Long term care insurance as public policy
LTCI has begun seeing uptake in Asia. However, creating sustainable, equitable long term care systems remains a problem to be solved.
The rising number of elderly in the world brings forth a set of problems which were unanticipated ere the dawn of the modern era. Bismarck, when he created the forerunner to the modern welfare state, did not imagine it needing to take care of a large number of people in their 70s and 80s. Yet here we are, living in a world in which people routinely live to their mid to late 80s.
This would traditionally not be seen as a problem. Having ancestors live long has historically had multiple advantages. However, with decreasing birth rates and increasingly high standards of living, some parts of the world have been contending with the surprising fact that taking care of elders is not exactly an easy thing to do.
The Netherlands was the first country to introduce mandatory universal social insurance scheme which provided long term care services in a variety of settings. Germany was the first country to implement long term care insurance (LTCI) in the form of social legislation in 1995. It has gone on to become the fifth pillar insurance after endowment insurance, medical insurance, accidental injury insurance, and unemployment insurance. The United States has also gone on to formally enact public LTCI.
Japan's long term care insurance
Japan was the first country in Asia to go down this route. With a birth rate below replacement for the longest time, the country has been dealing with epidemics of loneliness and single elders having no one to care about them. Japan's post service actually provides a service in which children living away from their parents can get a postman to visit and take stock of the situation at home.
The solution was a national policy response to this problem since the year 2000. Japan has public LTCI designed to provide long-term care services to residents based on their individual care needs.
The Long-Term Care Insurance Act in Japan categorizes long-term care services into three main types:
In-home care services: These include various services such as visiting, commuting, short-stay, and others that are provided at the individual's home.
Nursing-home care services: These are provided by welfare, health, and medical facilities for the elderly who require more intensive care.
Community-based care services: This category includes visiting, commuting, nursing-home, and composite services that are designed to support the elderly within their communities.
The primary candidates for LTCI are residents aged 65 years and above. Additionally, residents aged 40 to 64 years who require care due to specific conditions are also eligible. The requirements are divided into seven care levels (support levels 1 & 2, which do not qualify for nursing home service, and care-need levels 1 to 5, which qualify for nursing home service).
The classification is initially done based on the number of care minutes required per day to care for the person. The final care-need level is determined by the Nursing Care Needs Certification Board, which consists of physicians, nurses, and other experts in health and social services appointed by the mayor. The board takes into consideration the notes provided by the assessing officer and the statement from the primary care physician when making their decision. Once the care-need level is assigned, it remains valid for a period ranging from six months to two years. Typically, the care-need level is re-evaluated once or twice annually to ensure that the individual receives the appropriate level of care based on their current needs.
The LTCI law in Japan makes sure that the insured only pays 10% of the costs out of pocket. Out of the remainder, half is borne by the government's insurance policy into which the insured pays a premium, and the other half is paid for by the government.
South Korea's LTCI programme
South Korea's population is also aging rapidly, with the proportion of people aged 65 or older expected to reach one-third of the population by 2050. Alongside this, social changes such as increased female participation in the labour market, a rise in the number of elderly living alone, and increased public demand for governmental responsibility in caring for the elderly have begun exerting their demands on Korean society.
In response, the Korean government introduced the public LTCI program in July 2008, aiming to provide in-kind benefits for daily and social life activities for the elderly, either at home or in LTC institutions. Benefits are made available to individuals aged 65 and older, as well as those under 65 with debilitating conditions, subject to an eligibility test conducted through a national care need-assessment system. The system is very similar to Japan's.
Research has found that the most likely users of this programme were traditionally underserved people such as the elderly, women, people who live alone, and people living in rural areas. The programme is also effective: people in the programme have lower out of pocket costs across the board as compared to those who do not and most of them come close to maxing out their monthly benefit limit.
China's public LTCI programme
Another country to launch an LTCI programme was China, where the one-child policy has led to a fairly large skew in the demographics towards the elderly. While the primary caregivers in Chinese society have always been immediate family, with each married couple often needing to care for two sets of parents and four sets of grandparents, institutionalised policy needed to be made to plug this gap.
