Frail older people – the long-term care challenge

As the population in industrialized countries ages rapidly, the number of destitute and dependent people is growing. An average pension rarely covers the high costs of qualified care for the elderly. For this reason, Germany and Japan have introduced mandatory insurance systems to support care giving family members and relieve some of the burden on the state. German journalist Antje Soleimanian reports.

Article | 04 October 2004

HAMBURG – Everything was fine until his 90th birthday: Hans-Joachim Becker, a retired country doctor, lived together with his life companion in his own flat. A domestic help cleaned the big flat and an ambulatory care service passed regularly with warm meals for the two elderly people. One night, the situation dramatically changed: the old man fell in the staircase, sustained a cerebral concussion and had to spend several weeks in hospital.

"It was obvious that he could not stay any longer at home alone", says Mr. Becker's daughter Kristine Heese aged 56. "After the fall my father wasn't able to walk anymore, and his companion wasn't much of a help because of her Alzheimer affection".

Like many elderly people, Mr. Becker first refused to give up his relatively independent lifestyle and move to a nursing home.

"My father refused to leave his familiar surroundings but after his discharge from hospital he urgently needed qualified care", said his daughter. With her father in need of care and living far away, she faced the difficult task of finding an appropriate nursing home where her father was lodged temporarily.

"Fortunately, my father appreciated the short-term care in the nursing home. He had a nice single room and received all the medical care and attention needed", she said. A medical officer from the health insurance bureau examined the old man and classified him care level II – in other words, a severe disability and a need for care of not less than three hours per day. These services are paid by the care insurance while the cost of accommodation in the nursing home is financed from Mr. Becker's private pension. His daughter has a proxy to keep his account. "Without the allowances from the care insurance, my father could not afford the cost of the nursing home alone – in spite of his good pension", she explains, adding that "now the value in the account at the end of the month is about zero".

If elderly people in need of care or close relatives cannot bear the cost of care and accommodation, social assistance will finally have to pay for it. Before the introduction of a Social Dependency Insurance in Germany on 1 January 1995, social assistance had to do this more often than today. Now the new care insurance takes the growing load: all citizens are liable to insurance and pay contributions under the state or private health insurance system to care insurance.

German care insurance covers the risk of social dependency independently from the age of the insured person. Contribution income is directly used to cover the arising costs for care. With growing life expectancy the number of recipients in the care insurance system is also rising: the example of Dr. Becker highlights how most elderly people only need care when they are fairly old. When the new insurance system was introduced in 1995, only 750,000 people over 65 years received support from it. In 2002, the number of recipients in this age group had almost doubled reaching 1.43 million.

This comes at a time when the percentage of people over 65 years in Germany will rise from 13.4 per cent in 2000 to approximately 23 per cent in 2040. At the same time, the number of future contributors is expected to decline continuously because of lower birth rates. The Social Dependency Insurance will therefore face a demographically motivated problem of financing – forcing the new system ten years after its introduction to reform.

Health politicians in Japan are also concerned about the social security of the elderly. Demographic change in this country is more sweeping than in any other industrialized nation: already in 2000 some 22 per cent of the Japanese population was over 65 years old and for 2040 statisticians forecast 36.3 per cent. At the same time, the birth rate is declining in Japan even more dramatically than in Germany.

On the other hand, compared to other industrialized countries the demographic challenge in Japan has so far had only a limited impact on the level of social expenditure. One reason is the high activity rate of elderly people: in 1998 almost a quarter of all Japanese over 65 were still active – in Germany the rate was just under 2.2 per cent the same year. Furthermore, close family ties in Japanese society reduce public expenditure on the elderly: in 2001, some 48 per cent of all Japanese over 65 still lived with their children while in Germany and most other industrialized countries this is only the case for 14 per cent of the same age group.

In spite of these favourable factors, Japan had to take account of demographic trends and in April 2000 introduced Public Care Insurance. Despite being modelled on the mould of the German care insurance system, the Japanese system differs in some respects from the original. Only citizens over 40 years of age have to pay contributions while only people over 65 receive benefits comparable with those in the German care insurance system. As it continues to cover 45 per cent of the cost of long-term care for the elderly, the Japanese government does not need to move to a mandatory system fully funded by contributions.

Like in Germany, applicants have to pass an examination with a public health officer. Based on the degree of social dependency, the health officer will fix a certain budget for care. The budget is administered by a care manager who establishes a care plan for the insured and organizes the necessary care by ambulatory and in patient institutions. All recipients have to find 10 per cent of the costs. An evaluation of the Japanese Care Insurance is planned for 2005, five years after the law was enacted.

Social protection for those in need of care is only one of the many problems of ageing societies. The United Nations already acknowledged these problems in 1990 when it made October 1st the "International Day of Older Persons". Over the last years, the International Labour Organization (ILO) has produced a series of documents and information campaigns on social security for older people. The theme of the International Day in 2004 is Older Persons in an intergenerational society.