Social and Health-Care Policy for the Elderly in EU

Transcription

1 Bulgaria Serbia IPA Cross-border Programme Social and Health-Care Policy for the Elderly in EU Project name: Establishment and development of social infrastructure N 2007CB16IPO A recent research of World Bank shows that Bulgaria s aging population means increasing pressure on long-term care services and poor life quality. The project is co-funded by EU trough the Bulgaria Serbia IPA Cross Border Programme Проектът е съфинансиран от Европейския съюз, чрез Програмата за трансгранично сътрудничество по ИПП България - Сърбия This publication has been produced with the assistance of the European Union through the Bulgaria Serbia IPA Cross-border Programme. The contents of this publication are the sole responsibility of Municipality of Slivnitsa and can in no way be taken to reflect the views of the European Union or the Managing Authority of the Programme.

2 Social and Health-Care Policy for the Elderly in EU A recent research of World Bank shows that Bulgaria's aging population means increasing pressure on long-term care services and poor life quality. Bulgaria, as well as the other new EU member states and Croatia are facing a challenge many Western countries have been facing for years aging populations leading to increased demand for long-term care services. This is made doubly challenging because there are fewer potential caregivers to care for more dependent people; while at the same time, a decreasing working age population has to finance higher public expenditures on long-term care. Universal long-term care and better coordination are critical for these countries, according to the new World Bank study, "Long Term Care Policies for Older Populations in new EU Member States and Croatia: Challenges and Opportunities" 1. In 2025, more than one in five Bulgarians will be more than 65 years old. On average, 1 Long-Term Care Policies for Older Populations in new EU Member States and Croatia: Challenges and Opportunities November 30, 2010 A WORLD BANK STUDY

3 Bulgarians live 73.3 years, with men s life expectancy at 69.8 years and women 77 years. Today, 2,192 million Bulgarians are retired pensioners, with the average Bulgarian pensioner at 71.2 years old. There are four working Bulgarians for every elderly resident, and by 2050 there will be less than two working persons for every Bulgarian over the age of 65. These facts trigger the obvious conclusion: soon there will be an increasing demand for long-term care services. The new EU member states and Croatia are facing a rapidly aging population. In 2025, more than 20 percent of Bulgarians will be the age of 65 and over, up from just 13 present in 1990, and the average Slovene will be 47 years old, among the oldest in the world. One of the consequences of these demographic changes is the expected increase in demand among the older population for long-term care (LTC). The term long-term care services refers to the organization and delivery of a broad range of services and assistance to people who are limited in their ability to live independently over an extended period of time. Experience from OECD countries shows LTC is expensive and generates financial burden for individuals and households. There is considerable financial uncertainty over future LTC expenditures and private long-term care insurance systems are underdeveloped. The increasing good practice in OECD countries is to promote a policy of universal coverage. Yet, if countries are to adopt such policies, given the growing size of the older population and growing dependency ratios, they must closely examine the policies fiscal sustainability. Thus, the key policy challenge facing new EU member states and Croatia is how to balance the twin objectives of fair financing (where those in need are able to afford LTC) with fiscal sustainability. The objective of World Bank Summary Report is to highlight the main lessons learned from OECD countries with advanced LTC policies and the implications for LTC policymaking in new EU member states and Croatia. The present report only gives a breif review of the findings from the Framework Report on the financing, provision and regulation of LTC services. The Impact of Demographic Change on Supply and Demand for LTC Services The future demand for LTC services will be driven by two factors: first, the size of the older population (+65), especially the very old (+75) and second, the percentage of older people dependent or severely dependent, and therefore requiring help with Activities of Daily Living (ADL). The supply of LTC services will be strongly influenced by the number of healthy

4 people available to provide them and the amount of money available to fund them. All four case study countries are facing the double challenge of an increasingly older and more dependent society. The question facing the case study countries, and many others around the world, is how the marked increase of the elderly population will impact future demand for LTC services. For case study countries it is clear that the aging and increasingly dependent population will boost demand for LTC services at the same time the tax base and supply of healthy people to provide them steadily shrinks. Organization and Financing of LTC Services in Case Study Countries In all four countries, the financing and provision of LTC services straddle both the health and social sectors. Services are provided in both informal and formal settings, and in institutional and non-institutional settings and the mix of such services depend on the unique conditions in each country. Common characteristics of service provision in the four case study countries include: The provision of LTC services in both the social and health sectors are largely public. There has been tremendous growth in home- and community-based services in the past decade. Government efforts to decentralize have resulted in more services being provided at the municipal and regional level. There has been a limited role for the private and NGO sector in the provision of LTC services. In terms of LTC benefits, none of the case study countries have a universal entitlement system combining home, community and institutional care. Rather, LTC benefits, both cash and inkind, are limited and largely associated with the social assistance system. In a context where the health sector also, de facto, provides LTC services covered by health insurance, this could provide an incentive for the elderly to use health care institutions, which are typically more expensive than community- and home-based services. Obtaining a clear picture of the financing of LTC in the four case study countries is a challenge due to the lack of data on current expenditures, both public and private. In general, financing for health-sector LTC services is largely through the social health insurance system, with the exception of Latvia, which has a tax financed system managed through the

5 Ministry of Health. In the social protection sector, financing and provision is shared between the national government and municipalities, with the national governments making significant contributions to spending on the local level. The lack of data on LTC expenditures mainly stems from the undefined position of LTC between the health and social sectors, which makes it difficult to accurately collect data. Conclusions from the Case Study Countries The strong growth in home- and community-based services has helped cope with the growing number of elderly who need assistance with the activities of daily living. The fragmentation of services between the health and social service sectors can be seen in the types of benefits, eligibility criteria, and provision of benefits. It is also one of the main causes of the systematic lack of reliable data on LTC expenditures. The generally low levels of financing for LTC will have spill-over effects on the sustainability of health financing. The case study countries lack a coherent strategy and vision for LTC services, although it is important to note there are some incremental reform efforts underway. Future Policy Directions Policy Direction # 1: Develop a policy for universal LTC financing based on the concept of intergenerational fiscal sustainability. Use actuarial and other financial models to cost out the revenue and expenditure implications of expanding universal LTC coverage. Identify the appropriate LTC package and identify the role of supplemental LTC coverage through other instruments. Policy Direction # 2: Do not expand LTC coverage on an inefficient base but use LTC financing to control demand for LTC services and channel toward the right types of services (home-based services, care coordination, convert hospitals into community centers and not LTC institutions). Policy Direction # 3: Think proactively about how to leverage LTC service delivery reforms and encourage private sector provision. This depends a great deal on LTC financing policies and the overall regulatory environment. Policy Direction # 4: Develop a strong evidence-base on LTC financing and provision. As a part of developing an LTC policy begin monitoring LTC expenditures and whether LTC expenditures pose a burden on households or how households are

6 coping with increased LTC expenditures during old age. Build a database on coverage of LTC services and trends over time. The new EU member states and Croatia are facing a rapidly aging population. In 2025, more than 20 percent of Bulgarians will be the age of 65 and over, up from just 13 percent in 1990, and the average Slovene will be 47 years old, among the oldest in the world. One of the consequences of these demographic changes is the expected increase in demand among the older population for long-term care (LTC). The term long-term care services refers to the organization and delivery of a broad range of services and assistance to people who are limited in their ability to live independently over an extended period of time. These services are designed to minimize, rehabilitate, or compensate for loss of independent physical or mental functioning and include assistance with Activities of Daily Living (ADLs), such as bathing, dressing, eating, or other personal care. Services may also help with Instrumental Activities of Daily Living (IADLs), including household chores like meal preparation and cleaning; life management such as shopping, money management, and medication management; and transportation. Experience from OECD1 countries shows LTC is expensive and generates financial burden for individuals and households. There is considerable financial uncertainty over future LTC expenditures; and private long-term care insurance systems are underdeveloped. Narrowlytargeted social assistance for LTC does not provide adequate coverage and protection. Therefore, the increasing good practice in OECD countries is to promote a policy of universal coverage. Yet, if countries are to adopt such policies, given the growing size of the older population and growing dependency ratios, they must closely examine the policies fiscal sustainability. Public spending on health and social benefits is already significant in new EU member states, leaving little fiscal room to make costly decisions on the organization and financing of LTC services.2the recent global economic crisis has also brought to the forefront the need for prudent monetary and fiscal policies. Therefore the key policy challenge facing new EU member states and Croatia is how to balance the twin objectives of fair financing (where those in need are able to afford LTC) with fiscal sustainability. As the experience in OECD countries shows the dual objectives are achievable. A key determinant of LTC expenditures is government policy on public benefits, cost-sharing arrangements and the supply of LTC services. In particular, policies in support of formal or informal care, in-kind services or cash benefits and institutional or community care have important consequences for a country s LTC sector and the share of public LTC expenditures. 1 Organization for Economic Co-operation and Development

