International Perspectives and SolutionsInternational ...iltciconf.org/2012/index_htm_files/08-InternationalPerspectives.pdf · arti l d t bli h d b t l iticles and reports published

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International Perspectives and SolutionsInternational Perspectives and Solutions for Long Term Care Financing

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International Perspectives and Solutions

Panelists: Pamela Nadash – Assistant Professor of Gerontology, University of Massachusetts, Boston

Peter A. Bootsma, MD – Counselor for Health and Welfare to the ,USA and Canada, Royal Netherlands Embassy, Washington, DC

Moderator: Brian Vestergaard – LifeSecure Insurance Company

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Long Term Care Programs from Abroad: I li ti f LTCI?Implications for LTCI?Pamela Nadash, B.Phil, Ph.D., , , ,University of Massachusetts, Boston

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My background

• Started career in UKW k d f f fit d lti fi• Worked for a range of non-profits and consulting firms in US

• PhD from Columbia Public Health & Political SciencePhD from Columbia, Public Health & Political Science• Assistant Prof at UMass Boston, Gerontology Dept• Work focuses on LTC policy, heavy interest in

international comparisons

Session 08: International Perspectives 4

Two studies inform this talk:

Nadash, P., Doty, P., Mahoney, K., von Schwanenflugel, M. (2012). European long term care programs: L f CLASS? H lth S i R hLessons for CLASS? Health Services Research. 47(1): 309–328.

Nadash, P., Shih, Y.C. (2012). Introducing social insurance for long-term care in Taiwan: Key issues. I t ti l J l f S i l W k IInternational Journal of Social Work. In press.


Research Question: What do European cash for care programs have to teach us about establishing a voluntary long term care insurance (LTCI) program in the US?

Methods: A literature review that included both academic journal ti l d t bli h d b t l iarticles and reports published by governmental agencies or

international organizations (emphasizing those published in English within the past five years), yielding a set of questions that were explored with experts on European cash for care programswere explored with experts on European cash for care programs. These were brought together for two symposia at the September 2010 International Conference on Long-Term Care Policy (sponsored by the LSE), and provided us with much of the

Session 08: International Perspectives

(sponsored by the LSE), and provided us with much of the material for this article.

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CLASS the Community Living Assistance Services andCLASS, the Community Living Assistance Services and Supports Act, is a publicly-sponsored long term care insurance plan financed through voluntary premium payments. Designed to be self-financing, it operates under apayments. Designed to be self financing, it operates under a 3.5% cap on administrative benefits.

CLASS has been put on hold (but not repealed despite callsCLASS has been put on hold (but not repealed, despite calls for this), given concerns about its long-term financial sustainability. However, issues raised following the bill’s passage will remain relevant to any future proposals for LTC passage e a e e a t to a y utu e p oposa s o Cfinancing.


Specific questions:

• What are citizens willing to pay toward LTCI?• What populations should be targeted for coverage?• What is the level of benefit pay-out?• To what extent are cash benefits

restricted?restricted?• What are the administrative costs of

the programs?• Can such programs maintain solvency?


What are citizens willing to pay toward LTCI? • In the US, 10.7% of Americans aged 55 and older (12.5% of those

65 and older) pay an average monthly premium of $160 for LTCI

• In England and Austria funding comes out of general funds and isIn England and Austria, funding comes out of general funds and is not transparent to citizens

• In France, the public program is funded through a combination of i l di f t 90% f th ll ffsources, including copays of up to 90% for the well-off.

Consequently, roughly 30% of the French 60 and older purchase supplemental private LTC insurance, at an average cost of $43 per monthmonth.

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What are citizens willing to pay toward LTCI?

• In Germany, the premium equals 1.95% of income up to a maximum of $105 per month of which the employee pays halfmaximum of $105 per month, of which the employee pays half ($51).

In the Netherlands, about a third of financing comes from general d t thi d f i f 12 5% f i trevenues, and two thirds from premiums of 12.5% of income up to

a maximum of $474 per month, with the employee paying half ($237).

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What populations should be targeted for coverage?

• over 80% of German LTC insurance claimants are age 65 or older65 or older. • This is because the German program favors those who

need “hands-on” physical assistance and/or protective oversight related to dementiaoversight related to dementia,

The French program serves only those 60 and older.

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What populations should be targeted for coverage?g g

The Dutch, Austrian, and English programs serve all populations. The Dutch program has growing costs due to shifts from other parts of the service system, while in England enrollment has been limited due to local control of eligibility.

