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European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit120-Nov-161 SUSTAINABILITY AND FINANCING ASPECTS.

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Presentation on theme: "European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit120-Nov-161 SUSTAINABILITY AND FINANCING ASPECTS."— Presentation transcript:

1 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit120-Nov-161 SUSTAINABILITY AND FINANCING ASPECTS OF LONG TERM CARE Lidia Pola European Commission DG EMPL Unit E4 Social Protection and Social Services 22 February 2010

2 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit220-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit2 Outline The demographic challenge - Population projections and projections for public expenditure, including LTC – 2009 Ageing Report Modernising social protection systems – Social OMC – including health care & long-term care Related activities and policy initiatives in LTC: access, quality sustainability

3 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit3

4 European Commission A unique collaboration Projections for economic consequences of ageing and future public expenditure on pensions, health care, long- term care, education and unemployment transfers Repeat of projections carried out in 2001 and 2006 Joint project of Economic Policy Committee (EPC) and Commission (DG ECFIN) to ensure comparability while reflecting the diversity of welfare systems accross Member States 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit4

5 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit5 Ageing Report 2009 In 2007 some 20.7 million dependent persons, 65 years old or older, in the EU 27 Member States This could increase to some 30 million persons in 2030, and to 39 – 44 millions in 2060 –Care in institutions: from 2.9 to 8 millions –Care at home: from 5.5 to 13 millions –Informal or no care: from 12.3 to 20 million

6 European Commission Population 2008-2060 Labour force - Participation - Employment - Unemployment Labour productivity Real interest rate GDP Pensions National models Health care Long-term care Education Unemployment benefits Total age- related spending Overview of 2009 projection exercise

7 European Commission Main demographic indicators (EUROPOP2008)

8 European Commission Population projections: EUROPOP2008 20082060

9 European Commission Substantial increase in public spending ( pension, HC, LTC, UB, Education)

10 European Commission Health Care -Simple basic methodology but several sensitivity tests possible POPULATION PROJECTIONS AGE-RELATED EXPENDITURE PROFILES UNIT COST DEVELOPMENT TOTAL SPENDING ON HEALTH CARE Input data: (2a) Income elasticity of demand Sensitivity tests: (1) Alternative demographic projections (2) Health status (3) Alternative patterns of unit cost evolution *=*

11 European Commission Projected increase in health care expenditure – EU15 and EU12 EU15: from 0.7 to 2.4 (even 4.2% if technology is incorporated) EU12: from 0.2 to 2.8 (even 4.2% if convergence is incorporated) EU15 EU12

12 European Commission Main findings Europeans living longer than ever before, and hopefully in good health, is an enormous achievement and should not be seen as a threat Ageing leads to strong increase in spending Health status drives demand for care. Therefore, prevention and improvement in health status would substantially offset ageing effects, limiting future spending A population in better health will be able to work longer as it grows older, allowing higher productivity and labour participation, and will need less healthcare, ultimately resulting in decreased pressure on public finances. Supply side factors (technology, prices in health care sector, institutional setting) are expected to push up spending (but difficult to model) Newly developed methods for early diagnosis and treatments strongly contribute to growth in spending, but some of the medical progress may well be cost-saving in the long term. Investment in prevention and health technologies offers instruments for the population to stay healthy and productive for longer.

13 European Commission Model structure for long-term care Population by age and gender Size of the disabled population Formal care at home Formal care in institutions Informal care Unit cost of care at home Unit cost of care at institution Total spending Cash benefits and disability transfers Alternative patterns of unit cost evolution Increase in formal care provision Changes in disability rates Alternative demographic projections

14 European Commission Projection of dependent population EU15 EU12 Thousands

15 European Commission Pure effect of demographic changes

16 European Commission Alternative scenarios Pure demographic= no policy (or other) changes scenario Constant disability =disability rates by age assumed as constant AWG/EPC=impact of variability/changes (projections, dependency rates, different care options, costs perunit) 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit16

17 European Commission Alternative scenarios

18 European Commission Main findings Strong impact of ageing populations on long-term care expenditure. Public expenditure is very sensitive to trends in prevalence of disability among the elderly. Growing gap between the number of elderly in need for care and the actual supply of formal care services (possible alleviating effect: narrowing gap in life expectancy between women and men)‏ Relation between formal care provision and labour market situation (higher labour participation, higher effective retirement more formal care needed)‏ Need to reconcile two opposite trends: increasing need for formal LTC provision and/or growing pressure on public finances

