Long Term Care: What can we learn from the international experience? Romain Bridet, Bridget Browne
About the authors • Romain Bridet – Pricing Long Term Care (LTC) (re)insurance products in France, Italy, Israel, Spain... • Bridget Browne – Wondering why LTC insurance was so successful in France and non-existent in Australia
General definition of dependancy “ A dependant person is one, who for reasons linked to the lack or loss of physical or mental capacity, needs substantial care and/or aid to perform everyday activities ”
General definition of dependancy “ A dependant person is one, who for reasons linked to the lack or loss of physical or mental capacity, needs substantial care and/or aid to perform everyday activities ”
General definition of dependancy “ A dependant person is one, who for reasons linked to the lack or loss of physical or mental capacity, needs substantial care and/or aid to perform everyday activities ”
General definition of dependancy “ A dependant person is one, who for reasons linked to the lack or loss of physical or mental capacity, needs substantial care and/or aid to perform everyday activities ”
Outline • Brief review of various countries – Israel, Spain, Germany, UK, US • Detailed look at France • Why does LTCI work in France? • Why doesn’t LTCI exist in the UK? • Detailed look at Australia • Why doesn’t LTCI exist in Australia?
Demographic snapshot % of the population aged 60+ in 2009 30.0% % 60+ 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Germany France UK Spain Australia US Israel Brazil Russia India China Source: United Nations, World Population Ageing 2009
Demographic Snapshot % Aged 60+ Rank/196 Median Age Rank/196 25.7% 3 43.9 2 Germany 22.7% 14 39.9 20 France 22.4% 17 39.7 22 UK 22.2% 18 39.8 21 Spain 19.1% 33 37.6 43 Australia 17.9% 42 36.9 51 US 14.2% 61 29.5 75 Israel Brazil 9.9% 79 18.6 81 Russia 17.8% 44 37.9 40 India 7.4% 104 24.7 113 China 11.9% 65 33.9 59 Source: United Nations, World Population Ageing 2009
LTC insurance in Israel Social security provides LTC benefits to all citizens (the criteria and benefits vary according to income and whether at home or institutionalised) Most LTC insurance is sold on group basis through health funds as a rider to their standard health insurance The health funds have to cede their portfolio to insurance companies (via a tender process usually every 5 years) This group LTC market in Israel is fairly mature and highly regulated, e.g.: - Minimum definitions for ADLs (Activities of Daily Living) are provided by the regulator - Premiums are not guaranteed , but the insurance companies need regulator approval in order to increase rates during cover period - For group policies there is a requirement for continuation of the cover on a individual basis if the insured leaves the group or the policy is not renewed Further to that, all major insurance companies sell individual LTC products
LTC insurance in Israel • LTC definitions 3/6 ADLs failed or cognitive impairment ADLs are • failed if the insured is unable to perform at least 50% of the activity a. Transferring (i.e. getting up and lying down) b. Dressing c. Bathing d. Eating and Drinking e. Continence f. Mobility • no permanence condition Cognitive impairment according to a standard definition, to be confirmed by a specialist
LTC insurance in Israel • Product features Lifetime insurance term Subscription before retirement, children are included free of charge Underwriting by questionnaire, no ratings (accept/decline policy) Benefit cover 5 years or lifetime with decreasing indemnity Varying deferred and waiting periods Indemnity-based benefits with limits depending on location (institution/at home) Premiums differentiated by age and gender Premiums and benefit limits are linked to Consumer Price Index Premium increase by age is lower than expected claims cost increase by age (business mix risk)
LTC insurance in Spain Social security system compulsory coverage regulated by Law 36 of 14 December 2006 (Ley de Dependencia) – Universal system to be accessible, equitable and stable – Economic contribution from the pensioners – Giving priority to services instead of cash benefits – Covering three levels of dependency, assessment of the level of dependency with a national scale (ABVD = Basic ADL) giving a score between 0 and 100
