OECD Experience with Long Term Care Laurie Joshua Public Policy Consultant

Drivers of LTC Policy in OECD Population ageing, if not accompanied by a corresponding improvement in health status, leads to an increase in the number of dependent elderly and LTC needs (risks). Secondly, the availability of informal care is unreliable, increasing the need to resort to publicly financed formal care and thereby putting pressure on public expenditure on LTC Soci0-economic developments (pop growth, old age dependency ratios, total fertility rate, life expectancy at 60, and 80+ etc) Health status of population (communicable and non-communicable diseases) Patterns of LTC provision, organisational governance and financing the management of risks Human resource availability (formal and informal care supply) New technologies and medical progress ADLs are: eating, bathing, washing, dressing, getting in and out of bed, getting to and from the toilet and continence management. IADLS are: shopping, laundry, vacuuming, cooking and performing housework, managing finances, using the telephone, etc.

Projecting Pressures on LTC Systems Dependency levels places the greatest organisational and financial pressure on LTC systems. Dependency levels refers to disability translated into inability to perform ADLs and IADLs (Disability into dependency establishes need and demand for LTC) Number of people who will need and receive LTC Share and number of old and very old people expected in the coming decades is a key determinant - the risk to live with physical or mental disability leading to a dependency situation that requires LTC tends to increase with age, especially with very old age. Whether, as life expectancy increases, dependency levels will increase, remain constant or decrease. The propensity to provide care will be affected by the participation in the labour market, as well as the ability/willingness to provide care, which is likely to decrease as spouses, children and relatives themselves become older and frailer. Use of unit cost analysis based on the production of welfare framework Development scenarios to model LTC, for example, Demographic Scenario, Base Case Scenario, Constant Disability Scenario, Shift to Formal Care Scenario Life expectancy and Dependency Recent empirical research has not come to a clear conclusion regarding the question of the relationship between life expectancy and dependency levels. Some evidence suggests that specific causes of disability may become more prominent with increasing age. These disabilities can have a direct impact on the frailty of longer-living older people. In particular, the number of people with a dementia (Alzheimer's disease) is expected to increase Scenarios: The "demographic scenario" aims to isolate the size effect of an ageing population on public expenditure on LTC; for all types of LTC services, expenditure per user grows in line with GDP per capita. The "base case scenario" focuses in addition on the highly labour-intensive characteristic of the long term care services by letting in-kind LTC benefits profile grow in line with GDP per hours worked. The "constant disability scenario" aims to capture the potential impact of assumed improvements in the health (or non-disability) status of the Population The "shift to formal care scenario" assess the impact of a 10-year progressive shift into the formal service sector of 1% per year of dependent population who have so far received only cash benefits or informal care  

Financing LTC in OECD

Demographic Scenario, Current and Projected Levels of Public Expenditure on LTC as % of GDP (OECD/EU, 2015)

Components of Total Age Related Expenditure 2013-2060 (% of GDP)

Funding models for Managing LTC Risks vary… Broadly, there are four models of financing: each model with variants on the basic approach within it – BUT the lines between different models are often blurred: Social insurance model (e.g. Germany, Japan, Netherlands and Republic of Korea) Social democratic model (e.g. Nordic countries) Means-tested model (e.g. UK, USA, Australia) Hybrid systems/models (e.g. France, Poland)

Some common issues and trends in LTC across OECD

Some common issues and trends in LTC What balance of supply side and demand side subsidies is appropriate and how important is client choice? Strong focus on assessment systems and whether they are appropriate for determining need/access for different levels of LTC? How to coordinate the roles of different public actors in financing and provision, both across agencies and across levels of government? Does private LTC insurance have potential? The incorporation of LTC in new system of National Health System Accounts (OECD/EU/WHO framework ) Shift to ‘strength-based approaches’ Strength-based approaches go beyond simply assessing ADL/IADL functions and consider the person’s own strengths and capabilities, and what support might be available from their wider support network or within the community to help in considering what else other or alongside the provision of care and support might assist the person in meeting the outcomes they want to achieve. In order to do this assessors look at the person’s life holistically, considering their needs and agreed outcomes in the context of their skills, ambitions and priorities

