“In looking at how other countries have approached this problem, it became clear to us that there really is no ‘one size fits all’ solution,” explained Johannes Koettl, economist in the World Bank’s Europe and Central Asia Human Development Sector. “From tax-financed social safety nets like Medicaid in the United States, to universal entitlements financed either from taxes as in Austria or social security contributions as in Germany and Japan, what is clear, in all cases, is that some public risk-pooling is needed. Based on our review, we are suggesting that new EU member states and Croatia consider a universal system of basic protection for all individuals requiring long-term care service.”
Countries have already begun to address the challenges their aging populations pose to their long-term care systems through a variety of policy interventions. The study examines whether these interventions will be enough, or if there is a need for broader systemic reforms, especially in the area of Long-Term Care (LTC) financing. And, the report asks what lessons can be learned from the experience of countries that have been dealing with these challenges for a while.
Through an evaluation of the global literature on the financing and provision of long-term care services, the study develops a framework for public policy action on LTC. It applies this framework to four countries – Bulgaria, Croatia, Latvia and Poland – examining the current state of long-term care in these countries, and, by applying the framework, proposes possible options for policy-makers to consider.
In particular, the study suggests that lessons learned from OECD countries might be the most useful for the new EU member states and Croatia. One of the main findings of the report is that in all four countries, the financing and provision of long-term care services straddles the health and social sectors. Provision of service is largely public, with a limited role for the private sector and NGOs With the exception of Croatia, where two thirds of institutional homes for the elderly are privately owned.
In addition, the study found that four countries also apply a combination of cash and in-kind benefits related to long-term care services. In all the countries, the cash benefits programs are managed through the social assistance system. In Croatia, Poland, and Latvia, the social assistance system also includes in-kind benefits in the form of financing for social welfare homes. If an older person is assigned to a social welfare home, the cash benefit is directly provided to the social welfare home. In Bulgaria and Poland, the benefits are spread across social and health sectors. In Bulgaria, the social assistance system provides cash benefits. But in Latvia, informal care providers are not covered through the cash allowance. In addition, all four countries seem to largely provide long-term care in institutions.
Experiences from OECD countries suggest five broad directions for future policy reforms:
1. Medical to social services: Many dependent people and their families turn to the health sector, in particular hospitals, when really in need for social care. Long-term care provided by the health sector might both be inadequate and not cost-efficient.
2. Institutional to community-based services: In most countries, there is a lack of community-based care like daycare, assisted living, and home-based care. Patients overwhelmingly prefer to be taken care of at their homes, and in many cases it is also the more cost-efficient solution.
3. Fragmentation to coordination: In particular, between the health and the social sectors where the fragmentation of financing and provision of long-term care leads to cost shifting between sectors at the expense of patients’ wellbeing. Patient-centered care coordination, in particular through joint needs assessments, is key.
4. Producing services to purchasing services: In the future, a large share of all these economies will evolve around taking care of their people. This cannot all be done by the public sector. The public sector needs to define its core competencies and buy those long-term care services from the private sector that are suitable for private sector production.
5. In-kind benefits to cash benefits and vouchers: Cash benefits put patients in charge of buying the right type of care services and can play an important role in supporting informal care and spurring private sector response.
“Unfortunately there is no consistent data available on current expenditures on long-term care in all EU member states,” says Sarbani Chakraborty, World Bank Senior Health Specialist and one of the main authors of the report. “But, even without a deep financial analysis, it is easy to assume that the challenge of shrinking and aging population in these countries will soon create pressure both on state and individual families. Acting proactively to consider different policies and starting to implement them now provides an opportunity to mitigate against those pressures over the long-term.”