How can European states design efficient, equitable and sustainable funding systems for long-term care for older people?
Policy issue and associated policy challenges
- Long-term care expenditures are projected to rise significantly as a percentage of GDP in many countries. In OECD countries this is estimated at between 2% and 4% by 2050. In the EU25, by 2040 the 65+ age group will account for 28% of the population.
- Population ageing, changes in informal family support, increasing care costs and raised expectations of services pose major challenges to sustainability.
- State supported collective funding solutions can ensure that protection is provided to all those in greatest need and also help avoid catastrophic costs.
- Private sector solutions alone have failed to provide a sustainable insurance system that can cover a large proportion of the population. Continued reliance on family support is not possible for all.
- One policy option is the provision of a safety net system that minimizes state intervention and concentrates support on one population subgroup: those individuals lacking the financial ability to pay for the cost of services. Experience suggests this can be very effective in controlling state expenditure, but tight restrictions on eligibility can generate significant unmet need.
- Another option is a universal system that covers the entire population but at significantly greater cost. Co-payments may still be levied for some services. Tax-funded universal systems employ expenditure constraints and define eligibility criteria to optimize resource use. Social insurance funded systems tend to be needs driven rather than budget constrained, but in the absence of cash payments can lack flexibility.
- A progressive universalism approach combines universal entitlement with a means-tested element. The universal nature of support can increase public support for the system among those who would not qualify for some benefits under the minimum safety benefit system. As in the case of universal schemes, this can also have the effect of raising the profile of long-term care services, and reduce the stigma attached to the receipt of care in means-tested systems.
- To be sustainable long-term care systems need to be affordable, fair and flexible. In a given context, public consensus needs to be achieved around any mechanism of long-term care funding.
- National governments, as part of their stewardship of the health system, can consider steps to: (i) ensure that comprehensible information and advocates to help individuals navigate long-term care systems are in place; (ii) assure quality standards, provide support for informal carers and facilitate flexibility in care package choices (such as through cash payments); and (iii) pursue measures to improve coordination between the long-term care and associated sectors.
- With many countries facing similar challenges, Member States of the European Region may be able to draw on lessons from international experience in long-term care systems, both from Europe and beyond.