HOW TO FACE THE GROWING DEMAND FOR LONG TERM CARE?

Transcription

1 HOW TO FACE THE GROWING DEMAND FOR LONG TERM CARE? Francesca Colombo, OECD International Conference: EUROPE JAPAN NORTH AMERICA 18 September 2013

2 SIGNIFICANT PRESSURES ON HEALTH AND LTC SYSTEMS

3 Health and LTC: the 2 nd largest area of government spending Structure of general government expenditures, 2007 & 2010 (% of total expenditures)

4 Steep rise in the share of over 80 years old 1. Emerging economies include Brazil, China, India, Indonesia and South Africa. Source: OECD Historical Population Data and Projections Database, 2013.

5 What do these demographic trends mean? Demand for more and better formal care Not uniform sign of disability compression Multiple co-morbidities Preference for home and independent living Demand for responsive, patient-centred services Diverse user groups with different needs (e.g., Alzheimer; young disabled) Pressure on LTC workforce and financing LTC workers will account for a larger share of a shrinking workforce Pressure on financing of the welfare state especially if levies on labour income Economic and financial crisis

6 Even conservative projections suggest health and LTC spending will continue to grow (more rapidly than revenues) Percentage point increase in total public health and long term care spending, Percentage point increase in total health spending to GDP Note: The vertical bars correspond to the range of alternative scenarios, including sensitivity analysis. Countries are ranked by the increase of expenditures between 2010 and 2060 in the cost containment scenario. Source: La Maisonneuve and Oliveria Martins, OECD Economics Department

7 HOW TO FINANCE LONG- TERM CARE?

8 Note: Annual figures Source: OECD Basic universal coverage is desirable

9 Two critical considerations Basic universal coverage is desirable, since the costs associated with high-care need can exceed 60% of the disposable income of most seniors. But, projections points to significant increases in costs and demand. It is necessary to strike the right balance between universal coverage and financial sustainability. How? 4 potential axis

10 1) Target care to those with the greatest disabilities Put in place cost-sharing polices - based on income and/or care need (e.g., APA in France); Define the level of dependency triggering LTC entitlements in line with government s resources (e.g., Korea versus Japan);

11 2) Move towards forward-looking financing policies Better pooling of financing across generations (e.g., Germany, Japan) Broadening of financing sources beyond income from work (e.g., France, Japan, Belgium, Switzerland, Lux, Netherlands)

12 Shifting the composition of tax revenues from taxing wages to alternative sources Share of Public LTC spending financed out of social security funds

13 2) Move towards forwardlooking financing policies Better pooling of financing across generations (e.g., Germany, Japan) Broadening of financing sources beyond income from work (e.g., France, Japan, Belgium, Switzerland, Lux, Netherlands) Elements of pre-funding (private LTCI, Lux), but debate on pros and cons of pre-funding Innovative approaches, partnerships (Singapore)

14 3) Financial mechanisms to help users mobilise cash Some savings will need to be allocated to pay for LTC, but most users savings are locked into principal residence. Potential role for governments to facilitate the conversion of non-financial assets (e.g. a home) into cash. - e.g., bonds / equity release (as in Australia and Ireland) - Public measures to defer payments (United States and United Kingdom) - Private sector products such as the combination of LTC and life insurance and reverse mortgages.

15 4) Ensure better value for money Continue seeking for better value for money (e.g., health ageing, care coordination, productivity gains).

16 Want to learn more? Help Wanted? Providing and Paying for Long-Term Care, 2011 A Good Life in Old Age? Monitoring and Improving Quality in Long-term Care, These projects were supported by the EC