LTC insurance in Spain • LTC definition based on ABVD national scale Moderate dependency Require assistance for several ADLs at least once a day (ABVD score from 25 to 49) Severe dependency Require assistance for several ADLs two or three times a day but no need of permanent assistance (ABVD score from 50 to 74) Extreme dependency Total loss of autonomy physical or cognitive, implying need of permanent assistance (ABVD score from 75 to 100)
LTC insurance in Spain • Following the social system activation, the major companies of the market launched LTC insurance products • Product features Definition based on ABVD national scale. The insurer follows the decision of the administration in charge of the social system Lifetime annuity in case of extreme dependency, reduced to 50% in case of severe dependency Level premiums by age and gender Waiting periods (0, 1 or 3 years) • Tax deduction of premiums paid for LTC insurance for severe and total dependence (up to €12 500 pa)
LTC insurance in Germany Long Term Care Insurance in Germany compulsory supplementary LTC insurance LTC insurance private social health insurance life insurance daily supplementary nursing reimbursement care annuity allowance statutory benefits individual benefits
Compulsory LTCI in Germany Range of benefits Home health care Nursing home care Benefits Care ADL care in kind allowance Medical care Combination of benefits Social assistance Respite care Semi-statio- nary care Technical equipment Short-term care Social security pro- tection for carers Training courses for carers
Compulsory LTCI in Germany • Definition built around 4 areas: A = Personal Hygiene; B = Nutrition; C = Mobility; D = Housekeeping tasks • Levels of care Level Degree of care Required assistance Minimum daily time spent on care Considerable 1.5 hours* (at least I at least once a day for 2 ADLs in A, B or C 45 min for A,B or C) Severe at least three times a day II 3 hours* (at least for 2 ADLs in A, B or C 120 min for A,B or C) III Extreme round the clock 5 hours* (at least 240 min for A,B or C) * Included in all levels : help several times a week with D = housekeeping tasks
Private LTC Insurance in Germany • Life insurance – Product features • Coverage: lifetime • Premium: level guaranteed • Benefit payment period: lifetime • Definition: either 6-point ADL system or as per compulsory scheme; specific triggers for cognitive impairment • Benefit: fixed amount irrespective of where/by whom care is provided • Partial benefits: 40% / 70% / 100% for Levels I / II / III • Inflation protection: indirectly via profit participation • Waiting period: 0 • Deferment period: 6 months • Waiver of premium: yes
Private LTC Insurance in Germany • Health insurance – Product features • Benefit amount – Daily cash allowance : up to € 200 (occasionally only 50% in case of non-professional care) – Reimbursement of costs: increase of CLTCI benefit of 10% up to max 200% • Partial benefits: wide range • No waiver of premium • Premiums are reviewable
Main public resources presently going into LTC for older people in the UK • Attendance Allowance/Disability Living Allowance – £6.7 bn. • Carers’ Allowance – £1.1 bn. • Local Authority spending (in England) totalling £5.7 bn of which: – £2.9 bn on residential provision – £2.1 bn on non-residential provision – £0.7 bn on assessment and care management . • NHS spending on continuing health care (total not known). • NHS spending on nursing care – £0.7 bn. Source: Joseph Rowntree Foundation – Donald Hirsch 2005
Charges to individuals for publicly provided care in the UK Source: Joseph Rowntree Foundation – Financial care models in Scotland and the UK 2006
Who pays for care today? • For those with £23,000 and up: – Private LTC insurance products – Private savings – Selling of assets – house, car, land etc – Support from family, friends and other organisations • For those with £23,000 and under: – Supported by Local Authority Source: Association of British Insurers, Kirwan, UK Health & Care conference May 2009
LTC Insurance in the UK • No longer any private LTC insurance products as such, currently ABI mentions: – Equity Release – Immediate Needs Annuity – plus a variety of simplified plans Source: “A Sustainable Future for Long Term Care: The Insurance Industry Perspective”, Association of British Insurers, 10/2010
Recommend
More recommend