7 The objective of this Summary Report is to highlight the main lessons learned from OECD countries with advanced LTC policies and the implications for LTC policymaking in new EU member states and Croatia. The Summary Report is divided into three sections. Section I describes the main findings from the Framework Report. Section II presents comparative findings from the four case studies, including the demographic context for LTC services, the main features of the financing, provision and regulation of LTC services and finally the strengths and weaknesses of LTC systems in the four countries. Section III identifies policy options based on the previous sections. SECTION I: MAIN FINDINGS FROM A FRAMEWORK FOR THE FINANCING, PROVISION AND REGULATION OF LTC SERVICES The framework for LTC services was developed from an extensive literature review of: (i) welfare economics and public finance literature, especially as it relates to the social sectors (health, social protection and social assistance); (ii) the economics of the health sector; (iii) the economics of aging and LTC; (iv) institutional economics and industrial organization; and (v) the implementation of LTC policies in OECD countries. It sought answers to the following policy considerations: 5 Should the state finance LTC for all citizens, or is a safety net system that only protects those unable to pay for LTC adequate? What are the tradeoffs in terms of equity and efficiency between different models of LTC financing? In particular, what are the tradeoffs between universal care and a safety net type model? Does a system based on public and private contributions provide the best model by adequately covering those in need without crowding out private spending? Can the supply of LTC services be organized competitively? What are the barriers to entry and how can financing of LTC services create adequate incentives for supply? What should be the regulatory framework to allow adequate private sector participation while ensuring quality of care? Is the nature of LTC services such that for-profit sector provision is not possible? Main Findings on Financing:

8 The main findings under financing (highlighted in detail below) are that on equity and efficiency grounds, a universal system based on basic protection for all individuals requiring LTC services is desirable. The longer people live, the higher are their chances of entering institutional care at some point in their lives. Most people who enter a nursing home can expect to remain there for 1 to 3 years. Institutional care costs can be prohibitive for individuals and families. Demand for private LTC insurance (LTCI) is low in most OECD countries. Even in the United Kingdom and in the United States, which rely largely on social safety net systems for LTC, uptake of private LTCI is low. There are several reasons for the low uptake: (i) the perception that old-age disability is not a problem; (ii) a lack of financial literacy, which makes it difficult for people to understand the financial dimensions of various private LTCI schemes; (iii) perceived and actual high prices of premiums generating concerns regarding affordability; and (iv) the disincentive effect of public safety net schemes such as Medicaid in the United States. Even if demand for private LTCI is increased by reducing information gaps and reforming social safety nets, there are other market failures with private LTCI. These include: (i) the difficulties associated with actuarially accurate estimates of LTC costs and determination of actuarially fair LTCI premiums; (ii) adverse selection due to information asymmetry and high drop-out among individuals who discover they are healthier than they had originally thought; (iii) higher risks of bankruptcy before claims are made; and (iv) risk selection of insurers among enrollees. All these factors emphasize the need for substantive regulation of private LTCI. The problems described above point to the need for a stronger public sector role in financing with the objective of supporting larger risk pools and systems of intergenerational solidarity. Most OECD countries apply a mix of public risk-pooling instruments, consisting of (i) tax-financed social safety nets (like Medicaid in the United States); and (ii) universal entitlements, either financed from taxes (like Austria s cash benefit program) or social security contributions (like Germany, Japan, and the Netherlands). These mechanisms contribute to a more or less progressive system, where general revenues and contributions finance a basic package for all citizens with benefits graded according to levels of disability and income. In terms of outcomes, systems based on universal entitlements perform better on satisfaction, expectations and coverage of benefits. From the fiscal sustainability perspective,

9 universal entitlement systems based on social insurance systems are more expensive with expenditures growing at a slightly higher rate than in the other systems. Supplemental private LTCI could make an important contribution to the financial sustainability of LTC systems and could contribute to an optimal public-private mix in financing LTC services. In France, simply designed private LTCI based on cash benefits rather than reimbursements for in-kind services has performed rather successfully over the last few years. This type of LTCI is modeled after financial insurance products rather than health insurance products, and could substantially increase earmarked savings for future LTC needs. Main Findings on Provision: The main finding on the provision of LTC services is that there is no one model and countries have adopted various models based on country conditions and social acceptability. Unlike in financing where a strong public orientation is desirable, on the provision side there are no hard and fast rules. The design of financing mechanisms can play an important role in promoting private sector provision of LTC services. Provision of LTC services is complicated by the fact that it straddles both the health and social sectors and the formal and informal sector. Medical health care and social care are frequently complementary inputs needed to ensure quality service provision. Another characteristic of LTC service provision is that it can be provided in both informal and formal settings, and in institutional and non-institutional settings. The degree to which these settings are available choices to patients depends largely on the capacity of a country to promote a balanced mix of service supply via appropriate funding and re-organized care models. Depending on the model adopted, the distinction between formal and informal may become flawed. For example, France has promoted the employment of family caregivers. In Austria, LTC regulation allows informal family care-givers to enter into a formal contract to provide 24-hour care at home. The main public policy question vis-à-vis provision is whether to make or buy, that is how much of LTC services should be provided by the public sector and how much should be contracted out to the private sector? There are areas in LTC amenable to private production. One important area is enhancing the information base for patients and families. Other areas include contracting out of discreet services such as laundry, catering, accounting etc. However, the analysis reveals that given

10 the high complexity of LTC services and the difficulty of defining clearly measurable outcomes, contracting out of many aspects of LTC services will require time and investments in a strong regulatory environment and the development of evidence-based guidelines (as in the case of health care services). In most OECD countries, the current system of providing LTC services is characterized by a high degree of diversity in the way public expenditures on LTC are used. This often reflects the underlying welfare concepts in designing LTC policies. For example, in Nordic countries, state responsibilities prevail over the primacy of the family as the nucleus for providing LTC services. In contrast, Central European Countries welfare policies are based on the subsidiarity principle. While in Denmark, almost three-quarters of public expenditure on LTC are spent on home-care arrangements, while Switzerland spends 80 percent of these funds in institutions. At the same time, total public spending in Denmark as a proportion of GDP is about three times higher than in Switzerland, reflecting a varying degree of risk-pooling in this area. Main Findings on Regulation: Regulation, in the context of this paper is identified as a cross-cutting issue affecting all aspects of financing and provision. Regulation is defined as a rule, ordinance or law by which conduct is regulated. When applied to LTC services, it refers to the full range of rules and ordinances affecting the financing and provision of LTC services. Regulation of private LTCI is essential and any country considering this model must think through regulatory aspects. The U.S. has good example of LTCI regulatory practices which regulate aspects such as rate-setting, portability, etc. Enforcement, however, has been a problem and overall, regulatory interventions have not contributed to higher uptake of private LTCI there. On the LTC service provision side, the key issue is ensuring adequate quality of LTC services. Inspection and regulation is the cornerstone of quality assurance for LTC services. A critical element of inspection systems is more consultation rather than policing. Most OECD countries have yet to address this problem but reforms are underway. There is a need for more systematic evidence on regulation of the quality of LTC services in OECD countries. SECTION II: MAIN FINDINGS FROM CASE STUDIES (BULGARIA, CROATIA, LATVIA AND POLAND)

11 Section II describes the main characteristics of LTC financing, provision and regulation in four case study countries. The case study countries which are all part of the same country cluster in the World Bank (ECCU5) were selected on the basis of geographical and historical clustering: Baltic States (Latvia), central European countries (Poland), newcomers to the European Region from the Balkan region (Bulgaria), and a non-eu country with a slightly different background and history (Croatia). The methodology for the case study countries consisted of detailed in-country reviews completed by a team of national consultants. In all cases, given the fragmentation in LTC systems and the fact that there is no single agency responsible for LTC, it was very difficult to collect data, both about service provision and financial expenditures. In Bulgaria and Croatia, the overview case studies were complemented by a second round of data collection in selected municipalities. In Poland, a database on public expenditures across all levels of government was created to be able to trace decentralized spending on LTC. A complete list of studies completed for the case country countries is included in the references. Demographic Context for LTC Services in Case Study Countries The future demand for LTC services will be driven by two factors: first, the size of the older population (+65), especially the very old (+75) and second, the percentage of older people dependent or severely dependent, and therefore requiring help with Activities of Daily Living (ADL). The supply of LTC services will be strongly influenced by the number of healthy people available to provide them and the amount of money available to fund them. All four case study countries are facing the double challenge of an increasingly older and more dependent society. The children of this bulge generation will be born in the next 10 years and will keep the growth of the youngest age group positive for a while, but it will be negative after that. The all important working age group of is projected to steadily decrease over the next 50 years. As the parent generation of Generation X the so-called baby boomers start to retire, the growth of the 65 to 79 age group will increase. This will be followed by a significant and constant expansion of the very old the population 80 and older. The challenge with a shrinking and aging population is that just as the elderly population grows, the number of younger residents decreases, thus leaving fewer potential care providers in particular of informal care and fewer working people contributing to the tax and social security systems that fund LTC services. This increase in the old-age dependency ratio has serious implications for both the supply and financing of LTC. For example, today

