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Comparison of Long-Term Care Financing in Slovakia and OECD Countries

Analyzing the long-term care financing systems in Slovakia and OECD nations, exploring funding challenges and public-private financial structure.

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Comparison of Long-Term Care Financing in Slovakia and OECD Countries

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  1. Financing of Long Term Care in Slovakia: Comparison with other OECD Countries PETER GONDA Conservative Institute of M.R. Štefánik, Member of Socia Fdn., SLOVAKIA 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)

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

  3. 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) Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

  4. 1. Starting points Chart 1 Government expenditure by functions in Slovakia (2003) Source: Author, Ministry of Finance of the SR Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

  5. 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 * Preliminary data Source: Author, OECD (2003), Gibson (2003), Howe (2003) Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

  6. 2.Current LTC Financing • Structure of LTC expenditure (2002)*: • Relatively low expenditure on institutional care (circa 38%of total LTC spending) does not mean adequate domination home and community care • Expenditure on benefits (55% of totalLTC expenditures) exceeds the costs on services (45%) • Expenditure in social care (circa 90%) considerable dominate to the health care expenditure (10%) • Public expenditure (92%) significantly exceeds the private sources (8%). Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

  7. 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) Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

  8. 2.Current LTC Financing • 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) Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

  9. 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) Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

  10. 2.Current LTC Financing • 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) Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

  11. 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) Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

  12. 2.Current LTC Financing Chart 5 Public sources in selected countries Source: Author, OECD (2003), Howe (2003) Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

  13. 2.Current LTC Financing Chart 6 Approaches to the Application of Eligibility Source: Author, OECD (2003), Howe (2003) Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

  14. 2.Current LTC Financing Chart 7 Approaches to the Application of Co-payments Source: Author, OECD (2003), Howe (2003) Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

  15. 2.Current LTC Financing Chart 8 Comparisons of Approaches to the LTC Integration Source: Author, OECD (2003), Howe (2003) Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

  16. 2.Current LTC Financing Chart 9 Comparison of containing the costs of LTC Source: Author, OECD (2003), Howe (2003) Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

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

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

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

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

  21. 3. Current problems and future risks Chart 10 Year on year increase of Slovak citizens over 65 Source: Infostat (2003), Author, Ministry of Health of SR Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

  22. 3. Current problems and future risks Chart 11 Number of citizens over 80 years Source: : Infostat (2003), Author, Ministry of Health of the SR Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

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

  24. 4.Systemic change of LTC financing • PROPOSED FINANCING – conceptual framework • 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 residentialcare 1.2 Public health insurance – intended for financing health part of LTC (mainly nursing care) Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

  25. 4.Systemic change of LTC financing • 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... Financing of Long-term Care in Slovakia: Comparison with other OECD Countries

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