Introduction
Bromson Hill is a care and nursing home near Wariwck, Leamington Spa and Stratford-upon-Avon. We find in our experiecne that residents and their families want a home to be near me. In this occasional article, we consider how the government could refrorm social care.
As the ‘baby boomers’ have begun to age, the elderly population in Europe has been undergoing a steady increase in size. By 2020, for example, there will be only three people of working age to each person over the age of 65, and by 2045, this ratio is expected to drop to two-to-one.[1] In the United Kingdom, the population of people aged 85 and older had reached 1.6 million in 2016 and is expected to grow to about 2.8 million by 2031, an increase of 75%.[2]
However, as the size of the elderly population has been rising in the United Kingdom, the gap between people needing and receiving help has also been rising. As of January 2017, for example, there was an 8% gap between people needing and receiving help in the highest income bracket, a 14% gap in the middle income bracket, and a 23% gap in the lowest bracket.[3] Thus, in the upcoming general election, it will be pivotal for candidates to propose plans to increase the reach and accessibility of elderly care in the United Kingdom to deal with this aging crisis.
Germany’s Long Term Care Insurance System
One system that the United Kingdom could look to for some reform ideas is the German LTCI system, which was first introduced in 1995 in response to Germany’s aging population and rising care costs.[4] The main objective of the creation of the German LTCI system was to encourage family support of the elderly, which, in many cases, helps to reduce the loneliness that often comes with aging. The hope is that people will go through an aging process that begins with taking preventative measures and going to rehab, then they will move into receiving home care, before finishing their life under institutional care. Today, people in Germany do have a choice of the settings and benefits that they think will best meet their needs, but, as of 2007, families were the primary caregivers in nearly 90% of situations.[5]
This LTCI system uses risk pooling to fund protection. Personal contributions are based on income and are made monthly. These are ring-fenced to ensure that they are not spent on anything else. In this way, people can be sure that their contributions go directly towards the LTCI program. However, these funds do not cover all services and supports, so, often, supports such as “room and board” at nursing homes are out-of-pocket costs to users. Thus, in order to provide coverage for low-income people who may not be able to afford these out-of-pocket expenses but are in need of long-term care, Germany introduced the German Social Assistance Safety Net.[6] Some of the benefits the German LTCI provides without any added out-of-pocket are nursing home care, home care with the choice of cash benefit, service benefit, or a combination of the two, respite care, home modifications, assistive devices, and training for family caregivers.[7]
The German LTCI system includes both nationally set benefits and state-level legal frameworks that have local price negotiations, insuring that two people cannot be charged differently for the same service. This develops a certain confidence in German care providers. Furthermore, it is mandatory that even those who choose to obtain private insurance receive at least the same level of coverage as those who receive public protection. Private insurance premiums cannot exceed the contribution levels for the public program and the level of benefits offered must be at least equal to that of the public LTCI program. These statues insure that everyone in Germany has access to a certain level of care.[8]
Has Germany’s LTCI System Been Effective Overall?
According to the 2015 Global AgeWatch assessment, Germany ranked 4th on the Global AgeWatch Index. To put this into perspective, the United Kingdom ranked 10th. The index ranks countries on four different factors: capability domain, which measures the employment rate among older people and the educational status of older people, enabling environment, which measures social connectivity, physical safety, and access to public transportation, health status, which measures life expectancy and psychological wellbeing, and income security, which measures the poverty rate, pension coverage, and relative welfare of those of old age.
· Germany performed best in the capability domain, ranking 3rd in the world with an employment rate among older people (ages 55-64) at 63.5% and the level of educational attainment among older people at 96.4%, which is the second highest in the region. In comparison, the United Kingdom ranked 20th in this domain.
· In terms of enabling environment, the domain that measures how “age friendly” cities in the country are, Germany ranked 11th, while the United Kingdom actually sat ahead of them with a rank of 3rd. However, one area of this domain in which Germany performs ahead of the United Kingdom is in social connectedness, as 36% of the elderly in the United Kingdom live alone.
