Long-Term Care Trends
International Forum on Long-Term Care: Executive Summary
Research Report
October 2003
AARP
International Forum on Long-Term Care: International Approaches
to Financing and Delivery
Hyatt Regency Washington on Capitol Hill
Washington, D.C.
Wednesday, October 22, 2003
Executive Summary
As a part of its Global Aging Program, AARP held a half-day forum on October 22, 2003 that examined how several European countries, Australia, New Zealand, and Japan have developed and/or reformed their policies with respect to long-term care. The primary goal was to understand the lessons that these countries' experiences might offer for the United States.
Introduction
William D. Novelli, AARP’s Chief Executive Officer, emphasized how much different countries have to learn from each other on issues related to aging, noting that most countries are wrestling with similar issues, albeit in somewhat different ways and from different points on the aging curve. Policies are needed to address one of the biggest issues facing most if not all countries−how to finance long-term care. But there are also other issues. Consumers want long-term independence, not long-term care. They also want options and choices, and they fear losing independence and control. Public policy decision-makers fear the mounting costs of public reimbursement programs, while providers fear that tightening reimbursement will make it impossible to meet the growing demands for higher quality services. These mutual fears and distrust threaten a downward spiral of budget cuts, quality problems, and litigation. To address these fears, governments need to look beyond the immediate budget crunch and make systemic changes to promote consumer choice and enhance the quality of services.
The Challenge of Long-Term Care: A Search for Solutions
Joanne Disch, PhD, RN, FAAN, AARP Board Member, and Professor and Director of the Katharine J. Densford International Center for Nursing Leadership at the University of Minnesota, reviewed international approaches to the financing and delivery of long-term care. Like Mr. Novelli, Dr. Disch emphasized that the needs of older people can and should be met in an environment of their choice, which surveys suggest is usually the home (as long as there is easy access to community-based services). Even so, some individuals still need to receive services in assisted living facilities such as residential care apartment complexes. But regardless of the setting, the key challenge facing countries is to create a situation where people receive quality care that is accessible and affordable to all who need it.
Different countries have tried to meet this challenge in different ways. Many are trying to introduce the concept of consumer-directed home care, which gives individuals, rather than agencies, control over the provision and delivery of home health services. Individual states within the U.S. are also beginning to get the message, and as a result the number of consumer-directed programs is growing. A 2001 survey conducted by the U.S. General Accounting Office shows that only two states do not offer at least one consumer-directed program. Dr. Disch highlighted a few examples of innovative programs in Indiana and Wisconsin.
The 2004 Long-Term Care Study: Preliminary Findings
Jeremy Hurst, head of the Health Policy Unit of the Organization for Economic Cooperation and Development (OECD), reviewed the preliminary findings from the long-term care portion of the OECD's Health Project (2001-2003), which is based on a review of 18 countries. Key findings related to expenditures on long-term care include the following: some countries spend up to 2.5 percent of their GDP on long-term care, although most spend less; institutional care still dominates spending, with private spending even more concentrated in institutional care; expenditures on long-term care are concentrated on the very old; the government's share of total funding for long-term care has increased significantly in some countries with new social insurance schemes, while growth has been slower in other countries; out-of-pocket expenditures for long-term care are much higher than for acute health care in most OECD countries; private long-term care insurance is growing in some countries, albeit from a very low base; and increases in expenditures are currently being driven more by policies to expand services than by the aging of the population.
The study will also examine policy issues and trends related to consumer-directed care. Key findings include the following: there is a trend toward more choice and participation for users of long-term care services; support for home- and community-based care as an alternative to institutional care is growing; policies to sustain the efforts of informal caregivers are gaining in popularity; consumers are increasingly being given the choice between having agencies hire and direct their care assistants and being allowed to do this on their own; competition and the growth of local "markets" for home care is increasingly being seen as a way to improve quality and cost-efficiency; and countries differ in the way that consumer-directed care programs are organized.
A third part of the long-term care study will attempt to project future expenditures based on a variety of assumptions. One analysis concluded that the proportion of GDP spent by governments on long-term care will double between 2000 and 2050.
Lessons from Abroad: International Approaches to Long-Term Care
The forum included a panel in which four experts described the approaches to long-term care that are being taken by other countries, drawing out potential lessons for the U.S. John Rother, Director of Policy and Strategy at AARP, moderated the session.
The German Experience
Franz Knieps, Director General for Health Care, Health Insurance, and Nursing Services at the Federal Ministry for Health and Social Security in Germany, described the German system for long-term care. Germany's long-term care system is financed primarily through public funds raised through income taxes paid by individuals and employers. Roughly 90 percent of Germans are enrolled in the public system; the remaining 10 percent, composed primarily of the wealthy, "opt out," instead purchasing mandatory private health and long-term care insurance.
