Funding Long-term Care. Why, How And for Whom?
Long-term care covers various social and health care services. According to a recent survey, there are 160,900–190,500 people living in Estonia who use outside help to cope in their daily lives.
A study conducted in the USA found that a half of the people who are 65 years old at present will need long-term care services at some point in the future. The amounts of money needed for that are very large, many people cannot afford it, and from the point of view of society, such spending is ineffective. Thus, long-term care is a huge and costly risk, and managing it is essential for the quality of life of each person and their close ones.
The primary aim of funding long-term care services is covering the risk of individual long-term care services and costs for each person, not redistributing resources within society. Redistribution provides tequal services to everyone, regardless of their ability and willingness to contribute to the system during their lifespan. In Estonia, long-term care is mainly provided by families and close ones. It is a large expense for society if people have to be carers because of need, and not by their free will. In the future, the role of professional and financed services will increase, as will the volume of services connected with technology.
The Foresight Centre has drawn up four development scenarios that show how the funding of long-term care may develop in Estonia and what services can be provided. If the present system continues, Estonia will reach the scenario “SOS”, where both public and private sector funding is small and a large part of the risk will have to be borne by the person needing assistance.
If, however, the state is actively engaged in increasing the active responsibility of the people themselves, we will have the scenario “Money. Money, Money”. The total funding is larger because people have become aware of the risk of long-term care; a system has been created where it is possible to stand for one’s own welfare.
In the scenario “The Winner Takes It All”, the state deals only with developing the public sector funding.
In the scenario “People Need Love”, private and public funding develop equally. The total funding is large, and this is the system that is the closest to the current situation. Although all systems have their own positive and negative aspects, the least preferred is the system closest to the current situation.
The Foresight Centre’s report on the future of long-term care suggests five solutions for improving the funding of long-term care during the next 15 years, starting from increasing funding by the state (from three sources), while creating a suitable environment for the increasing contributions of private sector (two sources) that in the future limit the share of state expenses.
- A long-term care insurance will be created that is financed from household incomes or real estate tax.
- In 15 years, the general budget of the public sector could contribute nearly in the same order as specialised insurance. That would ensure minimal protection to all people, would not depend on a specific tax base, and enables flexibility in the state budget.
- Separate funds must be included in the social security budget for the people who are unable to finance their own contributions.
- People’s own resources as self-financing that will be covered from savings.
- Insurance contracts and solutions relating to real estate, including reverse mortgages, that can also be linked to insurance cover.