· In terms of health status, Germany again ranks 11th. The life expectancy for women in Germany in 2015 was 85, and the life expectancy for men was 82. Although the United Kingdom had similar life expectancies, they fell to 27th in the health status domain largely due to the fact that around 1/10 of people over the age of 65 in the United Kingdom reported that they were lonely.
· Finally, Germany and the United Kingdom performed at similar levels in the income security area. Germany ranked 15th, while the United Kingdom ranked 14th. Both countries had elderly poverty rates of 9-10% in 2015, which was slightly higher than the regional average.[9]
Downfalls of Germany’s LTCI System
Although the German LTCI system has worked well overall, there are some negative aspects of the system that are important to be aware of. For example, because the Germans rely so heavily upon informal at-home care, there has been significant growth in the ‘grey market,’ which is a market dominated by mostly Eastern European nationals who often work outside any regulations. The rise in the use of cash benefits, rather than service benefits also helps to drive this ‘grey market’ growth.[10]
Another negative effect of the prevalence of informal care in Germany is that it feeds into the decrease in size of the carer labor force. Many carers, most of which are women, are now staying home to care for their own family and friends by utilizing the available cash benefits. Thus although the German work force is known to be highly qualified by international standards, Germany is experiencing a work force shortage, much like that of the United Kingdom, for example:
· As of July 2018, there were 15,000 unfilled positions in the elderly care sector
· In 2017, it took, on average, 171 days to fill a position in elderly care
· On average, for every 100 open job positions in elderly care, there are only 21 job seekers
· Low wages in relation to workload are also pushing applicants away[11]
Furthermore, because the LTCI system only partially covers the cost of care, Germans have seen the costs of care rise disproportionally to the extent of benefits. Thus, more people have begun to find it necessary to seek out social assistance.[12]
Can it be financed?
Under a LTCI program like Germany’s, the United Kingdom would need to keep in mind that the risk of individuals becoming liable for large and unlimited costs of care will always exist. Although the mandated minimum level of benefits in the German system has caused out of pocket expenses to be comparatively lower than those in the United Kingdom, there is always the risk that these costs could rise. In fact, recently Germany’s price of care has been rising and has caused increasingly higher numbers of people to depend on social assistance. In order to address this threat of rising costs in their system, Germany began using risk pooling at the national level.
Although a system like the NHS requires individuals to contribute more upfront, it does allow for care to be free at the point of use. The German system does not guarantee that necessary care services will be free at the point of use, but it does distribute responsibility between the individual and the state, making it less expensive to the individual up front. This system presents the issue of drawing the line between what the state contributes and what the individual contributes. In adopting a system like this, it is important both to understand what individuals will be willing and able to pay and to make sure that costs to the state do not skyrocket. In order to address the risk of rising cost to the individual, a price cap could be introduced.
Also, although informal care dominance has many benefits, it has a few implications that could negatively affect the economy. Often, people providing informal care find it necessary to exit the workforce, which only furthers the issue of the lack of carers available to work. Likewise, these informal carers often accept available cash benefits over service benefits. Although cash benefits were introduced as a way to make the LTCI system cheaper, there is little evidence that it has actually done so.[13]
Would it be fair?