12 there are four working age Bulgarians for every elderly resident. By 2050, however, there will be less than two working Bulgarians for every person over the age of 65. And Bulgaria is not alone. Latvia and Poland, too, will be faced with old-age dependency rates of more than 50% in the next several decades. Old-age dependency rates are just one variable to be considered. Another is the caredependency ratio, which is the ratio between the dependent population or those with severe restrictions in their activities of daily living and the healthy population. This ratio will also increase in all four case study countries. Figure 1 shows the share of the severely dependent population among those aged 85 or older in selected European countries. Unfortunately, data are not available for Bulgaria and Croatia. However, in Latvia, the percent of the population above 85 who were severely dependent was 39.7% in 2007, and in Poland it was 45 percent, which is significantly higher than the EU average. If these rates remain steady as the size of the elderly population grows there will be two or even three times as many people, depending on the country, needing LTC services on a daily basis at a time when there are a third fewer people available to provide them. Figure 1: Share of severely dependent population among those aged 85 or older in selected European countries (2007) Source: Eurostat (2009b). Some of the projected increase of the severely dependent population could be reduced if the health status of the elder population improves in the future. In other words, the share of the 75+ population who can live independently might increase, leading to a less pronounced increase in the severely dependent population. Healthy life styles during younger ages, with a focus on preventive health 9 care and a reduction of unhealthy behavior like tobacco consumption and obesity, could help to compress morbidity among elderly in the future. In summary, the question facing the case study countries, and many others around the world, is how the marked increase of the elderly population in particular of the 75+ population will impact future demand for LTC services? How will improvements in overall health affect the number of people who have difficulty performing activities of daily living on their own? For case study countries it is clear that the aging and increasingly dependent population will boost demand for LTC services at the same time the tax base and supply of healthy people to provide them steadily shrinks.

13 Organization and Financing of Long-term Care Services in Case Study Countries Types of Services: Table 1 provides an overview of the types of LTC services provided in the case study countries. In all four countries, the financing and provision of LTC services straddle both the health and social sectors. Other common characteristics include: The provision of LTC services in both the social and health sectors are largely public. For example 90%of LTC services in Bulgaria are provided by the state, either at the national or local level. There has been tremendous growth in home- and community-based services in the past decade. These services have proven more effective, more cost efficient, and more culturally appropriate in most case study countries. Government efforts to decentralize have resulted in more services being provided at the municipal and regional level, even if funding is channeled from the national level. There has been a limited role for the private and NGO sector in the provision of LTC services, with the exception of Croatia where two thirds of institutional homes for the elderly are privately owned. Table 1: Formal long-term care services by level and type in case study countries LTC Services Bulgaria Croatia Latvia Poland Home-based Care Home helper Personal assistant Social assistant Foster family Home care services from welfare centers Home assistance from pensioners associations Outpatient nursing care Home-based care services

14 Daycare and Assisted Living Day care Centers for Halfway and Day centers center Welfare Services group homes Service centers Center for Centers for Aid for the ill, social and Care disabled and rehabilitation and integration NGO programs elderly Institutional Care Homes for Social welfare NGO centers Family welfare adults disabilities with homes Family center Nursing homes homes Social Welfare Social care Homes (SWH) home Social care center Health Care Hospitals for Prolonged Hospitals Medical care further and treatment home continuing treatment /geriatrics centers Medical nursing home Hospitals for rehabilitation Chronic lung disease centers Hospice Health visitor service through

15 primary care THREE LONG-TERM OBJECTIVES: ACCESSIBLITY, QUALITY, VIABILITY While the organisation of health care systems, their funding (ratio of public/private funding) and planning as a function of the needs of the population are a matter for the Member States, this responsibility is exercised increasingly within a general framework on which many Community policies have a bearing (research, public health policy, free movement of persons and services, viability of public funds). This is an argument for strengthening European cooperation. The Communication identifies three long-term objectives for national systems, which should be pursued in parallel. Accessibility Access to health care is a right enshrined in the Charter of Fundamental Rights of the European Union. However, it is often affected by an individual's social status. It is therefore particularly important to ensure that access to health care for disadvantaged groups and for the poorest members of society is guaranteed. The joint report to evaluate the national action plans for social inclusion proposes three categories of measures: measures to develop disease prevention and promote health education (mother and child care, medical care at school and medical care at work); providing less expensive and even free care for those in low-income brackets; measures aimed at disadvantaged groups, e.g. the mentally ill, migrants, the homeless, alcoholics and drug addicts. Quality In order to provide quality health care, national governments are required to achieve an optimum balance between the health benefits and the cost of medication and treatment. Ascertaining quality in this way is made complex by: the diversity of the structures and levels of health care, which often influence demand for health care and consequently the level of expenditure;

16 the different approaches to medical treatment. Comparative analysis of health care systems and medical treatment should make it possible to identify "best practice" and thus to help improve the quality of health care systems. Financial viability A certain level of financing is required to ensure the availability of high-quality health care that is accessible to the population. There is upward pressure on these health care costs, irrespective of the way in which Member States' health care systems are organised. Member States have been undertaking reforms since the early 1990s, based mainly on two methods: regulation of demand, by increasing contributions or by ensuring that the final consumer bears an increasingly large share of the costs; regulation of supply, by determining budgets or resource envelopes for health care providers, creating a contractual relationship between "buyers" and "providers" of health care. It is often difficult, however, to distinguish the short-term effects from the more structural effects of these reforms, which allow spending to develop at a sustainable pace. This Communication recommends more exchanges of experience, which would help to keep track of the policies introduced and would be a useful way of comparing health care systems and encouraging progress. In order to achieve these objectives it is essential that all parties concerned (local authorities, health care professionals, social protection bodies, supplementary insurance companies, consumers) work together to build strong partnerships. Background This Communication is a response to the conclusions of the Lisbon European Council of March 2000, which stressed that social protection systems needed to be reformed in order to be able to provide high-quality health care services. It also takes up the request made by the Gothenburg summit (June 2001) to prepare a progress report for the Spring 2002 European Council suggesting guidelines in the field of health and care for the elderly. Key figures life expectancy in 2010: 74.7 for men and 81.1 for women

17 Key figures life expectancy in 2050 (Eurostat forecast): 79.7 for men and 85.1 for women percentage of people aged over 65 in Europe in 2000: 16.1 % percentage of people aged over 65 in Europe in 2050: 27.5 % percentage of people aged over 80 in Europe in 2000: 3.6 % percentage of people aged over 80 in Europe in 2050: 10 % RELATED ACTS Communication from the Commission of 20 April Modernising social protection for the development of high-quality, accessible and sustainable health care and long-term care: support for the national strategies using the "open method of coordination" [COM(2004) 304 final - Not published in the Official Journal]. This Communication proposes that the "open method of coordination" be extended to the health and long-term care sector. This will allow a framework to be established to promote exchanges of experience and best practices and support the Member States in the reform of health care and long-term care. Joint report from the Commission and the Council on health care and care for the elderly: Supporting national strategies for ensuring a high level of social protection. The Barcelona European Council (2002) invited the Commission and the Council to examine more thoroughly the questions of access, quality and financial sustainability. A questionnaire was sent to the Member States in 2002 in order to collect information on their approaches to these three objectives. The joint report is based on the responses received. This joint report was adopted by the "Employment, Social Affairs, Health and Consumer Affairs" Council on 6 March and by the "Economic and Financial Affairs" Council on 7 March as a contribution to the March 2003 European Council. The challenges of getting older Europe is ageing and that comes with challenges, both social and economic. The number of people aged 65+ in Europe will almost double, from 85 today to 151 million in Living longer is great, but it is also a formidable challenge for both public and private budgets and services, and for older people and their families. New approaches and solutions are to be implemented urgently and you should be aware of that. Start today with Active and

18 Healthy Ageing and care for your health. The EU is working on new solutions for the demographic ageing problems. There are too few people to care for the many elderly people. Budgets for health and social care will grow substantially over the next decades. Ever more people have to live with chronic conditions and disabilities, which can lead to loneliness and depression. It is not easy to tackle the ageing challenge, but it can be done. It can even become an opportunity for better quality of life, for more sustainable health and social care, and for innovation and economic growth. Smart innovation with ICT technology definitely helps. It helps care for your health, and it helps you live actively and independently. It helps healthy people stay healthy, and it helps people with chronic live longer independently within their own social circle, job, and home. For example people with chronic diseases such as heart or pulmonary conditions, Alzheimer s disease or other forms of dementia, or individuals with a high risk of falling. Technology is part of the solution but you are crucial to its success. It is all about your willingness and ability to let these new technologies into your life and to live with them. Only then they can help you live more actively and healthier at home without having to be hospitalized or to travel back and forth to your doctor. What does Europe deliver and how may it help, now and in the future? EN

19 Introduction For Europeans, a high level of protection against the risk of illness and dependence is a vital asset that must be preserved and adapted to the concerns of the modern world, particularly demographic ageing. This prompted the Lisbon European Council of March 2000 to stress that social protection systems needed to be reformed in order to be able to continue to provide good quality health services. Subsequently, in June 2001, the Göteborg European Council called on the Council, in conformity with the open method of coordination and on the basis of a joint report of the Social Protection Committee and the Economic Policy Committee (...) to prepare a progress report for the Spring 2002 European Council on guidelines in the field of health and care for the elderly. The results of the work will be integrated into the Broad Economic Policy Guidelines. ( 43) Accordingly, and in the spirit of the conclusions of the Lisbon European Council, which define the open method of coordination as being based on partnerships between different actors, within their respective powers, the Commission hopes that this communication will contribute to achieving the task conferred upon it by the Göteborg European Council. The EU has an overall health situation and health care systems among the best in the world. The widespread extension of cover against sickness and invalidity, along with other factors such as the rise in the per capita standard of living, improved living conditions and better lifestyles, not to mention better health education, is one of the main reasons for this.2. It is what has made it possible to shield people from the financial consequences of ill-health and at the same time to sustain the rapid, ongoing progress in medicine and treatments. It therefore represents an essential part of the operation of health systems in general and the substantial share it represents in 2 The overall performance of health care provision does not depend directly on the volume of expenditure on health and therefore on the care system. While in Germany, for instance, this expenditure care amounted to more than 10% of GDP in 1999 (the highest in the European Union) compared with 7% in Spain, people in Germany can expect to live two years less than people in Spain; life expectancy in Germany is lower than that of British men and equal to that of British women, although the United Kingdom spends considerably less on health care (6.8% of GDP).

