Population Ageing: Implications for Health and Long Term Care Financing

1
Population Ageing Implications for Health and
Long Term Care Financing
Dr Phua Kai Hong, AB,SM (Harvard), PhD
(LSE) Associate Professor of Health Policy
Management Lee Kuan Yew School of Public Policy
2
Health Care Financing and Population Ageing

• Population Dynamics
• Socio-economic Development
• Health Status
• Rate of Population Ageing
• Rate of Health Care Costs

3
Demographic Trends

• Dependency Ratio
• Elderly persons 65 over
• Working persons 15-64
• Sex Ratio
• Women 65 over
• Marital Status
• Widowhood
• 1-parent and 1-person households

4
Population Ageing Impact on Health Expenditure

• Health expenditure will increase with growing
  proportion of the aged
• Health expenditure will increase with longer
  survival of the aged population
• Health expenditure will increase with widening
  periods of morbidity and disability before death

5
Health Expenditures and Ageing
14
United States
12
Canada
France
10
Switzerland
Finland
Russia
Australia
Germany
Norway
Italy
Sweden
8
Belgium
New Zealand
Health Expenditure as of GDP
Japan
Spain
Portugal
United Kingdom
Ireland
Denmark
Czechoslovakia
Taiwan
Korea
6
Greece
Poland
Hong Kong
Argentina
Mexico
4
Turkey
Singapore
2
0
4
8
12
16
20
24
28
Aged Dependency Ratio (gt65/Aged 15-64)
6
Comparative Health Expenditure in Singapore and
Selected Countries
U.S.
Germany
Canada
Japan
U.K.
Singapore
Year
7
Health Expenditures and Infant Mortality
IMR per 1,000 live births
Health expenditure as of GDP
8
Comparative Health Expenditureand Ageing - WHO
Report 2000

• /capita (Int )
  Public/Total GNP Popgt60 DALE
• United States 4187 (3724)
  44.1 13.7 16.4 70.0
• United Kingdom 1303 (1193) 96.9
  5.8 20.9 71.7
• Australia 1730 (1601)
  72.0 7.8 16.1
  73.2
• New Zealand 1416 (1393)
  71.7 8.2 15.5
  69.2
• Japan 2373 (1759)
  80.2 7.1 22.6
  74.5
• Korea 700 (862)
  37.8 6.7 10.2
  65.0
• China 20 (74)
  24.9 2.7 10.0
  62.3
• India 23 (84)
  13.0 5.2 7.5
  53.2
• Singapore 843 (750)
  35.8 3.1 10.3
  69.3
• Brunei - (857)
  40.6 5.4 5.0
  64.4
• Malaysia 110 (202)
  57.6 2.4 6.5
  61.4
• Thailand 133 (327)
  33.0 5.7 8.5
  60.2
• Philippines 40 (100)
  48.5 3.4 5.6
  58.9
• Indonesia 18 (56)
  36.8 1.7 7.3
  59.7
• Vietnam 17 (65)
  20.0 4.8 7.5
  58.2
• Myanmar 100 (78)
  12.6 2.6 7.4
  51.6
• Cambodia 21 (73)
  9.4 7.2 4.8
  45.7

9
Health Systems Performance WHO Rankings 2000

• 
  Health Expenditure
• 
  GDP Per capita
• France 9.8 2,369
• Italy 9.3 1,855
• San Marino 7.5 2,257
• Andorra 7.5 1,368
• Malta 6.3 551
• Singapore 3.1 876
• Spain 8.0 1,071
• Oman 3.9 370
• Austria 9.0 2,277
• Japan 7.1 2,373

10
WHO Health Systems Performance Assessment

• Health Attainment
• Responsiveness
• - basic amenities, social support, respect,
  
• confidentiality, autonomy, choice,
• communications
• Fairness in Financing
• - distribution of risks, social protection