In the United Kingdom, the current system of social care for the elderly has been seen as unfair, unclear, and unable to meet the needs of an aging population.[14] The German system has been seen as fair overall. Because payments towards the system are made on a fixed monthly basis and are based upon income, it is clear to people exactly what they owe, exactly why they owe it, and exactly when they owe it. Also, the ring-fenced criteria assure them that their money will go towards its perceived cause. Finally, once eligible, everyone is entitled to the same benefits regardless of their age, their location, their income, or their diagnosis, although they can pay up for more luxury-type accommodations if they wish. Thus, people know exactly what they will be getting back from the system in return for their payments. This clearly-defined funding system helped the German LTCI proposal initially gain support.[15]
Conclusion
As we have seen, the German system of funding of elderly care has both pros and cons. Because Germany focuses so heavily upon at-home care provided by family and friends, the United Kingdom’s adoption of a similar plan would help resolve the issue of loneliness among the elderly that has developed in the country. However, this plan could worsen the already prevalent issue of a small caregiver workforce that does not meet the needs of the population in the United Kingdom as this push towards at-home care often means losing people who would work in the care sector. Germany has had similar workforce size issues. Thus, in adopting a plan like Germany’s the United Kingdom would need to find alternative reforms to solve the workforce issue. As low wages are a huge detractor from many caregiver jobs, perhaps the means by which to provide caregivers with higher wages needs to be found. Furthermore, although a funding system similar to that of Germany could benefit the United Kingdom, citizens would need to adjust to the concept of their long term social care program not covering all costs, such as room and board, and would have to keep certain out-of-pocket expenses in mind.
[1] European Social Network. “ Services for Older People in Europe: Facts and Figures about Long Term Care Services in Europe. Services for Older People in Europe Facts and Figures about Long Term Care Services in Europe.” Europa.eu, Oct. 2008, ec.europa.eu/health/sites/health/files/mental_health/docs/services_older.pdf.
[2] Grant Thornton. “Care Homes for the Elderly: Where Are We Now?” Grantthornton.co.uk, 2018, www.grantthornton.co.uk/globalassets/1.-member-firms/united-kingdom/pdf/documents/care-homes-for-the-elderly-where-are-we-now.pdf.
[3] The Health Foundation. “Health and Social Care Funding Explained.” Health.org, Jan. 2017, www.health.org.uk/chart/health-and-social-care-funding-explained.
[4] Curry, Natasha, et al. “What Can England Learn from the Long-Term Care System in Germany?” The Nuffield Trust, 26 Sept. 2019, www.nuffieldtrust.org.uk/research/what-can-england-learn-from-the-long-term-care-system-in-germany#what-next-for-england.
[5] Gibson, Mary Jo, and Donald L Redfoot. “Comparing Long-Term Care in Germany and the United States: What Can We Learn from Each Other?” Assets.aarp.org, Oct. 2007, assets.aarp.org/rgcenter/il/2007_19_usgerman_ltc.pdf
[6] Gibson, Mary Jo, and Donald L Redfoot. “Comparing Long-Term Care in Germany and the United States: What Can We Learn from Each Other?” Oct. 2007
[7] Curry, Natasha, et al. “What Can England Learn from the Long-Term Care System in Germany?” 26 Sept. 2019
[8] Gibson, Mary Jo, and Donald L Redfoot. “Comparing Long-Term Care in Germany and the United States: What Can We Learn from Each Other?” Oct. 2007
[9] “Global Rankings Table: Data: Global AgeWatch Index 2015.” Global Rankings Table | Data | Global AgeWatch Index 2015, 2015, www.helpage.org/global-agewatch/population-ageing-data/global-rankings-table/.
[10] Curry, Natasha, et al. “What Can England Learn from the Long-Term Care System in Germany?” 26 Sept. 2019
[11] Deutsche Welle. “'Who Will Look after Us?' - Germany's Ailing Elderly Care System: DW: 16.07.2018.” DW.COM, 16 July 2018, www.dw.com/en/who-will-look-after-us-germanys-ailing-elderly-care-system/a-44702143.
[12] Curry, Natasha, et al. “What Can England Learn from the Long-Term Care System in Germany?” 26 Sept. 2019
[13] Curry, Natasha, et al. “What Can England Learn from the Long-Term Care System in Germany?” 26 Sept. 2019
[14] The Health Foundation. “Health and Social Care Funding Explained.” Jan. 2017
[15] Curry, Natasha, et al. “What Can England Learn from the Long-Term Care System in Germany?” 26 Sept. 2019