20 overall health expenditure makes this branch of social protection the largest behind retirement and survivors pensions. Total health care spending rose from around 5% of GDP in 1970 to over 8% in 1998, with most of this increase occurring before Public health care spending followed the same trend, growing faster than GDP from 1970 to 1990 (rising from 3.9% of GDP to some 6%), and at a slightly lower rate since 1990, in particular as a result of efforts to rein in public spending in all Member States. Since 1999, however, health expenditure has returned to a level of growth higher than GDP in several countries3. Health care systems in the European Union face the challenge of attaining at the same time the three-fold objective of access to health care for all, a high level of quality in health care and ensuring the financial viability of health care systems. Common issues 1 The impact of demographic ageing on health care systems and expenditure The ageing of the population involves two aspects: People live longer4. Since 1970, life expectancy at birth has risen by 5.5 years for women and almost five years for men. Despite substantial differences men in Sweden and women in France had a life expectancy three years higher than their Finnish and Irish counterparts in 1997 average life expectancy in the EU is one of the highest in the world and is continuing to rise. In 2000, it was 74.7 years for men born in that year and 81.1 years for women: in 2050, according to Eurostat s base scenario, it will be 79.7 and 85.1 years respectively. This higher life expectancy at birth also means higher life expectancy in good health and in the absence of disability. There are more elderly people. The share of the total European population older than 65 is set to increase from 16.1% in 2000 to 22% by 2025 and 27.5% by 2050; the 3 4 See graph 1, Annex 3. See graph 2, Annex 3.

21 share of the population aged over 80 years (3.6% in 2000) is expected to reach 6% by 2025 and 10% by While these trends are difficult to ascertain with accuracy, they may have major consequences on developments in health care systems. The fact is that per capita health expenditure increases sharply after the age of 65 and even more sharply after the age of 80. Old people s greater morbidity (often as a result of a combination of illnesses), the seriousness and more chronic nature of age-related diseases, which can lead to dependence on others, are just some of the factors that explain this distribution of expenditure by age group. The health information system envisaged in the proposal pending for a public health action programme will enhance knowledge on these issues. It is nevertheless difficult to predict the state of health that old people will experience in the future, or the life expectancy in good health of the generations due to turn 60 in around The first difficulty is that health care expenditure is concentrated during the last year of life, whatever age the person is, and that intensive care costs during this last year of life are lower if the person is very old. Moreover, improved standards of living and better education (which, alongside the health system, are the main determinants of health) may help to improve the overall health of the population by encouraging people to adopt healthier lifestyles and a prevention-based attitude. This could postpone the age at which health care consumption increases, and reduce the risk of high dependence among the oldest people. But, conversely, these older persons, more accustomed to a high level of health care, may demand the latest treatments, which are probably more costly. It is also clear that the increase in the numbers of elderly people will increase the pressure on the public sector for long-term care. Age-related illnesses, which may be serious enough to make sufferers completely dependent on others, require long-term care (outpatient care, in long-stay units or in psychiatric units). Such care is not a matter for the conventional health system, but for the medical-social sector. The increase in the number of smaller and more unstable family structures could undermine the family networks of solidarity and make the provision of health and care within families more difficult to continue. Consequently, if the number of people 5 See graph 3, Annex 3.

22 requiring long-term care increases, and given the rise in employment rate for women (the primary informal care providers), specific measures will have to be taken. The factors related to how provision is organised are thus crucially important in this context. This nature of the effects of ageing is reflected in the estimates of its impact on public expenditure carried out by the Economic Policy Committee of the European Union by national correspondents in the working party on ageing, using a simple methodology but one which is not without its uncertainties6: If the basic scenarios showing population trends are confirmed, public expenditure on health care could increase for the period by between 0.7 GDP points (low hypothesis for DK) and 2.3 GDP points (IRL). While public health expenditure in 2000 ranged from 4.6% (UK and FIN) to 6.2% of GDP (F), the same range is expected to be 5.6% (UK and NL) to 8.2% (IRL) of GDP in Expenditure on the 0-64 year age group in all countries is expected to rise (from 0.2 to 0.7 GDP points). The overall rise for most Member States for this half century ranges from 1 to 1.5 GDP points, not a substantial increase in relation to the level reached today, and only three Member States are expected to record a rise of over 2 GDP points (D, IRL and A). The impact of demographic trends on long-term care (according to the same scenarios), would be greater in countries which already have structured methods of covering costs and consequently high levels of expenditure even now (between 1.5% and 3% of GDP). Sweden, Finland, Denmark, the Netherlands, which fall into this group, would thus see demographic ageing generate a spontaneous increase in longterm care expenditure of approximately GDP points, i.e. an almost twofold increase. Six other countries - which, with the exception of the UK, all spent less than 1% of GDP on this care - would record more moderate increases (between 0.2 and 1 GDP point). However, these countries could experience changes in their cost coverage structure with a move towards greater formalisation driven by the increase in the population groups concerned and by social changes, which could generate a 6 The structure of expenditure on health care and long-term care by age group was combined with demographic projections in order to arrive at estimated future public expenditure. As shown in the working party report, it is thus more of a snapshot of the incidence of demographic trends than of actual public expenditure.

23 rise in the proportion this care represents in public expenditure and GDP. These foreseeable trends would bring the need to define appropriate funding arrangements within the sickness-invalidity branch, or specifically (creating a specific dependence risk, sharing of expenditure between the health care and the social assistance systems, use of private insurance schemes). Overall, the spontaneous effects of demographic ageing could increase the proportion of public expenditure on health and long-term care from 1.7 to almost 4 GDP points, i.e. a level of public expenditure representing between 7.5% (low hypothesis for I) and 12.1% of GDP (high hypothesis for S), compared with 5.5% (I) and 8.8% (S) of GDP in Generally speaking, developments in health care and long-term care of this kind raise the question of human resources, inasmuch as this care is per se labour-intensive in skilled manpower. Yet, the need to recruit people would come at a time when the number of people in work is stabilising or falling, and when the health-social sector is already experiencing a growth in employment which is well above average: between 1995 and 2000 in the Union, overall employment rose by 6.8%, but the same increase was 12.6% in the health-social sector7. 2 The growth of new technologies and treatment Developments in medical technology whether the use of miniature robots for surgery, genetic therapies, growing replacement organs and tissues, new medicinal substances constitute the second issue as regards the national systems, particularly as regards health care8. Technical progress will bring us new products and treatments involving more R&D and technology. Whilst this may lead to productivity gains, e.g. shorter hospital stays for a given disease, or reducing the risks of serious illness by means of preventive treatment, any increase in the effectiveness of treatments is likely to offer the feasibility of treating new diseases but at the same time lead to greater intensity of treatment and thus higher overall spending Labour Force Survey, distribution of employment by sector of activity. The projections by the EU s Economic Policy Committee take account of the effect of technologies and their developments indirectly through a range of different hypothetical patterns of per capita cost trends.

