Alternat

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Financing of Long Term Care in Slovakia
Comparison with other OECD Countries
PETER GONDA Conservative Institute of M.R.
Štefánik Socia Fdn. SLOVAKIA
Development in Community-Based Care and Public
Policy (IAHSA Conference Creative Solutions for
an Aging Society Sharing the Wisdom, Norway,
27.-29. June 2005)
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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.

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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)

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1. Economic and political framework

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

Source Eurostat, Statistical Office of the SR
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1. Starting points

• Chart 2 Government expenditure by functions in
  Slovakia (2003)

Source Author, Ministry of Finance of the SR
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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

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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

Preliminary data
Source Author, OECD (2003), Gibson (2003), Howe
(2003)
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2. Current LTC Financing

• Structure of LTC expenditure (2002)
• Low expenditure on institutional care as of
  total LTC spending (circa 38) does not mean
  adequate domination home and community care
• Expenditure on benefits (55 of total
  expenditure) 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 (8).

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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 gt home and community share in
  many OECD countries, but but it is contrary in
  case without all cash benefits (Chart 4)

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2. Current LTC Financing

• 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)
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2. Current LTC Financing

• Public-private mix
• Chart 5 Comparing public and private
  expenditure (2002)

Source Autor, OECD (2003), Howe (2003)
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2. Current LTC Financing

• 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)...

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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)

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2. Current LTC Financing

• Chart 6 Comparison of public sources in selected
  countries

Source Author, OECD (2003), Howe (2003)
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2. Current LTC Financing

• Public-private mix in a social and health systems
• Chart 7 Example of structure of financing
  social and health facilities

HEALTH
S OCIAL
Source MoH SR, MLSaF SR, author
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2. Current LTC Financing

• Chart 7
• Approaches to the Application of Eligibility

Source Author, OECD (2003), Howe (2003)
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2. Current LTC Financing

• Chart 9 Approaches to the Application of
  Co-payments

Source Author, OECD (2003), Howe (2003)
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2. Current LTC Financing

• Chart 10 Comparisons of Approaches to the LTC
  Integration

Source Author, OECD (2003), Howe (2003)
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2. Current LTC Financing

• Chart 11 Comparison of containing the costs of
  LTC

Source Author, OECD (2003), Howe (2003)
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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.

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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.

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3. Current problems and future risks

• Communityinstitutional 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

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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...

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3. Current problems and future risks

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

Source Infostat (2003), Author, MoH SR
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3. Current problems and future risks

• Chart 13 Number of Slovak citizens over 80
  years

Source Infostat (2002), Author, MoH SR
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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.

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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

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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
  services in home, community, and residential
  care
• 1.2 Public health insurance intended for
  financing health part of LTC (mainly nursing
  care)

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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...