11
Some Reasons for Singapores High Ranking and
Low Expenditure

• Relatively high GNP growth in denominator
• Lower consumption due to age structure
  (age-adjusted projection up to 6-8 of GNP)
• Strong budgetary controls on public spending
• Absence of comprehensive health insurance
• Government subsidies for public health and
  differential pricing for personal consumption
• ? Cost-sharing and co-payment systems

12
Health Expenditures as of GDP in Asian
Economies (2000)

• National Health Insurance Systems
• Japan 7.1
• Korea 6.7
• Taiwan 5.0
• Thailand 5.4
• National Health Service Systems
• Hong Kong 4.7
• Malaysia 2.4
• Singapore 3.1

13
Healthcare Expenditure in Asia
GNP PublicPrivate
14
(No Transcript)
15
Public-Private Health Expenditure in Singapore
(1965-2000)
16
Singapore Health Statistics Past and Present

• 
  1980 2005
• Life expectancy 70 years 80
  years
• Infant mortality 12/000
  2.5/000
• Aged/total population 5
  9
• Public hospital mix 85
  80
• Health expenditure/GDP 3
  4
• Health expenditure/ 6
  7 government
  budget
• User fees recovered / 3
  60 public expenditure
  

17
Population Ageing in Singapore by 2030
18
Health Expenditures and Ageing
14
United States
12
Canada
France
10
Switzerland
Finland
Russia
Australia
Germany
Norway
Italy
Sweden
8
Belgium
New Zealand
Health Expenditure as of GDP
Japan
Spain
Portugal
United Kingdom
Ireland
Denmark
Czechoslovakia
Taiwan
Korea
6
Greece
Poland
Hong Kong
Argentina
Mexico
4
Turkey
Singapore
2
0
4
8
12
16
20
24
28
Aged Dependency Ratio (gt65/Aged 15-64)
19
Singapores Hybrid Health Care Financing
Seeks to avoid either extremes -

• Welfare State
• Tax-funded/
• Social insurance
• - Free services
• Low quality
• Inefficiency

Free Market Fee for service Private insurance
- Moral hazard - Adverse selection
- Inequity
20
Healthcare Financing Strategies Instill
personal and family responsibility(Cost-sharing)
Ensure future sustainability with ageingand
avoid inter-generational problems(Savings)Enha
nce risk-pooling and social protection
(Insurance)Target subsidy and equitable
distribution(Taxation)
21
Health Care Financing in Singapore
Financing Method
Taxes
PUBLIC HEALTH SERVICES
Private Payment
PRIMARY CARE
Medisave
Compulsory Savings
ACUTE CARE
Medishield
Social/Private Insurance
CATASTROPHIC (LONG TERM CARE)
(Eldershield)
Medifund
(Eldercare fund)
PUBLIC SUBSIDIES
Source Dr. Phua Kai Hong
22
Sources of Healthcare Financingin Singapore
Medisave 8
Government subsidies 25
Medishield 2
Private Insurance 5
Out of pocket 25
Employer Benefits 35
23
Ministry of Health Sectoral FY Budget
24
Public Hospitals Bed Distribution
25
Features of the Singapore Health Care System

• Mixed Public-Private Health Care Market
• Choice of private and public systems
• Competition and integration between public,
  private and voluntary sectors
• Appropriate mix of financing methods
• Co-payment at the point of consumption
• Selective risk-pooling to avoid moral hazard
• Targeted public subsidies to address inequity
• Government benchmarks for prices quality

26
The Unfinished Agenda Health Care Financing
Reforms

• Blue Paper National Health Plan
• 1984 Medisave
• 1990 Medishield
• 1993 Medifund
• 1993 White Paper - Affordable Health Care
• 2000 Eldercare Fund
• Eldershield
• 2005 Enhanced Medishield
• 2007 ?Enhanced Eldershield