24 In fact, supply and demand will contribute to this higher spending. Health is an atypical economic sector, because the supply side i.e. doctors largely determines the demand, sometimes to the detriment of systematic evaluation of the real health benefits of innovations and their cost to the general public. Today s patients are, moreover, better educated and informed than ever before and are demanding the very latest molecules and treatments, or products such as food supplements which are supposed or claimed to be beneficial to health. They thus exert a pressure on doctors which is particularly keenly felt in countries where patients are free to shop around for health care. This pressure on the demand side has a specific, measurable impact for medicines, as the most recently developed molecules are almost invariably the most expensive. Technical progress thus raises the question of funding and of who is to bear the burden of expenditure, for it could have the same - or even greater - effect as demographic ageing. In a context of prudent budget management, clear, transparent and effective evaluation mechanisms must be developed, as this is the only way to guarantee accessibility to these new products and treatments. However, they should take more into account the specific needs of people above 65 years of age, who still make for a fraction of patients entered into clinical trials. New information technologies allow for collaborative work of health professionals on a European-wide basis and thus open fresh opportunities to improve assessments. 3 Improved wellbeing and a better standard of living Demand and supply of health care is heavily dependent on the standard of living and the level of education. This also determines the lifestyles adopted by people. Thus, for half a century, it has been observed that the demand for health care tends to increase more than proportionally to the per capita income. This has three main consequences. Patients are better educated and are able to adopt healthier lifestyles and a prevention-based attitude which in the long run makes it possible to avoid the use of intensive and costly care. Health care systems are thus prompted to increase their

25 drive on the education and prevention side within the overall context of public health policy. In addition, patients expect ever better quality and efficiency from health care systems. The spread of the new information technologies offers greater opportunities for seeking medical information, but also of locating services (e.g. health counselling) and obtaining products, with the risks such practices may involve. The fact that it is now easier to access information irrespective of quality also makes it easier for people to make comparisons with procedures in other countries. As a result, there is greater mobility of people, goods and services across national borders. This has a direct impact on the way in which health care systems operate, both in terms of what they supply and with regard to how they cover their costs. Lastly, health care consumers feel that they need to be considered as fully-fledged partners and players in health care systems, not only by health professionals but also by the public authorities. This can be seen from the emergence of patients charters in hospitals and the consolidation of patients rights in national law. They also expect greater transparency on the performance and quality of care services. The diversity of national systems and the contribution of Community policies While the organisation of health care systems, their funding and planning as a function of the needs of the population are a matter for the Member States, this responsibility is pursued increasingly in a general framework on which many Community policies have a bearing9, a situation which is an argument for strengthening European cooperation. 1 The diversity of national systems The diversity of funding 10 and organisational arrangements is one of the main characteristics of health care systems in Europe and sets the context for reform for adjusting to ageing and the other factors whereby expenditure on health care and on care for the elderly evolves See Annex 1. See graph 4, Annex 3.

26 It is nevertheless clear that public-sector funding makes up a significant proportion of health expenditure in all the EU Member States: this proportion being lowest in Greece although it still represents 56% in that country, and rising to nearly 84% in the United Kingdom. There are two aspects to this diversity: Some systems essentially those that constitute a national health system are financed through tax revenue; in some countries (NL, P, S UK, DK, IRL) this is their sole source of financing. Other systems are financed through social security contributions, although there is evidence of a trend towards reducing the proportion of such contributions in favour of tax revenue (as in France and Germany). The second aspect of diversity, unrelated to the first, is the way in which the financial burden is shared by the public authorities and private individuals: i.e. the share of overall health expenditure borne by households and, in certain cases, covered by voluntary supplementary insurance. It accounts for between a fifth and a quarter of overall expenditure in most Member States, but less than 5% in the UK and Luxembourg, and as much as 42% in Italy and Portugal. However, the consumers share of the costs often varies according to the type of care provided. While the bulk of the cost of hospital care is often covered by basic insurance, this is not the case for medication, dental care, or optical appliances, to mention only the most common types of care. The fact that consumers have to shoulder part of the cost of financing health care is often justified by the endeavour to make people more aware of the cost of health care. However, this also strengthens the role of supplementary insurance in making health care more accessible, including for the most deprived members of society, for whom arrangements must be found for bearing the supplementary costs involved. 2 The contribution of Community policies Three policies are particularly relevant as regards adaptations and reform. The public health policy and the promotion of a high level of human health (Article 152 of the Treaty). The Commission communication on the health strategy of the European Community (COM(2000) 285 final) emphasised that health services must meet the population s needs and concerns, in a context characterised by the challenge of ageing and the growth of new medical techniques, as well as the more international

27 dimension of health care (contagious diseases, environmental health, increased mobility of persons, services and goods). Improving the quality and viability of public funds. Health care accounts for a large proportion of public spending, which means that this sector is vital for the implementation of quality and viability strategies, which must respect the principles laid down in the Broad Economic Policy Guidelines for 2001 ( promoting the accumulation of physical and human resources and improving the effectiveness of expenditure through institutional and structural reforms ). The growing impact of the internal market. Organising and funding social security systems is the responsibility of the Member States. Under the oft-reiterated jurisprudence of the European Court of Justice11, while Community law does not impinge on the responsibility of the Member States when it comes to organising their social security system, the Member States must respect Community law in the exercise of this responsibility12. Since 1999, and following the communication from the Commission entitled A concerted strategy for modernising social protection (COM(99)347 final) European cooperation on social protection has been increasing, with the participation of the players concerned. In its conclusions of 29 November 1999 the Council makes guaranteeing a high and sustainable level of health protection one of the four priority objectives of European cooperation in the field of social protection, reiterating that Community action must be supported and the reform drive by the Member States encouraged as part of their national priorities. Three long-term objectives: accessibility, quality, viability 1 Accessibility For Europeans, access to health care is a fundamental right and an essential element of human dignity; it must therefore be guaranteed for all. The European Union s Charter of Fundamental Rights states that everyone has the right of access to Judgements of 7 February 1984, Duphar and others C-238/82, ECR p 523, point 16; of 17 June 1997, Sodemare and others C-70/95, ECR p.i-3395, point 27; and of 28 April 1998, Kohll, C-158/96, ECR p.i-1931 point 17 Cases C-157/99 (Smits/Peerbooms) and C-368/98 (Vanbraeckel)

28 preventive health care and the right to benefit from medical treatment 13 and that the Union recognises and respects the entitlement to social security benefits and social services providing protection in cases such as maternity, illness, industrial accident, dependency or old age.14 Under the Council Recommendation of 27 July 1992 on the convergence of social protection objectives and policies15, access to health care and the grant of replacement income at a sufficient level for people who have been obliged to interrupt their work for health reasons are established as key objectives of social protection systems. However, mortality rates show that in all the Member States there is sometimes a very close link between people s health and their position in society16. This is a reflection of low income levels, which mean that some people restrict their consumption of health products; this is particularly true when a large share of the cost has to be borne by patients, as in the case of dental or optical care, or when patients have to pay all or part of the cost of the services concerned themselves and seek reimbursement afterwards. However, the link between health and social position also reflects several other factors, e.g. living and housing conditions, job quality, standards of education, lifestyle and eating habits. The issues of access to health care for disadvantaged groups and for the poorest members of society, and of the linkage between the health care system and the other players in the fight against exclusion are therefore recognised as part of the common objectives adopted by the European Council in Nice with a view to combating social exclusion. The joint report to evaluate the national action plans for social inclusion describes three broad categories of measures in this area: Measures to develop disease prevention and promote health education which, although they do not relate exclusively to the most vulnerable in society, can make it possible to reach them more easily. Examples are measures relating to mother and child care, medical care at school and medical care at work Article 33. Article /442/EEC, OJ No L245 of 26/08/1992, p The mortality ratio of male manual and non-manual workers between 45 and 59 years of age ranges from 1.71 in France to 1.33 in Denmark [Inégalités sociales de santé, Inserm-La Découverte, 2000].

29 Measures to improve access to care by providing less expensive and even free care for those in low-income brackets but also by improving the coordination of social services and health services. Measures aimed at disadvantaged groups, e.g. the mentally ill, migrants, the homeless, alcoholics, drug-addicts and prostitutes. 2 Quality Good quality health care is an essential requirement for all Europeans. It is a major public health objective. Moreover, the significant share of the cost of care which comes from public funding gives this quality requirement a second dimension, namely how to achieve an optimum balance (which is acceptable without jeopardising the public health objective) between the health benefits and the cost of medication and treatment. The development of information resources accessible to the public, the growing impact of the internal market and increased mobility, give this quality issue a cross-border dimension hitherto unknown. But ascertaining quality in this way is made particularly complex and tricky by two factors: The diversity of patterns of provision. For instance, there were 465 hospital beds per inhabitants in Denmark in 1997, compared with 708 in Germany and 877 in France. In 1999, the ratio of doctors per head of population ranged from 226 doctors/ inhabitants in Ireland to almost 405 doctors/ inhabitants in Belgium. In 1997, there were 46.4 pharmacists (working in dispensaries) in France compared with only 17.5 in the Netherlands17. The variation is even more marked in long-term care structures, depending on the extent to which cost coverage is institutionalised. However, the structure and level of health care is often the decisive factor in determining demand for health care (and consequently the level of expenditure). The heterogeneousness of medical treatment. This is the case, for instance, with regard to childbirth. The perinatal mortality rates in France and the Netherlands are 17 Eurostat data, in Key Data on Health 2000.