Germany recently enacted a series of reforms with respect to long-term care. The reforms have met their goal of reducing dependency on institutional care−before they were enacted, 80 percent of those needing long-term care were served in institutional settings, while today that figure is only 25 percent. The first step in the German reforms was to establish a minimum home care benefit for all Germans in the public system. The second step was to allow those who receive care from family members or other acquaintances to opt out of the agency-based system, and to instead pay the caregiver directly for providing these services. The third step in the German reforms was to redefine the institutional benefit so that it became equal to the benefit for home health services. The final step was to enact safeguards to better ensure the quality of services in nursing homes, including bolstering the rights of residents of these homes.
Germany plans to continue reforming and improving the long-term care system. One of the key challenges facing the system is how to strengthen support and care for patients with dementia and their family members. Another challenge relates to controlling overall costs of long-term care.
The Dutch Experience
P. J. van de Kasteele, Deputy Director of the Department of Residential and Domiciliary Care and Seniors' Policy at the Ministry of Health, Welfare, and Sports in The Netherlands, offered an overview of the Dutch system for long-term care. The economic boom of the 1960s encouraged the Dutch government to enact a broad social insurance scheme for the whole population, one that originally covered only nursing home care. But over time the benefits expanded to include home nursing care in the 1970s, home care in the 1990s, and residential home care as of 2001. Today the system covers the entire population and is financed through a premium assessed on the basis of taxable income and administratively raised by government tax authorities. Total projected costs are $13 billion annually, equivalent to 2.7 percent of the Dutch GDP. The long-term care benefit is administered by health insurance companies that contract with the providers of services. The Netherlands has a substantial provider network set up to provide long-term care services. The Ministry of Education is responsible for vocational and professional schooling of those interested in careers in long-term care, and for training of staff in facilities. A division of the Ministry of Health projects the need for different types of medical specialists and works with the Ministry of Education to plan for schooling. Long-term care providers are not required to use any particular type of staff mix, but they are required to have a quality assurance plan. Anyone who wants to build a new facility must receive approval from the Ministry of Health.
The biggest problem facing the Dutch system is that patients do not pay their own bills, meaning that no one outside the government has much of an interest in cost control. This problem will become worse over the next 40 years, as the number of people age 75 and over is expected to double during this period. The government has made attempts to control costs in the past, primarily by limiting the building of new facilities. As a result, there are waiting lists for services.
The focus of the Dutch government going forward will be to emphasize home-based care rather than institutional care. The government is also beginning to rethink its financing of comprehensive benefits for the entire population. In addition, the government is looking for ways to introduce regulated market conditions into the delivery of care, so as to create an economic incentive for insurers, providers, and patients to improve the efficiency of the system.
Consumer-Directed Home Care in The Netherlands, England, and Germany
Joshua M. Wiener, PhD, RTI Fellow and Program Director of Aging, Disability, and Long-Term Care for RTI International, reviewed the results of a study (commissioned by AARP's Public Policy Institute) comparing consumer-directed home care in the Netherlands, England, and Germany. The development of publicly funded, consumer-directed home care programs represents a major innovation in the delivery of long-term care services. These programs give consumers, rather than home care agencies, control over who provides services, when they are provided, and how services are delivered.
• All three countries offer a choice of consumer- or agency-directed home care, using various systems for determining the size and administration of the consumer-directed benefit. In the Netherlands and England, any money paid must be spent on services, while in Germany there are no such restrictions. In the Netherlands and Germany, money can be paid to support informal caregivers, such as family members.
- The number of beneficiaries who choose consumer-directed care varies across countries and patient characteristics. In the Netherlands roughly one in 10 of those receiving home care services has opted for consumer-directed home care, while in England the comparable figure is only about two percent. In Germany, 75 percent opt for the cash payment.
- The role of informal caregivers also varies. In the Netherlands and Germany informal caregivers are supported, while England excludes close relatives from the system.
- Each country views the programs as a way to contain costs compared to agency-based care.
- Each country lacks traditional quality assurance mechanisms. While all three have minimal external review, oversight is not nearly as stringent as for agency-directed care. Instead, these programs rely on the consumer, competition across providers, and family members to ensure the provision of high-quality services.
The Japanese Experience
John Creighton Campbell, PhD, Professor of Political Science at the University of Michigan and an expert on social policy in Japan, reviewed Japan’s startling innovation in long-term care policy. The Japanese system is a public, mandatory, social insurance system in which all individuals over the age of 40 pay premiums based on income, and all those aged 65 and over are eligible for services, with eligibility determined by an activities of daily living (ADL) test. Neither income nor the availability of family care is taken into account. General tax revenues finance roughly half of the system, with the remainder coming from the premiums paid by workers and seniors themselves. Approximately 3.5 million individuals−equivalent to 14 percent of the 65-and-over population−have been certified as in need of services. Total costs are equal to about $30 billion a year in purchasing-power-parity dollars. By 2010, that figure is expected to rise to $70 billion, or 1.5 percent of GDP.
