrument for integrating social and private health insurance with the AWBZ into a single health insurance system. The AWBZ became a melting pot of different levels of medical risk; from home care, medicine, paramedical and psychiatric healthcare to intramural nursing and mental healthcare. The demarcation between curative care and other forms of care became blurred, and today this is still causing financial, functional and organisational problems. In Chapter 5, Lou Spoor describes how the trend rate of growth in Dutch healthcare exceeds the GDP growth rate. The cost of long-term care demands special attention because elderly care is an important form of long-term care. Can a system of partial capital funding contribute to more robust financing of long-term elderly care, for example through forms of saving or by using pensions? Is a market for Dutch private long-term care insurance possible? The sustainability of healthcare expenditure in the Netherlands has prompted a wide-ranging debate on the question of whether the funding systems for pensions, healthcare and housing can be integrated to provide more robust financing of care in old age. In the final chapter, the conclusions, the systems in the Netherlands, Germany and Norway are compared in terms of the differences and similarities between long-term care and high medical risks. Finally, is the concept of high medical risks useful for understanding the catch-all definition of long-term care?

23 2 Europe and healthcare including longterm care, who cares? Jos G.H. Draijer 1 1 Introduction The diversity of healthcare systems (understood to include long-term care) in Europe has been described many times by experts all over Europe. 2 The diversity in such healthcare systems is often explained by examining the way in which historical, cultural, social, economic and political determinants have helped shaping the various health systems into the different forms we find today in European countries. National healthcare systems reflect history, principles and values, traditions, political views and other cultural aspects of the different countries in Europe. Consequently it is rather difficult to find one generic definition of healthcare or long-term care which is applicable to all countries in Europe. Long-term care throughout Europe could be described as a mix of home, community and institutional services. In general we could say that long-term care in Southern European countries is provided by families (homecare) and communities (municipality, neighborhood, churches), while in Northern European countries long-term care is more institutionalized (e.g. nursing homes for the elderly) with the State playing a considerably larger role. 3 Similarly, the insurance arrangements for healthcare and long-term care can differ significantly: between predominantly private or public organization of healthcare, from tax-based systems to premium-based systems, and from regional to national governance structures. 4 In many ways, the situation today is much as it was in the past. From the European point of view: public health and healthcare including long-term care were and are primarily a national concern based on regional (decentralized) or national (centralized) governmental 1 I would like to thank Peter Schroder-Back and John Rowan for their comments. 2 See for example: Wendt C (2009) Mapping European healthcare systems: a comparative analysis of financing, service provision and access to healthcare. Journal of European Social Policy 19(5): Walker A (ed.) (2005) Growing older in Europe. Maidenhead, Open University Press. 4 Saltman RB, Busse R, Figueras J (eds.) (2004) Social Health Insurance Systems in Western Europe. Maidenhead, Open University Press, 2004.

24 24 Jos G.H. Draijer competences regarding the organizing and financing of public health and healthcare services. 5 In short, history can teach us a lot about the differences and similarities between healthcare and long-term care services in the EU member states. But what about the present and the future? Do we know enough of the different healthcare systems in the EU in view of increasing patient mobility, major common challenges across many EU countries, and the increasing legal competence of the EU, which (directly or indirectly) may affect the policies of national governments regarding healthcare including long-term care? 6 This chapter looks mainly at the future of healthcare including long-term care in the EU countries in the light of developments which may increasingly affect the national competence of governments regarding health and long-term care. This may seem surprising: healthcare including long-term care is still considered by governments, experts and citizens as a primarily national competence. And this is indeed the case. Even in the Treaty on European Union (from the Treaties of Maastricht to Lisbon on) it is stated that any kind of harmonization of healthcare systems in the EU is excluded. So, one might think, what is all the fuss about? However, the answer to this question is more complex than we think. 7 There are three main developments in the EU which could have a significant impact on the national competence of governments for healthcare systems: first, the provisions in the EU Treaty in particular those regarding free movement and the internal market; second, jurisprudence of the European Court of Justice (ECJ) dealing with the applications of those Treaty provisions to healthcare, long-term care, patients rights; and, third, the trend of increasing economic government by the EU, mainly in the Eurozone in order to master financial stability. In particular, the ECJ considered in some judgments healthcare as an economic activity as defined under article 49 EC service of general economic 5 Mossialos, E., Permanand, G., Baeten, R., Hervey, T. (eds.) (2010) Health Systems Governance in Europe: the role of EU law and policy. Cambridge, Cambridge University Press. 6 In order to avoid confusion about terminology on healthcare and long-term care at EU level from here on I will use healthcare including long-term care, which is precisely the scope of the subject in this article. 7 See for good overviews over these aspects: Mossialos, E., Permanand, G., Baeten, R., Hervey, T. (eds.) (2010) Health Systems Governance in Europe: the role of EU law and policy. Cambridge, Cambridge University Press. Hervey T, McHale JV (2004) Health Law and the European Union. Cambridge, Cambridge University Press.