30 fairly similar (8.2% and 8.4% respectively in 1996); yet, while in France most children are born in a hospital, almost a third of births in the Netherlands take place at home (although hospital births have become much more common in the last 30 years). It is therefore difficult to draw the a priori conclusion that one of these methods is better. There can also be regional differences within the same country, not only with regard to the methods or protocols adopted but also in terms of the apparent efficiency of health care services or techniques (which can, for example, be measured in terms of the post-operative mortality rate). There have been many studies which show that quality improvement policies, particularly in hospitals (which are the main recipients of health care expenditure), make it possible to reduce the costs resulting from poor quality care18. In order to explain and remedy these variations and thus improve the overall quality of health care, action must be taken to evaluate costs and performance, conduct surveys on patient satisfaction, and evaluate and grant accreditation to health care services19. Such steps must involve all the partners concerned (supervisory authorities, health care professionals, disbursing agencies and supplementary insurance agencies). Comparative analysis of health care systems and medical treatment, making it possible to identify best practice, will therefore be particularly useful in improving the quality of health care systems and optimising the use of resources in the context of social protection. The future public health action programme, now being examined by the Council and the European Parliament, will help to promote quality and "best practice" in health care systems. 3 Financial viability A certain level of financing is required to ensure the availability of high-quality health care that keeps pace with scientific and technical progress and is accessible to the population at large Report by the French Health Accreditation and Evaluation Agency (ANAES) Le coût de la qualité et de la non-qualité à l'hôpital (The cost of quality and poor quality in hospital) (September 1998). See, for example A First Class Service: Quality in the new NHS (UK), which makes provision for the creation of a National Institute for Clinical Excellence ; implementation of the French Health Accreditation and Evaluation Agency (F).

31 The pressures on the unit costs of care and on the demand for health care make themselves felt irrespective of the way in which health care systems are organised, but the effect they have depends on the nature of the systems in question. In the case of health care systems that take the form of national health services, it is theoretically easier to control expenditure (which is naturally budget expenditure) but the pressure of demand results in longer waiting lists20 which can show that the supply of health care is inadequate. When it comes to insurance-based systems, where the health care providers are often independent of the financing entity, a rise in demand and/or costs leads to an increase in expenditure, which can become unsustainable in the long term for public financing. All that the authorities can do in such a situation is to increase tax revenue or take steps to control expenditure, which are often opposed by the professions concerned and, above all, involve the problem of deciding which needs should be met. Up until 1999 at least, a substantial slowdown in the rate of increase in expenditure in relation to the growth of GDP was observed in this context. However, since 1999 health expenditure has overtaken the rate of growth of GDP in many countries. Many reforms have been introduced since the early 1990s21. These reforms have traditionally involved two methods, either separately or sometimes in combination, and implemented to a greater or lesser extent according to the specific situation: Regulation of demand, which can be achieved by increasing (tax or social security) contributions or by ensuring that the final consumer bears an increasingly large share of the costs (through de-listing or co-payments). Regulation of supply, which can take place at macro-economic level (particularly by determining budgets or resource envelopes for health care providers) or be achieved by seeking to improve the efficiency of supply at micro-economic level: this is the objective of the measures introduced to create a competitive market among the bodies responsible for financing and/or providing health care (Germany) or to create a contractual relationship between buyers and providers of health care (UK) The NHS High-Level Performance Framework (UK) includes an indicator measuring the length of waiting lists ( percentage of those on waiting list waiting 12 months or more ). See Annex 2 for an overview of health care systems and recent reforms.

32 The point is to be able to distinguish between the economic and structural effects of these measures, i.e. their ability to ensure that spending develops at a sustainable pace without compromising the quality and effectiveness of the health care system. Exchanges of experience which would make it possible to keep track of the policies introduced over several years would be a useful way of comparing health care systems and encouraging progress. A different kind of challenge is faced by most of the candidate countries in this regard. Many have made an effort to overhaul both the structure of their health care systems and the methods used to finance them, particularly as regards the balance between public and private financing, in order to improve the efficiency and quality of the service they provide. However, the success of reforms of this kind depends largely on whether the financial viability of health care systems, which, in turn, depends on economic reform and a successful transition to a market economy.

33 CONCLUSIONS The systems of health care in the European Union and the candidate countries face the challenge of attaining simultaneously the three-fold objective of access to care for everyone, a high level of quality in the care provided and the financial viability of health care systems. 1. Accessibility 2. Improvement of quality 3. Financial viability Ensure that everyone has access to good quality health care. The elderly require long-term care, which presents a special challenge both in terms of financing and as regards making the necessary adjustments on the supply side, particularly as regards institutionalisation of long-term care. Improve the transparency and quality of health care systems, particularly by developing ways of evaluating medical treatment, health care products and the structure of health care systems. Continue the reforms already introduced so that spending evolves at a viable pace, as part of policies that seek to improve the quality of public financing and ensure that adequate financing is provided for health care. If these objectives are to be attained, it is essential that all the players of the health systems cooperate, be they local authorities, health care professionals, social protection bodies, supplementary insurance companies, consumers or their representatives. This is often a difficult task, given the different and sometimes conflicting interests and viewpoints of those involved.

34 Annex 1: the contribution of Community policies Free movement of goods (Article 28) Health products are goods, the free movement of which may be restricted only for overriding reasons of public interest resulting from the need to protect public health or preserve the financial equilibrium of health care schemes, which is considered essential to the maintenance of high-quality health care. Such restrictions, particularly the refusal to reimburse the cost of a health care product purchased in a Member State other than the one in which the person concerned has health insurance cover, must be well-founded and in proportion to the desired objective. Free movement of persons (Articles 18, 39, 42 and 43) In order to promote the right to the free movement of persons, Regulation 1408/71 coordinates the statutory social security systems in the Member States, including health care schemes. Moreover, with regard to the free movement of employed and self-employed persons, which also applies to the health care sector, a large number of directives make provision for mutual recognition of qualifications for doctors and other health care professionals by laying down the essential requirements for initial training in such areas. Free movement of services (Articles 49 and 50). The Court of Justice has ruled that inpatient and outpatient health care constitutes a service. This means that the cross-border provision of such services may be restricted only for overriding reasons of public interest resulting from the need to protect public health or preserve the financial equilibrium of health care schemes, which is considered essential to the maintenance of high-quality health care. Such restrictions, particularly the refusal to reimburse the cost of a health care product purchased in a Member State other than the one in which the person concerned has health insurance cover, must be well-founded and in proportion to the desired objective. Functioning of the internal market (Article 95) The Treaty lays down the rules for the approximation of the laws, regulations and administrative provisions that relate to the establishment and functioning of the

35 internal market, particularly with regard to health products (pharmaceutical products, medical devices) and supplementary health insurance. Competition (Articles 85 and 86) The health insurance funds and the bodies that help manage the provision of social security services in the public sector fulfil a purely social function if their activities are based on the principle of national solidarity, if they are non-profit making and if the services they provide are defined by law and are independent of the level of contributions. Hence, their activities are not of an economic nature and the bodies responsible for such activities therefore do not constitute undertakings within the meaning of Articles 85 and 86 of the Treaty22. However, if activities in the health care sector can be described as economic activities within the meaning of the Treaty, these rules should be applied. Coordination of economic policies (Article 99) The economic and budgetary effects of an ageing population are examined as part of the multilateral monitoring procedure. In this context, the Broad Economic Policy Guidelines for 2001, adopted at the Göteborg European Council on 15 June 2001, stress that Member States need to develop comprehensive strategies for addressing the economic and budgetary challenges posed by ageing populations. Strategy measures might include reform of pension and health care systems, and care for the elderly. The work on the economic and budgetary aspects of ageing populations is being supported by the Economic Policy Committee. Cooperation between the Member States and coordination of action on social protection (Article 140) Article 2 of the Treaty states that The Community shall have as its task, by establishing a common market and an economic and monetary union and by implementing common policies to promote throughout the Community a high level of employment and of social protection In this regard, the Communication from the Commission A concerted strategy for modernising social protection (COM(99)347 final) makes guaranteeing a high and sustainable level of health 22 Joined cases C-159/91 and C-160/91 (Poucet and Pistre).

36 protection one of the four priority objectives of European cooperation in the field of social protection. In its conclusions of 29 November 1999, the Council approved the objectives contained in the Communication and requested that European cooperation be developed in this field, where health care systems and their methods of financing are a matter for national governments. Public health (article 152) The Treaty stipulates that the objective of ensuring a high level of human health protection must be incorporated in the definition and implementation of all Community policies and activities. With regard to public health, the Community's role is to complement national policies, to encourage cooperation between the Member States and to lend support to their action when it comes to improving public health, preventing human disease and reducing risks to human health. The Commission Communication on the Community's health strategy23 describes how the Community intends to respond to the main challenges facing care systems and cater for people's concern for effective protection of their health. A new Community Action Programme will support this strategy over the period Community action in the field of public health shall fully respect the responsibilities of the Member States for the organisations and delivery of health services and medical care. Research and technological development (Title XVIII) One of the 23 key actions of the Fifth RTD Framework Programme focuses on the medical and social challenges posed by an ageing population and the disabilities associated with old age. One of the research areas targeted by this key action is the effective and efficient delivery of health and social care services to older people, including comparative research on the financing of long-term care and pensions. Furthermore, the 4th and 5th FPs have supported the development of electronic tools for clinical trial management and remote data entry, for literature review and guideline development as well as for quality assurance. Research on the adaptation of these products to the special needs of the elderly are being taken up in the 5th Framework Programme. 23 COM (2000) 285 final of 22 May 2000

