Long-term care financing - the case of Poland First of all I would like to thnak the organizers for invitation to seminar. It is very important to me to participate in economics discussion about social protection within LTC as in Poland this discussion has already started (in my knowledge (zgodnie z moją wiedzą) it has started in 2005 when former Minister of Health sellted the group of experts whose aim was to perpare the LTC law. But in My opinion the economic discussion hasn’t been started yet, as there are only a few people interested in that field of research. I think that the green book and the research made by World Bank would be the starting point in discussion what range and quality of LTC we can afford. I’m here thanks to project financed from Human Capital sector Dr Barbara Więckowska Social Insurance Department Warsaw School of Economics Long-term care in Europe – discussing trends and relevant issues Budapest, 22-23 February 2010

CURRENT LTC „SYSTEM” FINANCIAL ANALYSIS BENEFICIARIES PROJECTIONS COST PROJECTIONS My presentation consist of 4 main points. I will stat with then I will pass…

Benefits are spread within social protection system Cash benefits (care supplement, care allowange) Benefits in kind (out-patient, in-patient) Social insurance Social assistance Healthcare Social assisance It is diffiuclt to say about polish ltc system, cause the system is the conceptually separated body which parts contribute to body’s mission so to the common goals. I would say to the incease of households safety in the field of LTC. We could identify the body and its parts koncepcyjnie wyodrębniona całość, której części powinny współprzyczyniać się do realizacji jego misji (celu), rozumianej jako poprawa stanu zdrowia populacji (optymalizacja efektu zdrowotnego)

Social insurance for farmers Old-age insurance (old-age pension) Disability insurance (disability pension, survival annuity) Workers compensation insurance (disability pension, survival annuity) Social insurance for farmers Old-age and disability insurance (old-age pension, disability pension, survival annuity) Social assistance Care supplement: Total inability to work Inability to live independetly or 75+ Care allowance: disabled children up to the age of 16 requiring permanent assistance from another person, children over the age of 16 with a moderate disability that began before the age of 21, seriously disabled persons, without age criteria, person who have reached the age of 75

Care supplement monthly in zloty in euro* since 1.03.2003 141.70 32.43 144.25 33.02 since 1.03.2005 since 1.03.2006 153.19 35.06 since 1.03.2007 since 1.03.2008 163.15 37.34 since 1.03.2009 173.10 39.62 Care allowance monthly in zloty in euro* since 1.03.2003 141.70 32.43 since 1.03.2004 144.25 33.02 since 1.03.2005 since 1.03.2006 153.19 35.06 since 1.03.2007 since 1.03.2008 since 1.03.2009 Proverty – fighting the * exchange rate as of 20.05.2009 1 euro=4,369zł (www.nbp.gov.pl)

  2005 2006 2007 2008 in thousands Due to age 1.649,93 1.738,92 1.839,64 1.941,84 Due to frailty 1.453,52 1.437,08 1.442,22 1.435,62 TOTAL 3.103,45 3.176,00 3.281,87 3.377,46 as % 53,16% 54,75% 56,05% 57,49% 46,84% 45,25% 43,95% 42,51% 100,00% 2006 2007 2008 Total 2005-2008 Annual average TOTAL 2.34% 3.33% 2.91% 8.83% 2.86% Due to frality -1.13% 0.36% -0.46% -1.23% -0.41% Due to age 5.39% 5.79% 5.56% 17.69% 5.58% ® Barbara Więckowska

