1. PETER GONDA Conservative Institute of M.R. Štefánik; Socia Fdn. SLOVAKIA Financing of Long Term Care in Slovakia: Comparison with other OECD Countries „Development in Community-Based Care and Public Policy“ (IAHSA Conference „Creative Solutions for an Aging Society: Sharing the Wisdom, Norway, 27.-29. June 2005)

2. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 2 1. Starting points  Long term care in Slovakia = virtual „system“ ! System of LTC financing LTC for relevant clients (frail elderly and severe disabled people) does not exist, since: financing a care for any such client has absolutely different arrangements in social and health care system, even same or similar services in social and health sectors are financed differently = financing according to sectors and type of institutions, not clients and type of expenditure)  Slovakia (similarly as other new EU members) needs to built a system of LTC, including system of LTC financing.

3. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 3 1. Starting points  Economic situation – still limiting factor of financing social and health systems, because:  growing, but still insufficient performance of economic entities (Chart 1)  limited public sources for LTC financing, accompanied with public finance deficit and excessive and distorted public expenditure (high demands for other expenditures) – „ crowding out in public expenditure“ – Chart 2 growing, but still low income of many individuals and households (distinctively LTC clients: old age and disability retired)

4. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 4 1. Economic and political framework Chart 1 Level of GDP per capita Slovakia to EU-15 and real change of GDP Slovakia Source: Eurostat, Statistical Office of the SR

5. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 5 1. Starting points Chart 2 Government expenditure by functions in Slovakia (2003) Source: Author, Ministry of Finance of the SR

6. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 6 1. Starting points  Political situation: health and social reforms inter alia have lead to: improvement in conditions for multi-source financing more transparent financial flows higher and more clear responsibility of stakeholders, but also stronger pressure on people from LTC target groups  Commitment of the Slovak Government to create new (integrated) LTC system, but its implementation was postponed to 2006 = risk of non-acceptance by new government

7. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 7 2. Current LTC Financing  Ratio of LTC expenditure to GDP (according to first estimations for SR) = circa 0.9% (2002)* Chart 3 LTC expenditure to GDP Source: Author, OECD (2003), Gibson (2003), Howe (2003) * Preliminary data

8. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 8 2. Current LTC Financing  Structure of LTC expenditure (2002)*: 1. Low expenditure on institutional care as % of total LTC spending (circa 38%) does not mean adequate domination home and community care 2. Expenditure on benefits (55% of total expenditure) exceeds the costs on services (45%) 3. Expenditure in social care (circa 90%) considerable dominate to the health care expenditure (10%) 4. Public expenditure (92%) significantly exceeds the private (8%).

9. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 9 2. Current LTC Financing  Community – institutional mix REASON of this paradox (1): structure of „non-institutional“ care - home and community care = 7% of total expenditure - benefits intended to home care 21% of total expend. - benefits no intended to care 34% of total expenditure  Home and community care, incl. cash benefits to home care, in SR > home and community share in many OECD countries, but but it is contrary in case „without all cash benefits“ (Chart 4)

10. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 10 2. Current LTC Financing  Community – institutional mix Chart 4 Institutional vs. home and community care Notes: (1) Expenditure on home/community care (and total expenditure) include also benefits directly related to care, but no compensation benefits. (2) Expenditure on home/community care (and total expend.) do not include cash benefits. Source: Author, OECD (2003 )

11. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 11 2. Current LTC Financing  Public-private mix Chart 5 Comparing public and private expenditure (2002) Source: Autor, OECD (2003), Howe (2003)

12. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 12 2. Current LTC Financing  Public-private mix of financing Predomination of public source (about 92% in 2002) is result of: ! significant difference between financing relevant clients in health care and social system, since: -health care – almost „free of charge“ access to services (with marginal user fees for dental care, related services, issuing prescription, drugs... -social system – means tested payments for services in facilities (partially for lodging, boarding, maintenance and attendance care)...

13. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 13 2. Current LTC Financing  Public-private mix: financing Predomination of public source is also result of: ! difference between type of public source - health care – from mandatory and public social/health insurance (financed by public and private Health Insurance Companies) - social system – from taxes (financed by central and local governments)  Since social system is dominant, thus taxes are main sources of (public) LTC are taxes (general taxation) – similar as in Norway and UK, but in contrary to „contributions system“ in Netherlands (Chart 5)

14. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 14 2. Current LTC Financing Chart 6 Comparison of public sources in selected countries Source: Author, OECD (2003), Howe (2003)

15. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 15 2. Current LTC Financing  Public-private mix in a social and health systems Chart 7 Example of structure of financing social and health facilities SOCIALSOCIAL HEALTHHEALTH Source: MoH SR, MLSaF SR, author

16. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 16 2. Current LTC Financing Chart 7 Approaches to the Application of Eligibility Source: Author, OECD (2003), Howe (2003)

17. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 17 2. Current LTC Financing Chart 9 Approaches to the Application of Co-payments Source: Author, OECD (2003), Howe (2003)

18. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 18 2. Current LTC Financing Chart 10 Comparisons of Approaches to the LTC Integration Source: Author, OECD (2003), Howe (2003)

19. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 19 2. Current LTC Financing Chart 11 Comparison of containing the costs of LTC Source: Author, OECD (2003), Howe (2003)

20. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 20 3. Current problems and future risks  Main problems of current financing:  excessive share of public financing and low pressure on personal responsibility (particularly marginal private financing in health part of LTC)  absolutely different arrangements of LTC financing in social and health parts (sector-based financing)  financing does not correspond to character of expenses (nursing care, related services...) and to different responsibilities of payers  Insufficient focusing on real needs clients, their families and relatives as part of home and community care.

21. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 21 3. Current problems and future risks  insufficient cost restrictions, e.g. on demand side followed from no strict „gate-keeper“ (missing clear link between assessment and financing)  huge portion of cash benefits, mainly allowances does not relating to care (but income support) in comparison with lack of services  low weight of home and community services and their problematic financing by Local and Regional Self- governments (with no clear responsibilities)  inefficient financing with additional costs and negative impacts on quality and efficient accessibility of services. 

22. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 22 3. Current problems and future risks  Community–institutional mix Key problems of home and community care followed from: no strict responsibilities of local and regional self- governments for financing LTC (splited between them each other and between them and central government), e.g. Example: contradictory responsibility in providing attendance care by Local Governments and cash Home Care Benefit (HCB) by Central Government  RESULT: rapid increasing of recipients of HCB, thereby increasing also costs = risks for financing in future

23. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 23 3. Current problems and future risks  Pressures on the increase of LTC expenses due to: ageing of population – considerably increasing population over 65 after 2011 (Chart 12) and earlier significant rising of number citizens over 80 years (Chart 13), rising requirements of clients, their families and client organizations to acquire more services with higher quality, expected increase in difficult diseases, incl. chronic diseases various forms of handicaps... new, more expensive, technologies, devices...

24. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 24 3. Current problems and future risks Chart 12 Year on year increase of Slovak citizens over 65 years Source: Infostat (2003), Author, MoH SR

25. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 25 3. Current problems and future risks Chart 13 Number of Slovak citizens over 80 years Source: Infostat (2002), Author, MoH SR

26. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 26 4. Systemic change of LTC financing  MAIN OBJECTIVE = to create financially sustainable system, which will support overall goal of new integrated LTC system „improving quality, accessibility and effectiveness LTC for persons with functional disabilities and thereby improving quality of their life and quality of life their famililies and relatives“.

27. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 27 4. Systemic change of LTC financing  KEY PRINCIPLES = universal entitlement of assessed individuals to care on standard level with strictly controlled expenses limited by the budget and with requirements of means tested co-payments = multi-source financing (public-private mix) with same setting of conditions for all entities = strict link between assessment and financing = financing according to (real need of) client and type of expenses = preference financing of home and community-based care in comparison with financing of institutional care

28. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 28 4. Systemic change of LTC financing  PROPOSED FINANCING – conceptual framework 1.Public sources = financing LTC on a standard level for assessed clients 1.1 Taxes – intended for financing social part of LTC - State Budget: cash benefits (also for aids and equipment) - Local and Regional Budgets: financing social services in home, community, and residential care 1.2 Public health insurance – intended for financing health part of LTC (mainly nursing care)

29. Financing of Long-term Care in Slovakia: Comparison with other OECD Countries 29 4. Systemic change of LTC financing 2.Private sources 2.1 Client = financing of costs on related services (total cost of boarding and housing), but with regard his/her financial possibilities - responsibility of Local Government to finance part of payment for client, who is not able to pay full costs 2.2 Other (voluntary) – from clients, relatives, sponsors... DESIRABLE RESULTS:  shifting weight of responsibility from Central Government to clients and Self-Governments  shifting weight of LTC expenditure from cash benefits to home and community services...