19 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit1920-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit19 Outline The demographic challenge - Population projections and projections for public expenditure, including LTC – 2009 Ageing Report Modernising social protection systems – Social OMC – including health care & long-term care Related activities and policy initiatives in LTC: access, quality sustainability

20 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit2020-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit20 Modernising Social Protection Lisbon European Council 2000, four key objectives: Promote social inclusion; Make work pay and provide secure income; Make pensions safe and sustainable; Ensure access to high quality, sustainable health care Reinforced message in Council and European Council in 2002 and 2003 2004 European Parliament resolution need more cooperation in the area, requesting the Council to extend the principle of the OMC to health care; Commission should submit proposal; MS should agree common objectives and indicators by 2006

21 European Commission Modernizing Social Protection Several Communications 2001-2004: -extend OMC to health care and long term care -common objectives: Accessibility, Quality, Sustainability 2005 Communication 706 = STREAMLINED OMC 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit21

22 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit2220-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit22 The Open Method of Co-ordination The OMC = learn from each other, exchange experiences Common Objectives Common Indicators National Strategy Reports Joint reviews – Report = summary & synthesis Conferences Peer exchange of specific experiences between interested parties Studies etc Community Action Programme PROGRESS – financial support for projects

23 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit23 Social OMC = streamlined OMC One National Plan for social inclusion, pensions and health care & long-term care – 3 years Common objectives and indicators for each strand, and indicators. Health care and LTC is one chapter One Joint Report every year, but heavy and light years To match with National Reform Programs of revised Lisbon strategy

24 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit2420-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit24 The OMC Objectives – in one Member States should (strive to) ensure access for all to high-quality and sustainable health care and long- term care.

25 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit2520-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit25 OMC- activities National reports, joint reports: 2005 Streamlined OMC, Common objectives 2006 National Reports 2007 Joint Report 2008 LTC paper, with SPC 2009 Joint Report 2010 Commission Staff Working Document –2011 Communication ? 2011? Guidelines for National Reports 2011? National Reports 2012? Joint Report, with support doc & country doc

26 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit2620-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit26 Social OMC - LTC - latest outputs The general cycles of National Reports and Joint Reports ‘SPC’ LTC Report April 2008 Joint Report 2009 and Supporting Doc. –LTC definition – close to OECD – similar as SSGI Biannual report Council Conclusions 30 Nov 2009 –Review situation in 2010 - a CSWP MISSOC Analysis 2009 on LTC

27 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit2720-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit27 LTC Key message in JR 2009 Member States are striving to establish and strengthen systems for quality long-term care, to create a solid financing basis, to improve care coordination, to ensure sufficient human resources and support for informal carers.

28 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit2820-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit28 Sustainability: How provide support and/or services How much from society –Money, support services, services in kind –Geographic distribution and access How finance –Private financing, social insurance, tax financed Efficiency, care coordination Promote healthy life, prevention Personnel –Recruitment, training, mobility –Working conditions –Support to informal carers

29 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit2920-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit29 Outline The demographic challenge - Population projections and projections for public expenditure, including LTC – 2009 Ageing Report Modernising social protection systems – Social OMC – including health care & long-term care Related activities and policy initiatives in LTC: access, quality sustainability

30 European Commission Ministerial Conference on the Financial Sustainability of Health Systems – Prague May 2009 Policy Brief 11: How can European States design efficient, equitable and sustainable funding systems for long-term care for older people (WHO) 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit30

31 European Commission Key messages and policy options Challenges to sustainability !!! Policy options: - Universal system: cover entire population at a high cost -Safety net system: concentrates support on specific subgroups -Progressive universalism: combines universal entitlement with means-testing 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit31

32 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit32 Social Situation Observatory – Research activities LSE Health A number of documents on health and LTC Reuse information – take step further Studies and research on LTC financing

33 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit3320-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit33 Related EMPL activities Demographic ageing, challenges Intergenerational solidarity Especially vulnerable groups Counteract abuse and maltreatment Deinstitutionalisation Disability action plan Antidiscrimination, human rights Effects of current crisis ‘White jobs’, sectoral restructuring

34 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit3420-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit34 Other related activities DG ECFIN –Projections DG SANCO –Healthy Ageing –Health Workforce DG MARKT DG COMP DG REGIO DG RESEARCH

35 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit35 THANK YOU !

36 European Commission 20-Nov-16Directorate-General for Employment, Social Affairs & Equal Opportunities ─ Unit36 Age pyramids for the EU25 population in 2004 and 2050

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