The current Japanese system is the product of reforms that began in 1990. After starting down the “road to Scandinavia” in 1990 with a major expansion of direct services for frail seniors, the government and the Liberal Democratic Party looked instead toward Germany. They came to see the advantages of a social insurance system financed largely through earmarked premiums, with delivery via individual entitlement and consumer choice, rather than tax-financed monopoly provision. The long-term care insurance scheme was passed in 1997 and implemented in 2000. The Japanese program has worked well thus far; 2.5 million Japanese citizens were certified for eligibility in the first year and the program has grown rapidly, by 45 percent over three years in terms of both funding and the number of people served.
The Japanese experience demonstrates that providing access to comprehensive long-term care is feasible and does not entail the same level of financial risk associated with medical care. Moreover, paying for services only (as opposed to also offering a smaller cash benefit, as in Germany) can actually result in cost savings.
Reforms and Best Practices in Australia and New Zealand
The final two presentations focused on the reform experiences of Australia and New Zealand.
The Australian Experience
Philip Davies, Deputy Secretary of the Department of Health and Ageing in Australia, provided an overview of Australia’s reform process. Over the past twenty years, the Australian long-term care system has undergone significant change. In the mid-1980s, the Australian Government introduced a service provision benchmark for residential care. In October 1997, the Australian Government introduced a structural reform package to produce a more seamless and sustainable system of long-term care delivery. A recent two-year review found that the reform package had improved access to care. In recent years, the Australian Government has substantially expanded the number of non-residential care options, has provided a number of older people with high-level care, and has substantially increased funding for programs to assist caregivers. A March 2003 paper broadly outlined additional proposed reforms, including aligning services with levels of need, developing a common access framework, reducing duplication in assessment and data collection, and streamlining administrative and accountability requirements. The Australian Government has also commissioned an independent examination of long-term financing options for the residential aged care sector. Over the next 40 years, Australian Government spending on long-term care is projected to more than double, from 0.72 to 1.77 percent of GDP, due to the doubling of the over-65 population and growing demands for new technologies.
Quality assurance (QA) and staffing represent two other important issues related to long-term care delivery in Australia. With respect to QA, the 1997 reforms introduced a system of accreditation aimed at improving quality of care. In 1999, the Australian Government and the aged care sector agreed on a 10-year forward plan to further improve the quality and safety of residential facilities. The Australian Government has also put in place a range of measures to safeguard and enhance consumer rights. With respect to staffing, the long-term care industry in Australia has had difficulties in recruiting and retaining appropriately educated and skilled staff. To help with this issue, the 2002-2003 government budget commits $AUD47.5 million over four years to encourage more people from rural and regional areas of Australia to enter or re-enter long-term care nursing, and to support the education and training of workers in smaller homes.
The New Zealand Experience
The Honorable Annette King, Minister of Health of New Zealand, reviewed her country's experience with respect to long-term care. Health and social care in New Zealand is funded predominantly through taxation, with a small private insurance market for health care. New Zealand has adopted the World Health Organization concept of "active aging" in developing policies related to older people. The New Zealand Positive Ageing Strategy, published in 2001, provides a framework within which all policies with implications for older people are developed. The health and long-term care component of the strategy focuses on supporting people to live at home for as long as it is safe and desirable to do so.
In October 2003, funding for disability support services for older people was devolved to 21 District Health Boards with responsibility for maintaining and improving the health of the population in their districts. The hope is that these District Health Boards will develop a continuum of care for the elderly, with incentives to focus on health promotion, disease prevention, and early intervention.
The majority of New Zealanders who need long-term care still live in their home. In fact, almost three-quarters (72 percent) of those age 85 and over live at home, 15 percent of whom live without any assistance. For those who need assistance, needs assessment and service coordination agencies undertake holistic assessments of needs, and work with individuals to develop a customized support package to meet these needs. These agencies have succeeded in reducing entry rates to residential care to a rate below that of the population growth in older age groups. At the same time the number of people receiving community support services has increased.
People age 65 and over who are assessed as needing long-term residential care can apply for a subsidy to cover all or part of the costs of their care. Access to a subsidy is means-tested based on income and assets. Most residential care is provided in the private sector in partnership with the government. Quality of care is monitored in part through the Health and Disability Sector Standards, which require residential care providers to establish safe practices and continuous quality improvement systems.
Looking ahead, New Zealand must grapple with an issue facing many other nations−workforce shortages. New Zealand faces workforce shortages across a range of health settings, including in long-term care, where there is a general shortage of registered nurses. To address this issue, training programs for caregivers, which in the past have developed in ad hoc ways, are now becoming more consistent across the nation. In addition, work is underway to develop minimum staffing levels in residential care facilities.
Conclusion
Ms. LeaMond closed the proceedings by noting that sharing "best practices" and innovative ideas can be extremely helpful to policymakers in the U.S. and other nations as they struggle to find strategies for addressing the tremendous challenges involved in providing timely, affordable, efficient, and high-quality long-term care services to everyone who needs them.