LONG-TERM CARE REFORM IN SLOVENIA – FINANCING PERSPECTIVE EVA ZVER, INSTITUTE OF MACROECONOMIC ANALYSIS AND DEVELOPMENT DAVOR DOMINKUŠ, MINISTRY OF LABOUR, FAMILY, SOCIAL AFFAIRS AND EQUAL OPPORTUNITIES OECD, 4TH MEETING OF THE JOINT NETWORK ON FISCAL SUSTAINABILITY OF HEALTH SYSTEMS
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Long-term care reform in Slovenia: financing perspective - Eva Zver, Slovenia
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LONG-TERM CARE REFORM IN SLOVENIA – FINANCING PERSPECTIVE
E VA Z V E R , I N S T I T U T E O F M A C R O E C O N O M I C A N A LY S I S A N D
D E V E L O P M E N T D AV O R DOMINKUŠ , M I N I S T R Y O F L A B O U R , FA M I LY, S O C I A L A F FA I R S
A N D E Q UA L O P P O R T U N I T I E S
O E C D , 4 T H M E E T I N G O F T H E J O I N T N E T W O R K O N F I S C A L S U S T A I N A B I L I T Y O F H E A L T H S Y S T E M S
Slovenia – in general
Capital: Ljubljana (350.000)
Geographical size: 20 273 km2
Population: 2,06 mio (2014)
Currency: Euro
forecast
2012 2013 2014
GDP (in mio EUR) 36006 36144 36931
GDP per capita (in EUR) 17,506 17550 17899
GDP real growth rates -2,6 -1,0 2,0
Inflation (year average) 2,6 1,8 0,3
Employment (growth rate) -0,8 -1,5 0,6
Unemployment (rate by ILO) 8,9 10,1 10,0
Average wage
General government deficit
(in % of GDP) -3,1 -4,3
General government debt (in
% GDP) 53,4 70,4
IMAD, Autumn forecast of economic trends 2014
Overview of presentation
1. LTC reform in Slovenia – reasons behind the need for a reform
2. Current state of health and LTC financing
3. Information on the envisaged LTC reform
4. Information on the proposed changes of HC and LTC financing
The focus of presentation is on two questions:
- Why do we have to link LTC and health care funding reform?
- What could be a solution to the problem of additional public (tax)
resources needed to finance LTC in Slovenia?
LTC reform – reasons behind the need for a reform
• Demographic reasons
• Fiscal sustainability reasons
• Social reasons (poverty and social exclusion among the elderly)
• Health reasons (Healthy life years are low; impact on savings in
health expenditure)
• Reasons deriving from the existing system, its imbalances and
fragmentation
LTC reform – reasons behind the need for a reform: demografic reasons
Source: Eurostat – EUROPOP 2013
0
10
20
30
40
50
60
2013 2020203020402050 2060
Old-age dependency ratio, in %
4.5
12.3
0
10
20
30
40
50
60
70
80
2013 2020 2030 2040 2050 2060
Demografic projections
Population aged 0-14 (%)
Population aged 15-64 (%)
Population aged 65 or more (%)
Population aged 80 or more (%)
80+ : 2050: 11 %; OECD: 10 %
LTC reform – reasons behind the need for a reform: People under the poverty threshold %
Source: SORS, 2013
0
5
10
15
20
25
2009 2010 2011 2012 2013
The share of population under the poverty threshold, in %
ALL age groups ALL 65+
LTC reform – reasons behind the need for a reform: fiscal sustainability
Projection of age-related public expenditure for Slovenia, 2010-2060
(AWG reference scenario)
11.2 11.8 12.2 13.3 15.8
17.9 18.3
6.1 6.3 6.4 6.8
7.0 7.2 7.2
1.4 1.6 1.7
1.9
2.4
2.8 3.0
4.7 4.7 4.9
4.8
4.6
5.0 5.2
0
5
10
15
20
25
30
35
2010 2015 2020 2030 2040 2050 2060
Share
in G
DP, in
%
unemployment
education
long-term care
health
pension
Source: The 2012 Ageing Report, European Commission, 2012
LTC reform – reasons behind the need for a reform: health
Central government (Ministry of Labor and SocialAffaires)Local governments
Health Insurance Institute of Slovenia
Pension Insurance Fund
Out of pocket
Current state of LTC financing: high share of funding from compulsory health
insurance
73
27
Public Private