China launched its first pilot LTCI program in 2016, covering 15 cities. In 2020, the central government expanded the pilot projects to an additional 34 cities, bringing the total number of pilot cities to 49. Despite these efforts, challenges remain, such as the lack of community and home-based care services, the need to expand insurance coverage, and the importance of diversifying funding sources.
However, there was no central authority governing these plans in China. Guidance provided by Beijing was only that: guidance. Every province had autonomy in creating and enforcing its own LTCI programme. So for example, while the guidance recommended a reimbursement rate of 70% for LTCI, this varied wildly across the various provinces where the programme was operationalised. Programmes in most provinces are designed to alleviate both financial and caregiving burdens faced by families, but are varyingly successful in either dimension.
Is public LTCI the answer to taking care of the elderly?
There are significant upsides to having public LTCI. The physical health of those covered by good public LTCI has been seen to show a marked improvement over comparable cohorts elsewhere, especially if they have received good home care. There is also a significant increase in financial security amongst those taking advantage of these programmes. A small positive effect on the labour market has also been noticed, likely due to caregivers having more time to spend in economically productive endeavours.
However, there some significant downsides too. The presence of LTCI in a country increases the use of institutional healthcare and the intensity of LTC sought. In other words, if you give people a benefit, people will use it regardless of whether they require it or not. The Korean system, for example, has no gatekeeping or care management system. As long as the beneficiaries can afford the (relatively small) co-payment, they can choose whether they would prefer institutional or home-based care leading to increasing strain on the health system.
China is also facing a similar problem. Although its LTCI programmes have led to a reduction in "social hospitalisation", which is a trend of seeking in-patient care for minor ailments to substitute for long-term care, the growth of institutional care over home-based or community-based care has been seen in all provinces. The programmes also do not address the needs, preferences and values of older people and also have spotty coverage in rural areas.
Implementation of such programmes in low-income countries such as India and Thailand would require careful thought about mitigating these issues. While the benefits are many, the major challenges are resource utilisation and sustainable funding. These countries have few public resources to spare, and legislating something like a LTCI would require major restructuring of the healthcare system. Financing such an endeavour is something with which countries such as Germany and Japan have grappled for years, with both countries increasing contribution rates and creating a public "population reserve fund". It would be difficult to say what such a system would look like in, say, India.
Ensuring coordination between the LTCI sector and tertiary healthcare would be another stumbling block. While India in particular has a good track record in certain health verticals (the national TB elimination mission, the Pulse Polio programme etc.), their integration with the wider healthcare system is spotty at best. These systems also clash with traditional ways of thinking about the elderly in these countries: Korea has faced heavy challenges with deeply embedded familialism in the society. There is no reason to think the same would not be true of countries such as Thailand, Indonesia, India, etc.
However, the biggest challenge would be countering fraud in such a system. Public systems have a way of turning into rent-seeking structures in many low and middle income countries (LMICs). The cannibalisation of limited resources by those who may not need them purely for the motive of seeking rent is quite common across LMICs: a public LTCI would be very vulnerable to it.
A solution might be to utilise digital identities to minimise theft and rent-seeking. It may not be 100% there, but it may go a certain distance in reducing fraud and increasing efficiency, especially in India, where the India Stack has the potential to allow for more transparent and quicker checking of identities, and combined with the one's abha number, may allow for quicker and more direct referrals to LTC institutions and/or for the provision of home care. A focus on home care over institutional care might be another way for LMICs to go forward.
Sources
https://www.frontiersin.org/journals/public-health/articles/10.3389/fpubh.2024.1252817/
https://www.sciencedirect.com/science/article/abs/pii/S0168851013001061
https://bmchealthservres.biomedcentral.com/articles/10.1186/s12913-020-05878-z
https://www.jstage.jst.go.jp/article/ace/6/1/6_24001/_html/-char/en