Benefits in-kind: Healthcare system In-patient care Wards for chronicly ill Nursing homes (ZOL, ZLP) Hospices Palliative care wards Out-patient care Home care Long-term care services for patients mechanically ventilated Nursing care Home hospices (including home hospices for children) not qualified for hospitalization problems with ALD (0-40 points in Barthel scale) need for continuuing of treatment not last stage of cancer disease or proverty or addiction Heathcare insurance – is financed form direct tax 9% 7,75% is tax deductible and 1,25 is the real premium that neither decrease the taxed income nor decrease the tax itself (we can compare this premium with motor TPL). Dla chronicznie chorych 30 dni ZOL, ZPO – 6 months for temporary (periodical stay) For czas nieokreślony Meals and accomodation is financed by patiens himself Miesięczną opłatę ustala się w wysokości odpowiadającej 250% najniższej emerytury, z tym że opłata nie może być wyższa niż kwota odpowiadająca 70% miesięcznego dochodu, w rozumieniu przepisów o pomocy społecznej, osoby przebywającej w zakładzie opiekuńczo – leczniczym i pielęgnacyjno-opiekuńczym. ZAŁACZNIK NR 9 !!!

Social welfare homes for the elderly Inhabitants of social welfare homes Problems with ADL No means testing Social assistance In-patient care Social welfare homes for the elderly Social welfare homes for the chronically ill Social welfare homes for the chronically mentaly ill Social welfare homes for the adults intelectually disabled Social welfare homes for children and youth intelectually disabled Social welfare homes for physically disabled Out-patient care home based care services and specialized care services services in support centers Pobyt w domu pomocy społecznej jest odpłatny do wysokości śred­niego miesięcznego kosztu utrzymania. Obowiązani do wnoszenia opłaty za pobyt w domu pomocy społecznej są w kolejności: a) mieszkaniec domu (do wysokości 70 % swojego dochodu) b) małżonek, zstępni przed wstępnymi, c) gmina, z której osoba została skierowana do domu pomocy społecznej – w wysokości różnicy między średnim kosztem utrzymania w domu po­mocy społecznej a opłatami wnoszonymi przez osoby, o których mowa w pkt 1 i 2. Średni miesięczny koszt utrzymania mieszkańca: w domu pomocy społecznej o zasięgu gminnym - ustala wójt (burmistrz, prezydent miasta) i ogłasza w wojewódzkim dzienniku urzędowym, nie później niż do dnia 31 marca każdego roku; w domu pomocy społecznej o zasięgu powiatowym - ustala starosta i ogłasza w wojewódzkim dzienniku urzędowym, nie później niż do dnia 31 marca każdego roku; w regionalnym domu pomocy społecznej - ustala marszałek województwa i ogłasza w wojewódzkim dzienniku urzędowym, nie później niż do dnia 31 marca każdego roku. (Art. 60. Ustawy z dnia 12 marca 2004 r. o pomocy społecznej (Dz. U. z dnia 15 kwietnia 2004 r., poz. 596)). Art. 61. Ustawy z dnia 12 marca 2004 r. o pomocy społecznej (Dz. U. z dnia 15 kwietnia 2004 r., poz. 596). Osoby wnoszące opłatę za pobyt w domu pomocy społecznej można zwolnić, na ich wniosek, częściowo lub całkowicie z tej opłaty, w szczególności jeżeli: wnoszą opłatę za pobyt innych członków rodziny w domu pomocy społecznej, ośrodku wsparcia lub innej placówce; występują uzasadnione okoliczności, zwłaszcza długotrwała choroba, bezrobocie, niepełnosprawność, śmierć członka rodziny, straty materialne powstałe w wyniku klęski żywiołowej lub innych zdarzeń losowych; małżonkowie, zstępni, wstępni utrzymują się z jednego świadczenia lub wynagrodzenia. W przypadku osoby samotnie gospodarującej, jeżeli dochód jest wyższy niż 250 % kryterium dochodowego osoby samotnie gospodarującej, jednak kwota dochodu pozostająca po wniesieniu opłaty nie może być niższa niż 250 % tego kryterium. W przypadku osoby w rodzinie, jeżeli posiadany dochód na osobę jest wyższy niż 250 % kryterium dochodowego na osobę w rodzinie z tym, że kwota dochodu pozostająca po wniesieniu opłaty nie może być niższa niż 250 % kryterium dochodowego na osobę w rodzinie. Barbara Więckowska

