1. Alexander Spermann, ZEW European Conference on Long-term Care 21 October 2005 Discussion of Roland Eisen‘s 10 Years Long-Term Care Social Insurance in Germany: What Economists expected, what happened and what we learned for the future design

2. 2 Disincentive I Heterogeneous LTC insurers but unitary contribution rate 1.7% AOK  no competition between public insurers  no incentives for public insurers to produce LTC efficiently

3. 3 Disincentive II LTC-SI for employees with gross income below Y* higher risk contribution rate 1.7 % of Y g Private LTC for self-employed, public officers, and high income earners above Y* low riskindividual premium ≤ 1.7 % of Y g Dual system

4. 4 Disincentive III Level I Level II Level III home care nursing home care Disincentive to switch to nursing home, especially for level I and II But preference of frail elderly to stay at home

5. 5 Disincentive IV No incentive for nursing home owners to help frail elderly to reach lower care levels III III

6. 6 Alternatives (German discussion) 1.Abolition of private LTC Proposal of incumbent and future health minister, Ulla Schmidt (SPD) intensely discussed: use 14 billion € savings of the private LTC insurance companies to finance the public insurance deficit

7. 7 2.Slow transition from public LTC to private LTC Proposal of majority of health economists in Germany Insurance obligation for everyone Risk premium according to age and sex like status quo in private LTC insurance But insurers have to accept frail elderly Supplementary tax financed transfers for low-income earners

8. 8 3.Moderate reform within LTC-SI Proposal of some German economists Abolition of care level I or convergence of payments between home care and nursing home care More competition between public insurers

9. 9 4. Integration of LTC and health insurance Proposal of some economists 5. Abolition of LTC, back to 1993 No proponents