1 / 24

Policy challenges of financing and providing long-term- care

Policy challenges of financing and providing long-term- care. Johannes Koettl Europe and Central Asia Regions – Human Development Sector Sofia, Bulgaria - December 9, 2010. Key messages. LTC sector has to prepare for future demographic “shocks”

ima-hurst
Download Presentation

Policy challenges of financing and providing long-term- care

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Policy challenges of financing and providing long-term-care Johannes Koettl Europe and Central Asia Regions – Human Development Sector Sofia, Bulgaria - December 9, 2010

  2. Key messages • LTC sector has to prepare for future demographic “shocks” • Substantial future fiscal pressure from LTC expenditures in ECA countries • Policy implications • Urgent need to mobilize financing for future LTC expenditures now • Control demand and costs for formal LTC services: • From health to social services • From institutional to community-based care • From care fragmentation to care coordination • From producing to purchasing LTC services • From in-kind to cash benefits

  3. 1. Prepare for demographic shocks • Population is aging rapidly, yet not at a constant rate, but in waves • These waves will lead to sudden increases in the number of dependent people • There will be much less healthy people, and more and more dependent people • Who will then care for the dependent? • There will be much less young people, and more and more old people • Who will then pay the care for the dependent?

  4. Example: BulgariaBulgarian society is aging rapidly, yet not at a constant rate, but in waves: 2010 Source: Eurostat

  5. Example: BulgariaBulgarian society is aging rapidly, yet not at a constant rate, but in waves: 2020 Source: Eurostat

  6. Example: BulgariaBulgarian society is aging rapidly, yet not at a constant rate, but in waves: 2030 Source: Eurostat

  7. Example: BulgariaBulgarian society is aging rapidly, yet not at a constant rate, but in waves: 2040 Source: Eurostat

  8. Example: BulgariaBulgarian society is aging rapidly, yet not at a constant rate, but in waves: 2050 Source: Eurostat

  9. Example: BulgariaBulgarian society is aging rapidly, yet not at a constant rate, but in waves: 2060 Source: Eurostat

  10. Sudden increase of 75+ age group during 2020s and after 2045... Annual population growth rate by age group Source: Eurostat

  11. …will lead to sudden increases in the number of dependent people… Projected annual population growth rates by dependency level in Bulgaria Source: World Bank staff calculations

  12. …while the healthy population is constantly decreasing (green line) Projected annual population growth rates by dependency level in Bulgaria Source: World Bank staff calculations

  13. Who will care and who will pay? • There will be much less healthy people, and more and more dependent people • Who will then care for the dependent? • There will be much less people in working age, and more and more retired people • Who will then pay the care for the dependent?

  14. Today: 18 healthy per severely dependent2060: 10 healthy per severely dependent Projected inverse dependency ratios for Bulgaria Source: World Bank staff calculations

  15. Today: 4 aged 15-64 per 65+2060: less than 2 Projected inverse dependency ratios for Bulgaria Source: World Bank staff calculations

  16. Key messages • LTC sector has to prepare for future demographic “shocks” • Substantial future fiscal pressure from LTC expenditures in ECA countries • Policy implications • Urgent need to mobilize financing for future LTC expenditures now • Control demand and costs for formal LTC services: • From health to social services • From institutional to community-based care • From care fragmentation to care coordination • From producing to purchasing LTC services • From in-kind to cash benefits

  17. 2. Substantial future fiscal pressure from LTC expenditures in ECA countries • Combination of • Steep expenditure increases per beneficiary in the past (quality improvements) • Expansion of formal services (larger share of elderly consume formal services) • Overall increase in number of elderly • Strong expenditure growth dynamic

  18. Key messages • LTC sector has to prepare for future demographic “shocks” • Substantial future fiscal pressure from LTC expenditures in ECA countries • Policy implications • Urgent need to mobilize financing for future LTC expenditures now • Control demand and costs for formal LTC services: • From health to social services • From institutional to community-based care • From care fragmentation to care coordination • From producing to purchasing LTC services • From in-kind to cash benefits

  19. 3.i) Urgent need to mobilize financing for future LTC expenditures now • Risk-pooling is essential to avoid old-age poverty • Private LTC insurance has not been very successful • Market failures (adverse selection, risk selection) • Unpredictability of costs lead to high mark-ups • Large role for public sector • Tax-financed (cash benefits, social assistance) • Contribution financed (social security) • Both are pay-as-you-go mechanisms • Who will pay?

  20. Who will pay?Today’s young can pay for tomorrow’s old… Source: Eurostat

  21. …but who will pay for today’s young when they are old? ? Source: Eurostat

  22. Increase private savings for retirement and dependency now • Increase savings of current working age population for their own retirement and dependency needs • Private financial products (not LTC insurance for in-kind benefits) to insure against poverty in case of dependency • Example of France • Enhanced annuity (life insurance payments increases in case of dependency) • Reversed mortgage

  23. 3.ii) Control demand and costs for formal LTC services • From health to social services and from institutional to community-based care • Channel future demand for formal LTC to more adequate and less expensive services • Away from medical care and hospital care • Toward social care, especially community-based care • Resist converting hospital infrastructure into inpatient LTC infrastructure • Rather, invest in community care centers that offer a wide variety of (outpatient) care services (daycare and home-based care) • From care fragmentation to care coordination • Especially between health and social sector to avoid cost shifting at the expense of patients • Joint needs assessments by inter-disciplinary teams (GP and social worker) • Scaled benefits

  24. 3.ii) Control demand and costs for formal LTC services • From producing to purchasing LTC services • In the future, a much larger share of the economy will evolve around providing care • Cannot be done by public sector alone • Define core competencies of the public sector • The rest, buy from private market • Proper regulation, accreditation, standards of care, and quality control mechanisms • Institutions and mechanisms might take time to develop • In the meantime, explore potential of public-private partnerships • From in-kind to cash benefits • Puts consumer in charge • Main vehicle to support (cheap) informal care • Maybe easier to control public expenditures on cash benefits • Explore potential of vouchers

More Related