PETER GONDA Conservative Institute of M.R. Štefánik, Member of Socia Fdn., SLOVAKIA Financing of Long Term Care in Slovakia: Comparison with other OECD Countries Session 24-E. Development in Community-Based Care & Public Policy IAHSA Conference „Creative Solutions for an Aging Society: Sharing the Wisdom“ (Norway, June 2005)

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 2 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  Slovakia (similarly as other new EU members) needs to built a system of LTC, including system of LTC financing.

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 3 1. Starting points  Economic situation = still limiting factor of financing social and health systems, because:  growing, but still insufficient performance of economic entities (GDP per capita of Slovakia / EU-15 = 50%)  limited public sources for LTC financing, accompanied with public finance deficit and excessive and distorted public expenditure (high demands for other expenditures) – „ crowding out effect“ in public finance – Chart 1 growing, but still low income of many individuals (distinctively LTC clients: old age and disability retired)

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 4 1. Starting points Chart 1 Government expenditure by functions in Slovakia (2003) Source: Author, Ministry of Finance of the SR

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 5 2. Current LTC Financing  Ratio of LTC expenditure to GDP (according to first estimations for Slovakia) = circa 0.9% (2002)* Chart 2 LTC expenditure to GDP Source: Author, OECD (2003), Gibson (2003), Howe (2003) * Preliminary data

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 6 2. Current LTC Financing  Structure of LTC expenditure (2002)*: 1. Relatively low expenditure on institutional care (circa 38% of total LTC spending) does not mean adequate domination home and community care 2. Expenditure on benefits (55% of total LTC expenditures) exceeds the costs on services (45%) 3. Expenditure in social care (circa 90%) considerable dominate to the health care expenditure (10%) 4. Public expenditure (92%) significantly exceeds the private sources (8%).

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 7 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 expenditure - benefits no directly intended to care 34% of total expenditure  Home and community care, incl. cash benefits, to home care, in SR > home and community share in many OECD countries, but it is contrary in case „without all cash benefits“ (Chart 3)

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 8 2. Current LTC Financing  Community–institutional mix Chart 3 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 )

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 9 2. Current LTC Financing  Public-private mix of financing Chart 4 Comparing public and private expenditure (2002) Source: Autor, OECD (2003), Howe (2003), Huber (2004)

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries Current LTC Financing  Public-private mix of financing Predomination of public source (about 92% in 2002) is result of: ! significant difference between financing LTC in health and social system, since: -health system for LTC clients – free of charge access to services -social system – means tested payments for services in facilities (partially for lodging, boarding, maintenance and attendance care)

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 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 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)

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries Current LTC Financing Chart 5 Public sources in selected countries Source: Author, OECD (2003), Howe (2003)

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries Current LTC Financing Chart 6 Approaches to the Application of Eligibility Source: Author, OECD (2003), Howe (2003)

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries Current LTC Financing Chart 7 Approaches to the Application of Co-payments Source: Author, OECD (2003), Howe (2003)

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries Current LTC Financing Chart 8 Comparisons of Approaches to the LTC Integration Source: Author, OECD (2003), Howe (2003)

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries Current LTC Financing Chart 9 Comparison of containing the costs of LTC Source: Author, OECD (2003), Howe (2003)

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries Current problems and future risks  General problems of current financing:  excessive share of public financing and low pressure on personal responsibility  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.

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries Current problems and future risks  General problems (continuation)  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 in comparison with lack of services  low weight of home and community services and their problematic financing by Local and Regional Self- governments  inefficient financing with additional costs and negative impacts on quality and efficient accessibility of services. 

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries Current problems and future risks  Key problems of home and community care followed from: no strict responsibilities of local and regional self- governments for financing LTC 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

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 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 10) and earlier significant rising of number citizens over 80 years (Chart 11), 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...

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries Current problems and future risks Chart 10 Year on year increase of Slovak citizens over 65 Source: Infostat (2003), Author, Ministry of Health of SR

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries Current problems and future risks Chart 11 Number of citizens over 80 years Source: : Infostat (2003), Author, Ministry of Health of the SR

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries Systemic change of LTC financing  MAIN PRINCIPLES (in consistency with MAIN OBJECTIVE - financial sustainability) = 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 client and type of expenses = priority financing of home and community-based care in comparison with financing of institutional care

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries Systemic change of LTC financing  PROPOSED FINANCING – conceptual framework 1.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 LTC services in home, community, and residential care 1.2 Public health insurance – intended for financing health part of LTC (mainly nursing care)

Financing of Long-term Care in Slovakia: Comparison with other OECD Countries Systemic change of LTC financing 2.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...