Some OECD countries use demand side subsidies to increase client choice An approach of “personal budgets” where the public subsidy is given directly to people is used in Germany, Netherlands and UK, but still evolving Supports and acknowledges informal care arrangements and widens choice – can be split in some cases between cash benefit and in-kind services (e.g. Germany) May be particularly appropriate where the formal sector supply of LTC is constrained Often set at a lower level than the per person subsidy for formal care – e.g. 25% lower in Netherlands; just over half in Germany, and in UK carers allowance is based on opportunity cost of foregone income But may be resisted by formal LTC providers Need for clarification of the distinction between carers’ allowance for informal care arrangement; and payment for formal LTC service Requires explicit public debate on the role and responsibilities of families for care provision.

What assessment systems are appropriate for determining need for different levels of LTC? As ageing progresses and cost concerns rise, assessment systems on degree of need and public funding have become more important. Should LTC apply only to people with servere dependency or to all people with LTC needs? Many countries vary the public subsidy according to “care intensity” needs using an activities of daily living (ADL/IADL) approach in most cases, with growing emphasis on what people can do (strengths) Differing levels of complexity in grading of need – e.g. Germany three tier needs decision; Japan more complex questionnaire and computer algorithm defines into 6 categories of need. Fiscal pressures to reduce the level of subsidy for lower category clients.

Coordination challenges within & across levels of government for LTC Different approaches to the roles of health and social welfare agencies in LTC: a question is to what extent the health and “non-health” elements of LTC are funded separately? Most OECD involve both national and local authorities – but the splits vary on financing roles and degree of spatial variation which systems tolerate. Balancing common standards with local autonomy remains a challenge even for Nordic countries.

Private LTCI and public financing Mandated private LTCI such as Germany exists But even in quite sophisticated financial markets, voluntary private LTCI is not dominant, e.g. UK had 30,000 people privately insured in 2014; USA around 7 million policies covering around 10% of those 65 and older. France highest private LTCI share (3 million out of 14 million people > 60 years, but even there demand side issues, adverse selection problems etc.

Risk Governance in LTC

Assessing Unit Costs of LTC Programme (Residential, Community, Home Care etc) Economic costs: The pursuit of economy requires detailed and accurate cost information, but—in its strictest sense—pays no heed to the impact of lower spending on LTC users, families, or communities. Economy is closely linked to cost. Effectiveness: Improving effectiveness means enhancing user welfare and quality of life or increasing the number of clients supported, services delivered, or referrals processed. Effectiveness is closely linked to outputs and outcomes. Efficiency: Efficiency combines the resource and effectiveness sides of LTC. There are many definitions of the term, including allocative and productive. The pursuit of efficiency can mean reducing the cost of producing a given level of outcomes (or effectiveness), or improving the level of effectiveness or the volume and quality of outcomes achieved from a fixed budget. Cost effectiveness is a measure of efficiency in the transformation of resources (summarised in terms of their costs) into outcomes (often called effectiveness in economic evaluations). Equity: Equity refers to fairness. Two kinds can be distinguished: horizontal equity refers to the equal treatment of equals (individuals with the same ‘needs’ should receive equivalent amounts of care or support), and vertical equity refers to the unequal treatment of people with

Identifying Governance Arrangements for LTC Service Delivery Note: The governance arrangements for service delivery will help Determine the workforce planning requirements and the service provider criteria Quality assurance and inspection arrangements Prevention and rehabilitation arrangements Contracting options

Key Governance Questions for LTC in SSA What level of government is optimally placed to undertake the responsibility of commissioning LTC services, generate economies of scale, and keep transaction costs in check? Which social risk management systems are most appropriate for financing LTC? Which level of government is best equipped to co-ordinate the licensing of providers of LTC services? How will volume of clients prices for LTC services [residential, home and community-based] be determined in the absence of reliable estimates of unit costs and stock and flow data? How will the administrative and legislative fragmentation of line ministry responsibilities for LTC be reduced to ensure that health, social care and social assistance work together? How will inspection, auditing and control and functions be aligned to take account of various components of the LTC service delivery system? What steps need to be taken to reduce dissonance between strategic and budgetary planning at central government and local government levels? (minimise the risk of unfunded mandates)