On the Inclusion of Dementia Patients into Compulsory LTC-Insurance in Germany - A Sustainable Step? On the Inclusion of Dementia Patients into Compulsory LTC-Insurance in Germany – A Sustainable Step? Jasmin Häcker und Bernd Raffelhüschen University of Freiburg Research Centre for Generational Contracts European Conference on Long-Term Care, Mannheim

On the Inclusion of Dementia Patients into Compulsory LTC-Insurance in Germany - A Sustainable Step? 1The Status quo of Long-term Care Insurance 2Projection of Dementia Patients and Sustainability 3Citizens‘ Insurance vs. Partial Funding Strategy 4Conclusion

On the Inclusion of Dementia Patients into Compulsory LTC-Insurance in Germany - A Sustainable Step? Method of Generational Accounting 1. The Status quo of LTCI Population projection Age-specific net contribution payments revenues (contribution payments) expenditures (transfer receipts) 159,2 sum 159,2 National account budget for the base year age Euro Sustainability gapGenerational accounts

On the Inclusion of Dementia Patients into Compulsory LTC-Insurance in Germany - A Sustainable Step? 1. The Status quo of LTCI Fig. 1: Age-specific contribution payments and transfer receipts of LTCI

On the Inclusion of Dementia Patients into Compulsory LTC-Insurance in Germany - A Sustainable Step? 1. The Status quo of LTCI Fig. 2: Sustainability gaps of LTCI in the status quo with an increase in LTC costs by 1,5% (scenario 1) and 2,5% (scenario 2) (base year 2003, r=3%, g=1,5%) Fig. 3: Development of the contribution rate of LTCI in scenario 1 and 2 (base year 2003, r=3%, g=1,5%)

On the Inclusion of Dementia Patients into Compulsory LTC-Insurance in Germany - A Sustainable Step? 2. Projection of Dementia Patients and Sustainability Age-specific prevalence rates of dementia patients (Bickel (2000)): over 90Age-group Prevalence rate ,2 % ,8 %6 %13,3 % ,9 %34,6 % According to the 5th variant of the 10th coordinated population projection the number of dementia patients can be extrapolated for all years after 2003

On the Inclusion of Dementia Patients into Compulsory LTC-Insurance in Germany - A Sustainable Step? Fig. 4: Development of the number of dementia patients and „all other beneficiaries“ for the years 2005 to 2050 (in percent) 2. Projection of Dementia Patients and Sustainability

On the Inclusion of Dementia Patients into Compulsory LTC-Insurance in Germany - A Sustainable Step? Fig. 5: Sustainability gaps of LTCI in the status quo and in case of additional benefits for dementia patients (scenario 3) (base year 2003, r=3%, g=1,5%) Fig. 6: Development of the contribution rate of LTCI in the status quo and in case of additional benefits for dementia patients (scenario 3) (base year 2003, r=3%, g=1,5 %) 2. Projection of Dementia Patients and Sustainability

On the Inclusion of Dementia Patients into Compulsory LTC-Insurance in Germany - A Sustainable Step? 3. Citizens‘ Insurance vs. Partial Funding Strategy Citizens‘ Insurance (Lauterbach/Nahles) Changes on the revenue side:  inclusion of all citizens in the pay-as-you-go scheme  increase in the assessment limit  increase in the assessment of contributions through including incomes other than wages Changes on the expenditure side:  Additional benefits for dementia patients  Increase in the outpatient in-kind transfers for the care levels 1 and 2: care level 1: 384 € 704 € care level 2: 921 € €

On the Inclusion of Dementia Patients into Compulsory LTC-Insurance in Germany - A Sustainable Step? Fig. 7: Sustainability gaps of LTCI in the status quo and in case of the citizens‘ insurance (base year 2003, r=3%, g=1,5%) Fig. 8: Development of the contribution rate of LTCI in the status quo and in case of the citizens‘ insurance (base year 2003, r=3%, g=1,5%) 3. Citizens‘ Insurance vs. Partial Funding Strategy

On the Inclusion of Dementia Patients into Compulsory LTC-Insurance in Germany - A Sustainable Step? Partial Funding Strategy (Stewens)  supplementary funded LTCI, mandatory for all 60 year-olds and younger in 2006  Adjustment of outpatient and inpatient in-kind transfers: € care level 2: 921 € care level 1: 384 € 400 € 500 € € € € outpatientinpatient care level 3: € € Freezing of the nominal transfer level Supplementary Insurance: benefits are adjusted annually Changes on the revenue side: Changes on the expenditure side:  Additional benefits for dementia patients 3. Citizens‘ Insurance vs. Partial Funding Strategy  + Fig. 9

On the Inclusion of Dementia Patients into Compulsory LTC-Insurance in Germany - A Sustainable Step? Fig. 9: Real term transfer level of the base year if the supplemetary insurance covers the loss in benefits of unfunded LTCI due to the freezing of the nominal transfer level 3. Citizens‘ Insurance vs. Partial Funding Strategy

On the Inclusion of Dementia Patients into Compulsory LTC-Insurance in Germany - A Sustainable Step? Fig. 10: Development of the contribution rate of LTCI in the status quo and in case of the partial funding strategy (base year 2003, r=3%, g=1,5%) 3. Citizens‘ Insurance vs. Partial Funding Strategy

On the Inclusion of Dementia Patients into Compulsory LTC-Insurance in Germany - A Sustainable Step? Conclusion  Neither of the reform options can curtail the problems of the LTCI  partial funding strategy does not fully account for the development in expenditures  citizens‘ insurance even aggravates the demographic burden  Without having solved existing problems, no new basis for claim should be created!