Complementary programs will also affect coverage decisions, as well as social expectations about care.

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What is the level of benefit pay-out?• In all countries, there are supplemental supports for the

poor (usually means-tested and run by local governments) and, in some cases, forms of

ti f f il icompensation for family caregivers.

• Some countries offer a choice of in-kind or cash benefits: Only England matches the value of in-kind benefits when Only England matches the value of in kind benefits when

determining the amount of cash payments

Dutch recipients receive 25% of the value of in-kind benefits, while German recipients receive roughly 50%benefits, while German recipients receive roughly 50%

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What is the level of benefit pay-out?

• In Germany and Austria, cash reimbursement does not meet the full level of need, and is typically supplemented by family care or through hiring workers on the greyby family care or through hiring workers on the grey market.

In France, reimbursement is heavily income-adjusted, so th t i d f th b t t bthat coverage is good for the poor, but must be supplemented for the better-off.

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Comment: Governmental concerns re black market/grey market workersg y

• A big concern for many countries, including Taiwan, which is hesitant about introducing cash benefits for this (and other) reasonsreasons

• Also an issue in Italy (Albanians) and Singapore…• Goal is to maximize tax revenues from wages, reduce unfunded

d d li it f i titi f d ti kf ddependency, limit unfair competition for domestic workforce, and develop a legal workforce

• Not an issue that is going to go away.

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To what extent are cash benefits restricted? • I G d A t i b d d th i littl• In Germany and Austria, uses are broad and there is very little

accountability for how benefits are used.

In England, a broad range of uses are sanctioned, but these must be detailed and justified in a care plan; spending is carefully trackeddetailed and justified in a care plan; spending is carefully tracked.

In France, case managers control care plans, which typically favor hands-on care; accountability is high, as workers are paid through a government service that issues checks and ensures that relevantgovernment service that issues checks and ensures that relevant taxes are paid.

In the Netherlands, too, rules favor the purchase of personal assistance and leave little discretion to the recipient Accountability forassistance and leave little discretion to the recipient. Accountability for expenditures limits use of illegal workers.

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What are the administrative costs of the programs?• Different countries define “administrative costs” differently, and they will vary

according to the program and the service delivery environment. Under CLASS, marketing, eligibility, and tracking expenses are unique to the program because of its voluntary natureprogram because of its voluntary nature.

Germany has a cap on expenses of 3.5%.

Austria estimates its costs at about 3%.

In France, the costs to national government are 0.5%, but local government performs many functions and evidence is lacking, costs estimated at 3-5%.

England and the Netherlands were unable to estimate administrative costs.g

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Can such programs maintain solvency?

• Germany has controlled costs most successfully helped by a• Germany has controlled costs most successfully, helped by a self-financing mandate.

The Dutch program has recently been pulled back, based on t f t l dit lti f t hifti f thout-of-control expenditures resulting from cost-shifting from other

programs as well as a broad eligibility pool.

The English program is small and locally administered, and therefore controlled via local government discretion, which will be impacted by national austerity measures.

In Austria alone, cost control is not a big political issue., g p

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The French Situation

The French program’s expenses vastly exceeded predictions.

This has been partly blamed on inconsistent administration of eligibility. g y

Fixes are currently under discussion. Private LTCI is a big part of this discussion

Currently, an estimated 30% of the French 60 and older (when they are eligible for the APA) purchase supplemental private LTC insurance, at an average cost of $43 per month.

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Our Conclusions

• Controlling eligibility is important – both in setting the criteria and in administering it.

D i i t ff ti t t th l l Devising cost-effective systems to ensure the legal employment of workers is critical.

Self-financing mandates can be effective means of controlling costs to government.

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Our Conclusions

• European citizens tolerate fairly high levels of contribution toward public and private LTCI.

A program that does not aim to meet all needs can be a valuable component of the social security net, by offering some protection against the financial risks posed by LTSS

dneeds.

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The Bottom Line: Sell a Ford Fiesta, not a Cadillac!Sell a Ford Fiesta, not a Cadillac!

“In Europe, the aim of LTC coverage has been to reduce the burden on unpaid family care by providing limited financialburden on unpaid family care by providing limited financial compensation for family caregivers or by enabling access to formal services. European experience suggests, at the very least, that CLASS could appeal to an untapped market for a more modest, pp ppbasic form of coverage – something more akin to a good quality affordable economy car like the Ford Fiesta than to a “Cadillac” private insurance targeted at a niche market of wealthy Americans.”

