EASPD CONFERENCE 2006 FINANCING STRATEGIES AND THEIR EFFECTS ON EQUITY, CHOICE, EFFECTIVENESS AND SUSTAINABILITY RAPHAEL WITTENBERG 8 JUNE 2006, GRAZ

ACKNOWEDGEMENTS STUDY FOR DEPARTMENT OF HEALTH –ADELINA COMAS-HERRERA –DEREK KING –JULIETTE MALLEY –LINDA PICKARD STUDY FOR JOSEPH ROWNTREE FOUNDATION –BLEDDYN DAVIES –CAROLINE GLENDINNING –ADELINA COMAS-HERRERA –LINDA PICKARD

LONG-TERM CARE INFORMAL (FAMILY) CARE AND FORMAL SERVICES SOCIAL CARE, HEALTH, HOUSING AND OTHER SERVICES HOME-BASED AND RESIDENTIAL CARE SERVICES CASH AS ALTERNATIVE TO CARE

FINANCING STRATEGIES COVER: THE WAY RESOURCES ARE RAISED – GENERAL TAXATION, –INSURANCE CONTRIBUTIONS, –USER PAYMENTS; THE WAYS RESOURCES ARE SPENT – ELIGIBILITY CRITERIA, –CASH PAYMENTS OR SERVICES.

KEY POINTS DIFFERENT COUNTRIES HAVE ADOPTED DIFFERENT APPROACHES TO FUNDING LONG- TERM CARE A KEY ISSUE IS THE BALANCE BETWEEN PRIVATE FUNDING AND PUBLIC FUNDING FROM TAXES OR SOCIAL INSURANCE. FINANCING ARRANGEMENTS CAN BE ASSESSED IN RESPECT OF THEIR LIKELY IMPACT ON EQUITY, CHOICE, EFFICIENCY AND SUSTAINABILITY.

RISING DEMAND: EXTERNAL DRIVERS OF DEMAND DEMOGRAPHY: RISING NUMBERS OF OLDER PEOPLE DISABILITY: UNCERTAIN TRENDS AVAILABILITY OF INFORMAL CARE: CONCERN ABOUT POSSIBLE DECLINE REAL UNIT COSTS OF CARE: RISING

OTHER DRIVERS OF DEMAND EXPECTATIONS OF FUTURE COHORTS OF OLDER AND YOUNGER DISABLED PEOPLE FUTURE PATTERNS OF CARE FUTURE FUNDING ARRANGEMENTS

PROJECTIONS OF LONG-TERM CARE FOR OLDER PEOPLE, UK YEAR%GDP % % % % % % ON BASE CASE ASSUMPTIONS ABOUT TRENDS IN DRIVERS OF DEMAND

AIMS OF THE WELFARE STATE INSURANCE AGAINST RISKS REDISTRIBUTION TOWARD THOSE WITH GREATER NEEDS SMOOTHING RESOURCES OVER THE LIFE CYCLE STEPPING IN WHERE THE FAMILY FAILS Source: Hills et al, 1997

ROLE OF INFORMAL CARE MOST CARE IS PROVIDED BY UNPAID FAMILY CARERS SOME COUNTRIES STRESS PRIMARY RESPONSIBILITY OF FAMILES OTHER COUNTRIES STRESS SOCIETAL RESPONSIBILITY

DIFFERENT COUNTRIES HAVE DIFFERENT FUNDING SYSTEMS SOCIAL INSURANCE – –GERMANY, NETHERLANDS TAXATION AND MEANS-TESTED CHARGES – USA, ENGLAND TAXATION –AUSTRIA, DENMARK, SCOTLAND TAXATION AND SOCIAL INSURANCE – JAPAN

BALANCE OF FUNDING A KEY ISSUE IS THE BALANCE BETWEEN –PRIVATE FUNDING, FROM PEOPLE’S OWN RESOURCES OR PRIVATE INSURANCE, AND –PUBLIC FUNDING, FROM TAXES OR SOCIAL INSURANCE.