Inhabitants of social assistance institutions by age ® Barbara Więckowska

Barbara Więckowska

2005 2006 2007 in thousands Cash benefits 3,103.45 3, 176.00 3 ,281.87   2005 2006 2007 in thousands Cash benefits 3,103.45 3, 176.00 3 ,281.87 In-kind benefits 139.04 141.88 142.63 TOTAL 3,242.49 3, 317.88 3, 424.50 as % 95.7 95.8 4.3 4.2 100.0 ® Barbara Więckowska

CURRENT LTC „SYSTEM” FINANCIAL ANALYSIS CURRENT LTC „SYSTEM” FINANCIAL ANALYSIS* BENEFICIARIES PROJECTIONS COST PROJECTIONS *Based On: J. Koettl, B. Więckowska, POLAND: Who will care for the elderly and who will pay for it? Current and future public expenditures on long-term care, World Bank Raport, January 2010 Barbara Więckowska

Expenditures on LTC cash benefits (in thousands) 2005 2006 2007 2008 TOTAL 5,372.1 5,838.4 6,033.0 6,614.4 Due to age 2,516.1 2,641.8 2,651.3 2,812.6 Due to frality 2,856.0 3,196.6 3,381.7 3,801.7 2005 2006 2007 2008 TOTAL 100% Due to frality 46,84% 45,25% 43,95% 42,52% Due to age 53,16% 54,75% 56,05% 57,48% 2006 2007 2008 Total 2005-2008 Annual average TOTAL 7.60% 0.81% 5.22% 14.14% 4.51% Due to frality 3.96% -2.09% 1.81% 3.63% 1.19% Due to age 10.82% 3.21% 7.89% 23.40% 7.26% Barbara Więckowska

Expenditures on LTC benefits in-kind (in thousands) 2005 2006 2007 2008 Inpatient 2,044 2,242 2,445 3,022 Health sector 537 599 718 988 HIF 516 578 702 970 State budget 10 7 8 9 Local governments 11 13 Social sector 1,507 1,643 1,727 2,033 21 42 37 46 1,487 1,601 1,690 1,988 Outpatient (social sector) 2,520 2,756 3,117 3,637 36 41 48 57 2,484 2,715 3,069 3,580 Total public expenditure 4,564 4,998 5,562 6,659 Total HIF Total state budget 66 90 93 111 Total local governments 3,982 4,329 4,766 5,578 Barbara Więckowska

Expenditures on LTC benefits in-kind 2006 2007 2008 Total Average annual Inpatient 8.57% 6.39% 18.63% 37.03% 11.07% Health system 10.33% 16.95% 32.20% 70.57% 19.48% HIF 10.92% 18.53% 32.57% 74.30% 20.35% State budget -31.06% 12.76% 1.97% -20.74% -7.45% Local governments 20.28% -48.76% 30.58% -19.51% -6.98% Social sector 7.94% 2.55% 13.00% 25.08% 7.74% 102.64% -14.50% 19.21% 106.55% 27.35% 6.63% 3.00% 12.86% 23.95% 7.42% Outpatient (social sector) 8.30% 10.34% 11.96% 33.80% 10.19% 15.17% 14.25% 12.05% 47.43% 13.81% 8.21% 10.28% 33.60% 10.14% Total public expenditure 8.42% 14.89% 35.25% 10.59% Total HIF Total state budget 35.24% 0.76% 13.99% 55.34% 15.81% Total local governments 7.65% 7.40% 12.31% 29.85% 9.10% Barbara Więckowska

Expenditures on LTC benefits - Total 2005 2006 2007 2008 Cash benefits - total expenditure 5,372 5,838 6,033 6,614 due to frailty 2,516 2,642 2,651 2,813 due to age 2,856 3,197 3,382 3,802 In-kind benefits - total expenditure 4,564 4,998 5,562 6,659 Inpatient 2,044 2,242 2,445 3,022 Outpatient (social sector) 2,520 2,756 3,117 3,637 Total public expenditure 9 ,936 10 ,836 11 ,595 13, 273 Barbara Więckowska