25 Europe and healthcare including long-term care, who cares? 25 interest. 8 This is very relevant. It means that the principles of the EU internal market apply to healthcare and (although so far less clearly) to formal longterm care: free movement of persons (thus also patients), services, goods and capital are essential in this respect. 9 This means that e.g. EU legislation on competition, procurement, state aid apply to healthcare including long-term care in the EU. However, it should be mentioned that the jurisprudence of the ECJ on curative healthcare is much more extended and clear than (until now) on long-term care. One could say that new jurisprudence on cross border long-term care might help to shape more legal clarity about the definition of long-term care and more legal certainty for patients in the EU as existing jurisprudence on cross border curative healthcare did in the past. Only time will tell to what extent the three irreversible developments at EU level (reviews of the EU Treaty, jurisprudence of the ECJ, and increasing coordinative economic government by the EU) will affect the nature of healthcare systems in the EU and to what extent sovereign competences for healthcare will be transferred from national level to EU supranational level. So, healthcare in Europe: who will care in the future? Therefore, let us explore these three main developments in the EU that effect healthcare including long-term care in more detail, one after another. 2 EU Treaty provisions From the historical point of view it is worth briefly looking at the history of the reference to public health in the EU Treaties as this a rather undocumented development. Historically, it is relevant to mention that Regulation 1408/71 on the coordination of social security provisions for those who work, live or stay in another country of the EU (now called EU Regulation 883) was and still is of major importance, even for planned healthcare abroad. Everyone knows the European Health Insurance Card (EHIC). However, the history of this EU Regulation 1408/71 has been documented extensively elsewhere. Therefore, this EU regulation is not dealt with in the context of this chapter. 8 Cygan A (2008) Public Healthcare in the European Union: Still a service of general interest? International and Comparative Law Quarterly 57 (31): Cygan A (2008) Public Healthcare in the European Union: Still a service of general interest? International and Comparative Law Quarterly 57(3):

26 26 Jos G.H. Draijer During the Dutch EU Presidency in the second half the 12 EU member states agreed to adopt the Maastricht Treaty (although the United Kingdom retained some opt outs from the Social Protocol which was attached to the Maastricht Treaty). Negotiations on having a firmer legal text on social policy within the Treaty itself failed. According to the principle of subsidiarity, that was one bridge too far at that time. The Treaty of Maastricht (signed in 1992, entered into force in 1993) is one in a line of EU Treaties: Rome (1957), Amsterdam (1997), Nice (2001), Lisbon (2007), entered into force in 2009) where Heads of Government revised or amended existing EU Treaties in order to align the EU Treaty with relevant developments and challenges ahead in the European Union, and to enhance European integration in various EU policy areas. It is important to know that the EU Treaty is the legal basis for all hard EU law (EU directives and regulations), and soft EU law (recommendations, conclusions). The Treaty gives the right of initiative in these policy areas to the European Commission, which presents draft laws to the European Council (made up of representatives of Member States) and the European Parliament (directly elected by European citizens). In other words: if a subject is not mentioned in the EU Treaty, the European Commission has no right to come up with legislation, measures or incentives on that subject, unless the EU members unanimously have asked for it in the Council. The Maastricht Treaty is a landmark in the history of European integration because it represented a major step forward in strengthening EU internal market legislation, but also because it was a starting point for establishing the Economic and Monetary Union (EMU) and paved the way for the introduction of the Euro as a new currency in Europe. It also extended the European Community s responsibilities by adding new policy area such health, education and vocational training, culture, youth, and social issues. It was no longer a European Economic Community (EEC) but a European Community (EC), later changed into the European Union (EU) after the ratification of the Lisbon Treaty (2010). It gave also the European Parliament more power in decision making, notably in legislative dossiers related to the EU internal market. In the context of this chapter, the Maastricht Treaty is of particular importance because it was the first time that public health was included 10 At that time I was involved in the drafting/negotiation on the new Treaty of Maastricht, particularly article 129 on public health. From I worked at the European Commission helping to transfer the new Treaty of Maastricht text into strategies and policies as well as to establish new instruments for carrying out these strategies on public health at EU level, e.g. the first Action programme on public health.