Rethinking the Welfare State: The prospects for ... - e-Library

Health care 117
and unpredictable. Long-term care satisfies both criteria.” 105 It would seem, therefore,
that LTC is as suitable for a public insurance system as is health care. It would therefore
be more equitable, and more efficient, to require that all members of the population share
in the risk, rather than to simply finance services on a means-tested basis as is now
typically the case.
An interesting model of LTC provision is the new German model. In 1994, Germany
enacted a universal-coverage social insurance program for long-term care. 106 This
program is mandatory and is financed partially by the government and partially through
individual contributions. The benefits are extensive and pertain to nursing home and
home-care services for “people of all ages without regard to financial status.” 107 Thus,
eligibility for benefits is contingent solely on meeting criteria relating to functional status;
specifically, to qualify, a person must show that he or she requires assistance with at least
two ADLs and some assistance with respect to IADLs. 108
Once an individual is deemed to qualify for the receipt of benefits, he or she may
choose to receive a voucher for the approved services, or may choose to receive a cash
payment instead. Those who choose the latter receive less than half the value of the
service benefits, but the use of cash is unrestricted. 109 As well, expenditures per person
are capped at levels that vary by disability level and institutional status. 110 There are three
“grades” of disability, by which recipients are categorized. The cash payments vary
according to the grade of disability experienced. 111 In addition to these cash benefits,
informal caregivers (friends and family members) can attend free care-giving training
courses. 112 The costs of this program have remained relatively low, largely due to the cap
placed on per-person expenditures and the overwhelming preference for cash benefits
(which are less expensive for the government).
Individuals electing to receive vouchers are free to choose from among a variety of
suppliers who have contracts with the sickness funds. One of the benefits of this new
program is that the number of suppliers has increased substantially, thereby providing
more choice to consumers, and introducing a greater element of competition into the
market. In addition, regulatory measures have been put in place to ensure that minimum
standards are being met. A national quality framework was introduced in 1995 that,
“specifies standards and review procedures for institutions and home-care providers
participating in the long-term care program.” 113 These standards require that providers
implement internal quality assessment programs, and provides for external reviews when
complaints are made.
In our view, consumers should be enabled to choose their suppliers and change
suppliers as they see fit, thus enhancing both the quality and cost-effectiveness of LTC
service provision. We envision a system in which eligibility is assessed on a needs basis.
Those requiring LTC services would apply to an independent case-management agency
that would be responsible for determining the level of assistance required. Individuals
would be encouraged to utilize home-based services where appropriate in order to contain
costs, as well as to foster individual autonomy and community participation by the
elderly. Individuals would bear the full costs of services purchased beyond the average
cost of the recommended care, in order to mitigate moral hazard problems. Tax-collected
user fees (based on a sliding income scale) would apply to covered services and would be
integrated with our proposed tax-based user fees for other health care services. However,
the extent of this integration would be qualified by the extent to which LTC services