27
Health Care Financing Reforms in East Asia

• JAPAN
• Universal health insurance (1922/1939)
• NHI Law amended (1984/1990)
• Trial DRG/PPS in 10 Hospitals (1/11/1998)
• Long term care insurance (1997/2000)
• KOREA
• Universal health insurance (1976/1989)
• Health Care Reform Committee (1994/1997)
• K-RDRG Pilot Program (1997-1998)
• TAIWAN
• Universal health insurance (1995)
• Partial DRG system (from 1998)

28
Health Care Financing Reforms in East Asia

• SINGAPORE
• National Health Plan (1983)
• Medisave/Medishield/Medifund (1984/1990/1993)
• Review Committee on National Health Policies
  (1992)
• White Paper Affordable Health Care (1993)
• Casemix Funding (1999)
• Eldercare Fund/Eldershield (2000/2002)
• HONG KONG
• Scott Report (1985)
• Consultation Paper Towards Better Health
  (1993)
• Harvard Consultants Report (1999)
• Consultative Paper on Lifelong Investments
  in Health Care (2000)

29
Health and Long Term Care Financing in Japan

• Universal health insurance 1922-1939
• National Health Insurance (1961)
• Health Service Law for the Aged (1982/1986)
• National Health Insurance amendments 1984-1990
• The Golden Plan / New Golden Plan (1990) -
• 10 -Year Gold Plan for the Development of
  Health and Welfare Services for the Elderly
• Public Long Term Care Insurance Act (1997) -
  implemented in 2000
• - 50 insurance (40 years and above)
• - 50 general taxation

30
Health and Long Term Care Financing in Singapore

• FINANCING METHOD
• Personal savings
• Compulsory savings
• Catastrophic insurance
• Disability insurance
• Endowment
• Taxation

• 3-M SYSTEM 2E
• MEDISAVE (1984)
• MEDISHIELD (1990)
• ELDERSHIELD(2002)
• MEDIFUND (1992)
• ELDERCARE FUND (2000)

31
Past Financing System for Long Term Care

• Community care / long term care
• Direct payment by individuals and families
• Community assistance
• Voluntary Welfare Organizations
  fund-raising
• (Up to 50 or more of recurrent
  expenditure)
• Government funding
• Grants-in-aid or subventions
• - Capital funding (up to 90)
• - Recurrent funding (up to 50 of cost norms
  
• 75 for public assistance cases)

32
Financial Security Healthcare

• National Survey of Senior Citizens
  in Singapore (1995)
• Inadequate income 2.1
• - High medical costs as reason
• for inadequate income 16.6
• - High medical costs as reason
• for financial insecurity
  9.4

33
Provisions for Health Care Financing among the
Elderly

• National Survey of Senior Citizens (1995)
• Men
  Women
• Childrens Medisave 43.8 65.0
• Spouses Medisave 0.6 3.2
• Own Medisave 30.1 6.9
• Own Savings 13.1 11.1
• Other Provisions 5.1 5.3
• No Provisions 7.3 8.5

34
Health Care Needs of the Elderly

• National Survey of Senior Citizens
• in Singapore (1995)
• Men
  Women
• Good Health 88.2 82.6
• Hospitalization 6.5
  7.3
• Long Standing Illness 28.0 31.1

35
Socio-cultural Gender Issuesin Health Care
Financing

• Most caregivers are women
• - Who cares for the elderly women?
• Women lose out in earnings
• - Who pays for care of elderly women?
• Women also lose out in savings
• - Who saves for financial security and medical
  savings of elderly women?

36
Inter-Ministerial Committee on Health Care for
the Elderly 1998

• VWOs to include middle-income clientele,
  charge higher fees and raise quality of care
• Government funding for 90 of capital costs
  does not differentiate types of residential care
• Government funding for recurrent costs does not
  differentiate the case-mix and affordability
• Difficulties in administering means test
• Subventions for home medical care/nursing
  services not yet available
• Lack of incentives for private sector
  participation

37
Inter-Ministerial Committeeon the Ageing
Population 1999

• Social Integration of the Elderly
• Health Care
• Financial Security
• Employment and Employability
• Housing and Land Use
• Cohesion Conflict in an Ageing Society