37 Annex 2: Health care systems and health policies within the Union Total Public General government Social security Private Out-of-pocket Private health Recent trends health expenditure expenditure expenditure expenditure expenditure expenditure insurance A No overall fixed health care budget B n/a n/a 28.7 n/a n/a Budget set annually by Government D No overall fixed health care budget DK Budget negotiated annually and set by central and local governments E n/a n/a Budget set annually EL n/a n/a 43.7 n/a n/a Budget set annually F Target budget set by Parliament since constitutional reform in 1996;"Universal Health Coverage" for lowincome households FIN No overall fixed health care budget I n/a Budget set annually IRL Expenditure is cash-limited and set by Government L n/a Target budget since 1994 NL Target budget set for a 4-years period P n/a n/a 33.1 n/a n/a Budget set annually on an historical basis S n/a n/a 16.2 n/a n/a No overall fixed health care budget UK Expenditure is cash-limited and set by Government as % of GDP (1999 data as % of total health as % of public expenditure as % of public as % of total health as % of total health as % of total health expenditure (1999 data for B.DK.F.FIN.UK;1998 for for D.S.UK.IRL.E.EL) expenditure (1999 data. on health (1999 data for expenditure on health expenditure expenditure (1999 IRL.NL.D) 1998 for P.S.IRL.E.EL.D) A.DK.F.FIN.I.L;1998 for (1999 data for data for D.E.IRL.NL.UK) A.DK.F.FIN.I.L;1998 for A.DK.F.FIN.I.L.UK;19 D.E.IRL.NL) 98 for D.IRL.NL) Source: OECD Health Data 2001, Health care & Cost Containment in the EU, edited by Elias Mossialos & Julian Le Grand, Ashgate, 1999

38 Organisation Recent trends and reforms Contracted services Integrated services Hospitals Doctors Pharmaceutical products Most count ries Co-payments; prospective budget setting; development of activity-based funding Co-payments; restriction on the number of doctors Co-payments; price controls; positive and negative lists of products; BE All services Prospective budgets for hotel and biology costs Fee for service; free choice of doctor Expenditure targets DK Most hospitals, GPs and specialists Some counties hospitals Prospective budgets Fee for service and capitation Expenditure targets; reference prices outside hospitals, dentists, pharmacies DE All services Prospective budgets Fee for service; free choice among sickness funds doctors; indicative budget Reference prices GR Pharmacies, private hospitals, most Doctors and hospitals Prospective budgets Fee for service (private doctors) and salary (NHS) dentists, private doctors ES Specialist doctors, hospitals, 60% of Pharmacies, dentists and Prospective budgets combined with activity-based Salary payment or capitation Fixed budget; ceilings on promotion expenditures GPs private hospitals payments FR All services Prospective global budgets, with phasing-in of activitybased Fee for service; free choice of doctor; expenditure Expenditure targets; revenue target for companies; payment global targets; non-binding medical guidelines (RMO) taxes on promotion expenditure; development of generics; practice guidelines IE Private hospitals, GPs, pharmacies Public hospitals, specialists Prospective budgets and diagnosis-related group measures Capitation plus fee for service (for special service);referral; indicative budget IT Private hospitals, GPs and Public hospitals, specialists activity-based payment Salary payment or capitation, plus fee-for-service Fixed budget; reference prices specialists, pharmacies (for special services);referral LU All services Prospective budgets combined with activity-based payments Fee for service; free choice of doctor NL All services Prospective functional budgets based on activities Capitation (low income) or fee for service (high income);referral; prescription auditing; Pharmacists paid on a flat rate; reference prices AT All services Prospective budgets combined with activity-based payments Fee-for-service combined with capitation; free choice among sickness funds doctors PT Private hospitals, doctors in rural GPs, some specialists, Prospective global budgets based on activities Salary; referral areas, pharmacies, most dentists, public hospitals labs FI Hospitals, pharmacies, private Health centres Purchasing of packages of hospital services, phasing-in Salary payment or capitation; referral outpatient care of DRG-based prices SE Hospitals, pharmacies, private Health centres, Prospective payments based on DRGs, complemented Salary payment; fee for service for private doctors Reference prices; taxes on promotion expenditure hospitals, dentists pharmacies, dentists by price, volume and quality controls UK Public hospitals, GPs, most Community care services Activity-related annual contracts between purchaser Fixed budgets (fundholding GPs);salary payment or Pharmacists paid on a flat rate; promotion of generics; dentists, pharmacies and provider capitation for first-contract doctors; referral; profit control; ceilings on promotion expenditures prescription auditing; Source: Health care & Cost Containment in the EU, op.cit.; European Commission

39 Figure 1: Total expenditure on he as a % of GDP 7,7 7,7 7,9 8 8,3 8,4 8,6 8 6,8 6,8 6,9 7 6 L UK E P A EL N 1998 data - Source: OECD Health Data Figure 3: The ageing EU population Source: Eurostat, population structure indicators ( ), ba projection ( ) Proportion of population aged 65 years and Proportion of population aged 80 years and Figure 2: A rising life expec 90,0 85,0 80,0 75,0 70,0 65, Source: Eurostat Males Figure 4: Public expenditure on he EL P NL B A IT FI D F E IRL DK Public expenditure as % of total health expenditure (left scale) Source: OECD Health Data 2001 Public expen on hea expen

40 In Australia, a set of common community care standards have been implemented by most jurisdictions since 2011 to integrate and standardise accreditation for community care services. According to this regulation, there are 18 indicators (and associated expected outcomes) covering management, access and service delivery, as well as service user s rights. The performance of providers is monitored through the Community Care Quality Reporting Programme. In Canada, data on LTC quality are collected through standardised assessment instruments (RAI) and submitted to the Continuing Care Reporting System of the Canadian Institute for Health Information (CIHI). Information is provided on volumes and pathways, demographics, outcome scales, quality indicators, and resource utilisation, at the provider level. In Finland, quality indicators are derived from a voluntary quality development network using the RAI assessment instruments in place since Although the coverage is about 30% of the total LTC users, the collected information are standardised and comparable across different counties using RAI assessment instruments. Some local authorities require RAI-based quality information as part of the service procurement contracts for residential care. In Germany, The Medical Advisory Boards of the Health Insurance Funds (Medizinische Dienste der Krankenversicherung) is a central body responsible for needs assessment and quality assurance in LTC. Providers are obliged to meet transparency agreements and report information which feed into transparency reports (started in 2009). These include information on inspections of the rooms, living areas and documentation on relevant activities, as well as the results of personal visits among the residents. The quality related indicators measured by the audits and inspections are related to nursing and health care and patient satisfaction as well as structural aspects. In the Netherlands, the Ministry of Health developed the CQ Index to measure the experiences of patients in nursing homes and homes for the elderly. The CQ Index is based on the national quality framework for responsible care which specifies ten quality domains such as quality of life and satisfaction of users. The institutions are ranked and the information is available to the public. In Portugal, an on-line web based system of data management (GestCare CCI) was developed to compliment the National Network of Integrated Continuous Care (RNCCI) in This allows the continuous monitoring of assessments of recipients across transitory care and long-term care at provider, regional and national level. Providers are required to collect and report data for a minimal data set. 40

41 Needs assessment is the instrument that assists the monitoring process and provides a basis for the publication of a report every six months. In Sweden, registries offer a rich source of quality information among elderly people. For example, the Senior Alert Registry, started in 2009, gathers individual data on falls, pressure sores and malnutrition to help in identifying elderly people at risk. By 2012, 274 municipalities (out of 290) reported data to the registry. Using such data and surveys, Sweden has recently started a website, Elderly Guide containing quality data for all municipalities as well as special housing, home-help services and day care services units. Thirty-six indicators such as responsiveness, care co-ordination, and quality of life are reported. In the United States, some of the data submitted from Medicare and Medicaid certified nursing homes and home health agencies are posted on the website of the Centers for Medicare and Medicaid Services (CMS). The public is free to access the information and evaluation of each facility and provider. Policy Brief A Good Life in Old Age OECD/European Commission June Key Facts about Long-term Care in OECD countries In 2010, OECD countries allocated 1.6% of GDP to public spending on LTC. LTC expenditure has grown on average at an annual rate of over 9% since 2000 across 25 OECD countries, compared to 4% for public expenditure on health. LTC services are increasingly being delivered in care recipients homes. In 2010, over 8% of people aged 65 years old and over received care at home while less than 4% of them received care in institutions. Less than a third of OECD countries collect LTC quality measures systematically e.g., in Canadian provinces, Finland, Iceland, Korea, Germany, the Netherlands, Norway, Portugal and the United States. In more than two-thirds of 27 OECD and EU countries reviewed, accreditation of LTC institutions is either compulsory (England, Spain, Ireland and France), or is a condition for reimbursement or contracting (e.g., Australia Germany, Spain, Ireland, England, and Portugal, the United States). Protection mechanisms to prevent elder abuse include national awareness campaigns (e.g. Ireland), training of care workers to identify and respond abuses (e.g., Ireland, Canada, Israel, the United States), and complaint or reporting mechanisms (e.g. Alberta, Ontario and Nova Scotia, Canada; Germany, Norway, the United States, the Netherlands, Japan, England and Scotland.