Structure of total LTC expenditure by source of funding, 2012
Source : SORS, calculations by IMAD
Current state of LTC financing: very fast growth of private LTC expenditure
132
123
163
95
105
115
125
135
145
155
165
175
2005 2006 2007 2008 2009 2010 2011 2012
Real gro
wth
index, 2005=
100
Total
Public
Private
Real growth of expenditure for long-term care, 2005-2012
Source : SORS, calculations by IMAD
The structure of current health expenditure
by functions, 2003 and 2012
8 10
0%
20%
40%
60%
80%
100%
2003 2012
Governance and health administration (HC.7)Preventive care (HC.6)Medicines and therapeutic appliances (HC.5)Anciliary services (HC.4)Long-term care - health (HC.3)Rehabilitative care (HC.2)Curative care (HC.1)
2.3
5.7
0
1
2
3
4
5
6
Healthexpenditure*
LTCexpenditure**
In %
Average annual real growth rate,
2003-2012
Current state of LTC : LTC expenditure grow even faster then health expenditure
Source : SORS, calculations by IMAD
Current state of LTC financing: high share of LTC health component
68
32
LTC (health) LTC (social)
Total LTC expenditure
89.0
11.0
Public LTC expenditure
LTC expenditure by purpose - health and social care, 2012
Current situation – conclution
Key challenges for LTC reform in Slovenia:
- Demographic aging is faster than the average of EU and OECD
countries
- Fiscal sustainability problem is serious
- High share of disabled/dependent – low indicator of Healthy Life Years
- High growth of private LTC expenditure
- Underdeveloped home care and integrated care
- Underdeveloped ICT, preventive and rehabilitative services (important
to lower the costs of health LTC services)
Information on the envisaged LTC reform
Preparation of the LTC reform started 10 years ago!
Since than several drafts of legislative act were prepared
Since 2013 recommendations from EC and OECD
In 2014: developed official statistics on LTC with detailed information
on LTC expenditure and recipients
Since 2014 better collaboration of the Ministry of Health with the
Ministry of Labor, Familiy, Social Affaires and Equal Opportunities
Information on the envisaged LTC reform: planned future financing of LTC services and rights
The starting point of reform: a need for LTC as a (new) social risk
Ensuring a sustainable financing system that needs to be adaptable
and predictable in times
To keep three pilars of funding:
A compulsory public LTC insurance, based on the merged parts of
the existing health and disability/pension insurance currently
intended for LTC
Tax based financing (including the introduction of new special public
source (tax/levy) for LTC provision)
Out of pocket co-payments (and optional voluntary private
insurance)
Major issue still remains…
Where to find additional public resources to finance LTC under new
legislation ! (approx. 0,2 % of GDP)
- After the long period of crisis Slovenia is still facing a problem of
fiscal consolidation! It is not possible to get additional resources for
LTC reform from central or local budgets.
- Contribution rates to social security funds are already very high
- Dedicated tax/levy – the idea comes from the envisaged
health financing reform (proposed in the coalition agreement
of current government)
Information on the envisaged LTC reform
Source: SORS, Health expenditure and financing ( http://www.stat.si/novica_prikazi.aspx?id=6382)
5 2
65
14
12 3
Centralgovernment
Localgovernment
Socialsecurityfunds
Private healthinsurance
Households(OOP)
Other private(corporationsandnonprofit)
5 2
65
14
12 3
Centralgovernment
Localgovernment
Socialsecurityfunds
New publicsource(dedicatedtax?)
Households(OOP)
A replacement of complementary private health insurance with
new public source of funding (dedicated tax/levy ?)