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Long Term Care in The NetherlandsPeter A. Bootsma, MD Counselor for Health and Welfare to the USA and Canada

CRoyal Netherlands Embassy, Washington DC

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Netherland Key Data (‘09 – ‘10) 16 7 million inhabitants16.7 million inhabitants 1,259 inhabitants per square mile 12 provinces / 421 municipalitiesp p Four major cities (300,000 – 800,000) 60% of population below sea level Size of the Netherlands = 16,500 sq miles

− (Size of Maryland = 12,500 sq miles)


Economic Data (‘09 – ‘11) Labor Force 7 5 millionLabor Force 7.5 million Unemployment rate 2011: 5.8% Unfit for work: 810,000, Inflation 2011: 2.3 % Economic growth 2011: 1.2% Average income 32,000 euro ($25,000) Netherlands supports 600,000 jobs in the U.S.

N th l d 3rd l t i t i U S 7th i t d Netherlands 3rd largest investor in U.S., 7th in trade USA>NL


Political Data (‘09 – ‘10) Two-tiered parliamentary systemTwo tiered parliamentary system House of Representatives (150 members)

− 10 parties (2 – 31 seats) Senate (75 members)

− 10 parties (1 – 21 seats) Coalition Governments


100 hospitals 2,000 long-term care institutions 16,000 medical specialists 8,000 general practitioners 21 insurance companies21 insurance companies € 60 billion spent on health care

= 12% GDP

Hospitals, nursery homes are privately-owned.p y

Medical specialists and general practitioners are mostly private entrepreneurs


entrepreneurs

Individual mandate

Legal Structure of Health Care Healthcare Insurance Act (ZVW/HIA)Healthcare Insurance Act (ZVW/HIA)

− (mandatory) private healthcare insurance: GPs / therapists / medication / hospital care / specialists / ambulance transport / audiovisual and locomotive aids

Exceptional Medical Expenses Act (AWBZ/EMEA)− (mandatory) public long-term care insurance: nursing homes / elderly

homes / home care / institutional care for disabled people and peoplehomes / home care / institutional care for disabled people and people with chronic psychiatric disorders

Social Support Act (WMO/SSA)Social participation; national government / local authorities− Social participation; national government / local authorities

General Laws on price control / Accreditation / Quality / Rights of clients


(ZVW/ (AWBZ/ (WMO/HIA)

cure

(EMEA)

care

(SSA)social

support


Health Insurance Act Private health insurance companiesPrivate health insurance companies Private providers Obligation to accept every residentg p y Individual mandate Standard package of essential health care Supplemental insurances


Exceptional Medical Expenses Act (AWBZ/EMEA) National insurance scheme for long-term careNational insurance scheme for long term care Everyone who pays payroll tax in the Netherlands is

insured Carried out by health care insurance companies Everybody with a compulsory health insurance is

automatically registered for entitlements under this Actautomatically registered for entitlements under this Act Aim is to provide chronic and continuous care Financed by income and payroll tax systemsFinanced by income and payroll tax systems

(government sets the percentage annually)


AWBZ/EMEA (continued) Rights are described in 5Rights are described in 5

functions:− Personal care

N i− Nursing− Treatment− Accommodation

S ti G id (>SSA)− Supportive Guidance (>SSA)

Indication by assessment office


Organizational Structure

AssessmentOffice

Client

I C /Insurance Company/Health Care Office

Care Provider


Care Assessment Centre Independent autonomousIndependent autonomous

authority

Control function on publicControl function on public financed care

Six districtsSix districts


Assessment Process Medical diagnosis: physicianMedical diagnosis: physician Needs assessment: assessors with a background as

nurse, social worker, physiotherapist, ergo therapist, etc. Multi-disciplinary team: physician, senior assessor; for

complicated situations e.g., multi-problem cases Information from caregivers therapists physicians Information from caregivers, therapists, physicians Post-bachelor level education for assessor


Assessment FrameworkClient

Medical diagnosis/disease/function disorders

Disabilities / participation problems

Environment

Existing facilitiesExisting facilities

1. “Picture” of the client in his surroundings

Treatment, rehabilitation, education, adaptation

Regular care provided by members of the same household

Provisions from other laws/actsProvisions from other laws/acts

General accessible facilities

2. Gross need for care

Care given by informal caregivers

3. Net-need for care


4. Decision 5b. With accomodation5a. Without accomodation

Long-term Care: Who?