42 Educational requirements for personal care workers vary significantly, ranging from around 75 hours in the United States to 430 hours in Australia, and from 75 weeks of total training in Denmark to three years training for certified care workers in Japan. More than one-third of OECD countries make information on care providers available in the form of public reports at the national level BULGARIA INTRODUCTION As gains in basic health care increase life expectancy, more people live past the age of 65, a time when the risk of dementia and other degenerative diseases is higher and people are more likely to require longterm care (LTC) services. Whether at home or in an institution, such care is an important way to protect the lives and dignity of a country s elderly citizens. Unfortunately, the cost of LTC, especially in institutions, can be catastrophic for families. Without public social protection systems many people cannot afford the care they need or the high cost of care sends them and their families into poverty. Thus, LTC is not only a health issue, but also a fiscal issue and as the European population ages, it is crucial for states to develop comprehensive LTC systems that address this interrelated issue. How states cope with increased expenditures for LTC depends on policy choices regarding the generosity of public benefits, cost-sharing arrangements, and the supply of LTC services. In particular, policies in support of formal or informal care, in-kind services or cash-benefits, and institutional or community care have important consequences for a country s LTC sector and the cost to the public. Bulgaria s LTC and social service system for the elderly has grown significantly in the past few years thanks to recent reforms aimed at deinstitutionalization and providing more community and home-based services. Yet the country s National Report on Strategies for Social Protection and Social Inclusion states there is no long-term approach for establishing an adequate system for LTC to match demographic forecasts. The next section explores the demographic background of the Bulgarian population, which is one of the fastest aging in Europe. This is followed by s short-description of the macro-economic and fiscal

43 framework in post-crisis Bulgaria. Next, an overview of LTC service provisions is given, followed by a section on financing of LTC services. The last section concludes by introducing some guiding principles for future policy reforms Demographic Background Bulgaria s population of 7.6 million people is declining faster than any other country in the European Union.1 After averaging an annual population growth rate of -0.6 percent in the mid 2000s, it reached in The negative population growth can be attributed mainly to lower birth rates and higher emigration rates, especially after Bulgaria joined the EU in In addition to fewer births and more emigrants, Bulgaria also faces an aging population as the proportion of residents aged 65 and older steadily grows. In the past decade, the share of the population aged 65 or more has grown to 17.3 percent and has remained slightly higher than the EU-27 average. 1 CIA Fact Book (2010). Table 1.1: Main Demographic Information Total Population 8,257,000 7,845,841 7,640,238 7,187,743 6,752, ,288,092 1,333,793 1,321, , , ,049 Share of total population 65+ Bulgaria 15.6% 17.0% 17.3% EU-27 average 15.3% 16.2% 17.0% 80+

44 Bulgaria 2.1% 2.8% 3.6% EU 27 average 3.4% 3.8% 4.3% Overview of the LTC and Social Services System Long-term care and other social services for elderly are provided through two distinct systems in Bulgaria. Social services, defined as activities which assist and expand the opportunities of persons to lead an independent way of life and which are carried out at specialized institutions and in the community 2 are regulated by the Social Assistance Act (SAA) and Rules for the Implementation of Social Assistance Act (RISAA). Long-term social care is defined as social services provided for a period of more than three months. There is no separate definition of LTC services in Bulgarian legislation at this time, nor an official classification of who qualifies for it. 2 SG No. 120/2002 of Social Assistance Act of 1998 (2002 Revision). Health services, on the other hand, are regulated by the Medical Treatment Facilities Act and are provided through different types of institutions such as hospitals for further and continuing treatment, hospitals for rehabilitation and hospices. Unlike social services, however, the legislation does not provide a definition of long-term health care. As is the case in many countries, the social service sector and the health care sector do not have an official mechanism for coordination with regard to LTC services. Bulgaria has identified better cooperation and coordination between the health and social services as one of their priorities in the next few years. This includes concrete steps such as including health consulting rooms in homes for the elderly and disabled. Organization of Services Traditionally, long-term care and other social services for the elderly are categorized as formal and informal, institutional and non-institutional. Every country has a different menu of services depending on cultural preferences, state capacity and funding. In Bulgaria, informal services such as home care by a family member most likely make up the bulk of LTC however there are no available data on this. What the data do show is that until recently most formal LTC and social services for the elderly were provided through institutions. After Bulgaria revamped its social service system in 2003, the share of formal services provided in the community or home grew steadily from 17 percent to 81 percent in 2008.

45 Institutional Table 1.4: Number of Beneficia ries of Different Types of Social Services Year Institutio nal Non- Communi ty-based Homebased Total of all services ,707 4,762 5,037 5,250 5,257 5,398 35,375 36,832 38,437 40,610 42, ,733 1,984 2,877 n.a. 34,574 35,925 36,704 38,626 39,209 5,277 40,137 41,869 43,687 45,867 47,484 Table 1.5: Non-institutional LTC and Social Services Type of Service Personal assistant Services Provided Take permanent care of a child or adult with disability Service Delivery/Management Financed and managed by the state through the Assistants for persons with

46 Social assistant Home helper or serious illness Provide a range of services to elderly or disabled person, including food delivery, shopping, personal hygiene, cleaning, errands, etc. Social assistants play an important role in avoiding institutionalization for clients. Provide services at home, house cleaning, cooking, shopping, errands, etc. Number of hours per week varies with individual needs. disabilities program. Small contribution from the municipalities that apply for this service. This is the only service that is completely free of charge for the users. Financed and managed by the State In the framework of the National program Assistants for persons with disabilities. Users pay small fees for a set number of hours per week. Fees for additional hours are higher. Municipalities provide some financial and managerial support. Social assistants are normally a trained unemployed person hired by the national program. This new service (as of 2009) is a component of the National Program Social services at home, financed by the state budget. User fees based on income. Daycare center Provide comprehensive services for the elderly including food, health, Funded by the state, managed by the municipality. Can be

47 Center for social rehabilitation and integration Care services at home education, rehabilitation, and general social contact. Provide a range of social services by a team of specialists (psychologist, physical therapist, counselors, etc.) to prepare clients for integration into society and eventual independent living. Social services provided at home such as food delivery, cleaning, help with personal hygiene. contracted out to a private organization. Clients pay 30 percent of their income. Funded by the state, managed by the municipality. Small user fees based on a set schedule. Management can be contracted to a private organization. Initially financed through municipal budgets but recently added to the national program: Services in Family Conditions which provides additional state funding to expand services. User fees apply, based on the Local Taxes & Fees Act. When the state began funding social services in 2003, they also asked municipalities to remit any fees collected back to the state treasury. This broke the direct link between service provision and the collection of fees, resulting in a decrease in overall fee collection. Once they had to remit any fees collected to the state, local employees were less motivated to collect them in the first place and to update their rate based on changes in the user s income. This also broke the link between quality of service and fee payment. The municipalities receive the same fee regardless of the quality of service and users pay the same fee regardless of the quality of service.

48 User fees for long-term health services are directly related to the user s health insurance status and their package with the National Health Insurance Office. For elderly, there is no risk of interruption in health insurance status due to unpaid contributions because their contributions are paid by the state budget starting at age 60 for women and 65 for men. The government is clear that the current system of funding for LTC and other social services is unsustainable given the demographic projections. The heavy reliance on state-delegated services will need to change and local municipalities will need to find other sources of funding. Expenditures on LTC and Other Social Services While there are no data on services funded directly by the state (personal assistants, home helpers), Bulgaria spent BGN 133 million on state-delegated and local services in 2008 (see Table 1.10). This is a dramatic increase from 2003 when spending was just BGN 76 million and most services were funded solely by municipalities. There has been a significant increase in staffing, expenditures, geographic coverage and the number of beneficiaries reached by state-delegated services. This may reflect the demand for services and aging population but it may also reflect the preference of municipalities to establish state-delegated services for which they receive state funding rather than local services that come directly out of their budget (see Table 1.11 below). This is especially true for services like social care at home where fees cover less than 40 percent of expenses and there are now similar state-delegated services like social assistants and home helpers.13

49 Table 1.10: Spending on LTC and Social Services (BGN) Institutional Homes elderly disabled for & 30,382,846 43,796,817 53,289,202 72,341,548 Hospitals and hospices 22,544,412 45,012,288 38,087,070 n.a. Total 52,927,258 88,809,105 91,376,272 72,341,548 Community & Home-based Day care centers, rehab centers Social care at home 578,780 1,746,961 5,423,871 18,533, ,10,599 28,066,221 34,322,129 42,261,276 Total 22,889,379 29,813,182 39,746,000 60,795,091 Grand total 75,816, ,622, ,122, ,136,639

50

51 Bulgaria Serbia IPA Cross-border Programme Project Partners The project is co-funded by EU trough the Bulgaria Serbia IPA Cross Border Programme Проектът е съфинансиран от Европейския съюз, чрез Програмата за трансгранично сътрудничество по ИПП България - Сърбия This publication has been produced with the assistance of the European Union through the Bulgaria Serbia IPA Cross-border Programme. The contents of this publication are the sole responsibility of Municipality of Slivnitsa and can in no way be taken to reflect the views of the European Union or the Managing Authority of the Programme.