MODELS OF FINANCING PRIVATE SAVINGS PRIVATE INSURANCE PRIVATE INSURANCE WITH PUBLIC SECTOR SUPPORT TAX-BASED PUBLIC SECTOR SCHEME SOCIAL INSURANCE

CRITERIA FOR EVALUATION EQUITY EFFICIENCY AND EFFECTIVENESS INDEPENDENCE, DIGNITY, CHOICE AFFORDABILITY, SUSTAINABILITY

PRIVATE SAVINGS NO REDISTRIBUTION NO RISK POOLING NOT MAIN METHOD OF FINANCE

PRIVATE INSURANCE ADVERSE SELECTION RISK UNCERTAIN EXPENSE INADEQUATE INFORMATION LOW UPTAKE IN MOST COUNTRIES

PUBLIC SUPPORT FOR PRIVATE INSURANCE TAX CONCESSIONS PARTNERSHIP ARRANGEMENTS COMPULSION

TAX-BASED PUBLIC FUNDING SYSTEM PROGRESSIVE, DEPENDING ON TAX SYSTEM WIDE RISK POOLING, DEPENDING ON MEANS TEST FOR USER CHARGES HYPOTHECATION UNLIKELY

SOCIAL INSURANCE HYPOTHECATION LESS MEANS TESTING, IF ANY NATIONAL ELIGIBILITY CRITERIA

NATIONAL ELIGIBILITY CRITERIA OR INDIVIDUAL NEEDS ASSESSMENTS NATIONAL ELIGIBILITY CRITERIA –CONFER ENTITLEMENT TO CARE –MAY CREATE DIAGNOSTIC INEQUALITIES –MAY DISADVANTAGE THOSE ON THE MARGINS INDIVIDUAL NEEDS ASSESSMENTS –MAY NOT CONFER ENTITLEMENT TO CARE –MAY LEAD TO LOCAL VARIATIONS IN ACCESS –MAY BE MORE FLEXIBLE IN MATCHING RESOURCES TO NEEDS

CASH OR SERVICES: CONSUMER DIRECTED CARE CASH BENEFITS –OFFER MORE USER CHOICE IF SUPPLY AND INFORMATION AVAILABLE –MAY CONTAIN EXPENDITURE SERVICES IN KIND –MAY REDUCE PRESSURES ON INFORMAL CARERS INDIVIDUAL BUDGETS –INTERMEDIATE APPROACH – ENGLISH PILOTS

INFORMAL CARE MOST CARE IS PROVIDED BY UNPAID FAMILY CARERS CASH BENEFITS PROVIDE AN INCENTIVE TOWARD INFORMAL CARE IMPORTANCE OF SUPPORT FOR CARERS TENSION BETWEEN PROMOTING INFORMAL CARE AND PROMOTING LABOUR MARKET PARTICIPATION

USER CHARGES USER CHARGES MAY CONTAIN DEMAND OR RAISE REVENUE DIFFERENT RULES TEND TO BE APPLIED FOR DIFFERENT SERVICES CHARGES MAY TAKE VARIOUS FORMS: –WEALTH TEST - CAPITAL LIMIT –DISPOSABLE INCOME CONTRIBUTED –COPAYMENTS –TOPPING UP OF PUBLIC FUNDING

WANLESS SOCIAL CARE REVIEW WANLESS REVIEW EXAMINE THREE APPROACHES IN DETAIL: MEANS-TESTED SYSTEM (POSSIBLY WITH LIMITED LIABILITY) FREE PERSONAL CARE PARTNERSHIP, UNDER WHICH USERS MAKE 50% COPAYMENTS FOR SERVICES ABOVE A FREE MINIMUM

FREE PERSONAL CARE WIDER POOLING OF RISKS THAN MEANS-TESTED SYSTEM PROMOTES DIGNITY POTENTIALLY COSTLY, DEPENDING ON IMPACT ON DEMAND BENEFITS WEALTHIER PEOPLE AND THEIR HEIRS RELATIVE TO MEANS- TESTED SYSTEM

PARTNERSHIP WIDER POOLING OF RISKS THAN MEANS-TESTED SYSTEM PROMOTES CHOICE LESS COSTLY THAN FREE PERSONAL CARE, POTENTIALLY MORE AFFORDABLE BENEFITS WEALTHIER PEOPLE BUT LESS THAN FREE PERSONAL CARE

WHAT BALANCE TO SEEK BETWEEN DIFFERENT OBJECTIVES – EQUITY, CHOICE, SUSTAINABILITY? SHOULD PUBLIC FUNDING AIM TO ENCOURAGE FAMILY CARE OR FORMAL SERVICE PROVISION? DIFFERENT COUNTRIES HAVE CHOSEN A DIFFERENT BALANCE CONCLUSIONS