Target groups Residential care Home care

Demented elderly people

Elderly people with somatic disorders

55,000

109,000

17,000

210,000

Disabled people

People with psychiatric disorders

66,000

23,000

47,000

61,000

Total 253,000 335,000


Costs of Long-term CareT t l t A t Total costs (billion euro’s, dollars)

Average amount per client (euro’s, dollars)

Care in kind:id ti l € 14 8 ($11 4) € 58 500 ($45 000)• residential

• home care€ 14.8 ($11.4)€ 5.9 ($ 4.5)

€ 58,500 ($45,000)€ 22,000 ($17,000)

Personal care budget € 1.3 ($1, before cuts) € 14,500 ($11,200)


Long-term Care in Historic Perspective

1968 1998 2008

CostsAWBZ/EMEA- < € 1 ($0 77) € 12 8 ($9 8) € 20 5 ($15 8)AWBZ/EMEA-care1 (billion euro’ s, dollars)

< € 1 ($0.77) € 12.8 ($9.8) € 20.5 ($15.8)

Number of clients about 55,000 about 900,000 about 600,000Number of clients about 55,000 about 900,000about 500,000 (excl. GGZ-extramural)

about 600,000

Premium AWBZ/EMEA

0.41 % 9.60% 12.15%


Various Data Deductible EMEA on average 5 – 8 % 600,000 EMEA entitlements of which 70,000 PCB PCB: nursing, personal care, supportive guidance (>SSA) 3 5% of GDP is spent on long-term care3.5% of GDP is spent on long term care 8.2 long-term care workers per 1,000 population over 65

(OECD: 6.4)H l h k 1 3 illi 400 000 d d 15 20 Health care workers 1.3 million; 400,000 more needed 15 – 20 years

Financing EMEA: 70% premium (12.5% payroll tax), 25% tax, g p ( p y )5% deductible

PCB costs risen on average 23% annually (non-PCB: 4%) Number PCB clients 13 000 (2001); >130 000 (2011)


Number PCB clients 13,000 (2001); >130,000 (2011)

Future Perspective 2020

2008 2020 Change

Population 75+Dementia

1.7 million200,000

2.8 million250,000

+1.1 million+ 50,000

Working population 7.5 million 7.7 million +0.2 million


Social Support Act Covers care and support in cases of protracted illnessCovers care and support in cases of protracted illness,

invalidity or geriatric disease, as well as the area of well-being and welfare policy

Aim is to ensure that all citizens participate in all facets of the Aim is to ensure that all citizens participate in all facets of the society, whether or not with the help from friends, family or acquaintances

All citizens of the Netherlands Implemented by the municipalities; the minister defines the

framework within which each municipality can make its own p ypolicy, based on the composition and demands of its inhabitants


WMO Provisions (1)

Housekeeping/ Wheelchaircleaning


WMO Provisions (2)

H i d t tiHousing adaptations


WMO Provisions (3)

Transportation Facilities


Challenges: Ageing populationAgeing population Labor market More demanding society / clientsg y Financial sustainability …..?


Changes in 2012 budget (1) Personal Care BudgetPersonal Care Budget

− Limit of PCB to clients with “residential indication”

− Budget increase PCB by 5% (>75%)Budget increase PCB by 5% (>75%)

− Payments only via bank account

− Submit care plan to insurance companySubmit care plan to insurance company

− Reinforcement Health Inspectorate, high trust/high penalty, expansion, breaking up care organizations (quality/patient

f t )safety)


Future Changes (1) Exceptional Medical Expenses ActExceptional Medical Expenses Act

− Law on Entitlements: care plan, 8 subjects, reinforcement position of client

− Various programs to implement innovations

− Program to prevent assault and battery of elderly persons

− Reduction bureaucracy


Future changes (2) Exceptional Medical Expenses ActExceptional Medical Expenses Act

− Indications: more standard indications, mandated indications, indication 5>15 year, over 80 years just registration

− “Results financing” (definition of result “areas” ?)

− Restrict access EMEA to persons IQ < 70

− Separation accommodation and care


Documents

International Perspectives and SolutionsInternational ...iltciconf.org/2012/index_htm_files/08-InternationalPerspectives.pdf · arti l d t bli h d b t l iticles and reports published