38
IMC on the Ageing Population - Sub-Committee
for Resource Funding

• Roles of the Public, Private and People Sectors
• in providing and financing health care for the
  elderly
• Impact of IMC on Health Care for the Elderly
  recommendations on Governments expenditure
• Financial capabilities of VWOs
• New approaches/options for cost-effective and
  sustainable provision of health care for the
  elderly
• - structural strengthening of the voluntary
  sector
• - VWOs as partially private rather than
  charities
• - role of private sector operators
  
  
• Financial planning for long term care

39
Recommendations of IMC on the Aged Population
Health Care

• Study further health care needs
• Review standards for service delivery
• Strengthen service providers
• Develop appropriate manpower
• Financing health care for Senior Citizens
• - Government funding for VWO step-down care
• and insurance for severe disabilities
• - Public education on insurance scheme with
• research and evaluation
• - Consider extending subsidies to lower-income

40
Future Community Long Term Care Model in Singapore

• Involvement of voluntary welfare organizations
• Co-financing from government of 31 ratio,
• based on piece-rate and program funding
• Within grassroots structure of local government -
  Community Development Councils (CDC)
• Multi-service centres to be co-located with
  existing Community Clubs and Centres (CC)
• Networks of neighbourhood Residents Activity
  Centres (RAC) Seniors Activity Centres (SAC)

41
The Singapore Health Care Model

• Singapores health system ranked extremely high
• Reputation for high quality, choice and
  efficiency
• Equity risks covered by subsidies and safety nets
• Fully funded medical savings with social
  insurance to finance increasing needs of ageing
  population
• Balance between health care supply and demand
  with pricing and subsidy, while containing costs
• Goals of efficiency, equity, quality and
  sustainability to be maintained by appropriate
  public-private mix in provision, financing,
  regulation and education

42
Similar Approaches to Old Age Security and Health
Care Financing

• World Banks 3 Pillars for Old Age Security
• Redistribution
• Savings
• Insurance
• Singapores 3M for Health Care Financing
• Savings (avoids inter-generational transfers)
• Insurance (pools risks for catastrophic care)
• Taxation (subsidizes the poor and indigent)

43
Effects of Health Care Financing and Payment
Methods

• EQUITY Who pays? Who benefits?
• - Distribution
• - Access
• EFFICIENCY Supply Demand
• - Allocation
• - Production
• EFFECTIVENESS Outcomes
• - Quality of Care
• - Health Status

44
Policy Options for Health Care Financing

• Resource Mobilization -
  diversify financing from pay-as-you-go (PAYGO)
  to pre-funded or fully funded schemes
• Efficiency -
  optimal resource allocation,
  balance cost-effective supply and demand
  utilization
• Equity -
  better targeting of public
  subsidies to the poor, shift
  well-off from public to private sector

45
Policy Implications Financing the Levels of Care

• Family support for home care
• Personal savings and community services for
  primary health care
• Compulsory savings for hospitalization
• and acute care
• Insurance and institutional support for
  catastrophic and long term care
• Taxation and state welfare as safety net

46
Policy Implications Towards Cost-effective Care

• Avoid hospitalization and institutions
• Provide substitutes and alternatives
  eg. day care, home nursing, hospice, etc
  
• Develop community-based services
• Strengthen family support and home care
• Improve housing and living arrangements

47
The Future of Eldercare Financing?

• The many helping hands approach in
  communitarian community care
• Partnership of the Public, Private People (3P)
  Sectors
• Joint responsibilities of the individual and
  family, community and the state
• Shift from state welfarism to greater
  cost-sharing by a more diversified mix of
  financing methods, eg prepayment, savings,
  insurance and targeted subsidies (means-test)
• 
  

48
Special Conditions in Asia

• Fastest pace of economic transition
• Highest rates of population ageing and population
  growth
• Great propensity for savings
• Strong traditional family support systems
• Social security and health care reform policies
• must contend with such considerations