Expenditures on LTC benefits - Total 2006 2007 2008 Total Average annual Cash benefits 7.60% 0.81% 5.22% 14.14% 4.51% due to frailty 3.96% -2.09% 1.81% 3.63% 1.19% due to age 10.82% 3.21% 7.89% 23.40% 7.26% In-kind benefits 8.42% 8.57% 14.89% 35.25% 10.59% Inpatient 6.39% 18.63% 37.03% 11.07% Outpatient (social sector) 8.30% 10.34% 11.96% 33.80% 10.19% TOTAL 9,06% 7,00% 14,47% 33,58% 10,13% ® Barbara Więckowska

Expenditures per beneficiary by benefit type and sector 2005 2006 2007 2008 Cash benefits 1,867 1,963 1,915 1,958 Inpatient benefits 22,482 24,244 24,647 28,791 In health sector 35,607 37,792 35,340 46,002 In social sector 19,872 21,443 21,895 24,361 Cash and inpatient benefits 2,499 2,635 2,609 2,767 Outpatient benefits n.a. 1,567 1,731 Total 2,214 2,377 ® Barbara Więckowska

Annual real growth rates of expenditures per beneficiary by benefit type and sector 2006 2007 2008 Total Average annual Cash benefits 5.15% -2.44% 2.24% 4.88% 1.60% Inpatient benefits 7.83% 1.67% 16.81% 28.06% 8.59% In health sector 6.14% -6.49% 30.17% 29.19% 8.91% In social sector 7.91% 2.11% 11.26% 22.59% 7.02% Cash and inpatient benefits 5.46% -0.98% 6.04% 10.73% 3.46% Outpatient benefits n.a. 10.46% 7.39%

Real expenditures on LTC benefits by benefit type and sector as share of real GDP 2005 2006 2007 2008 Cash benefits 0.54% 0.55% 0.52% due to frailty 0.25% 0.23% 0.22% due to age 0.29% 0.30% In-kind benefits 0.46% 0.47% 0.48% Inpatient benefits 0.21% 0.24% Health sector 0.05% 0.06% 0.08% Social sector 0.15% 0.16% Outpatient benefits 0.26% 0.27% Total expenditure 1.00% 1.02% 1.05% ® Barbara Więckowska

Annual growth in shares of real GDP spent on LTC benefits, by benefit type and sector 2006 2007 2008 Total Annual average Cash benefits 1.32% -5.52% 0.40% -3.89% -1.31% due to frailty -2.11% -8.24% -2.85% -12.74% -4.44% due to age 4.35% -3.27% 2.95% 3.91% 1.29% In-kind benefits 2.09% 1.75% 9.63% 13.89% 4.43% Inpatient benefits 2.23% -0.29% 13.20% 15.39% 4.89% Health sector 3.88% 9.61% 26.14% 43.63% 12.83% Social sector 1.64% 7.82% 5.32% 1.74% Outpatient benefits 1.98% 3.41% 6.83% 12.67% 4.06% Total expenditure 1.68% -2.16% 4.83% 4.28% 1.41% ® Barbara Więckowska

CURRENT LTC „SYSTEM” FINANCIAL ANALYSIS BENEFICIARIES PROJECTIONS COST PROJECTIONS *Based On: J. Koettl, B. Więckowska, POLAND: Who will care for the elderly and who will pay for it? Current and future public expenditures on long-term care, World Bank Raport, January 2010 Polish society is aging rapidly, yet not at a constant rate, but in waves These waves will lead to sudden increases in the number of dependent people There will be much less non-hampered people, and more and more dependent people Who will then care for the dependent? There will be much less young people, and more and more old people Who will then pay the care for the dependent?

Polish society is aging rapidly, yet not at a constant rate, but in waves Source: Eurostat

Annual population growth rate Sudden increase of 75+ age group during 2020s and after 2045 Source: Eurostat

Dependency level by age group for Poland Source: SILC

® Barbara Więckowska

Projected annual population growth rates by dependency level Source: own calculation

Projected dependency ratios Source: own calculation

CURRENT LTC „SYSTEM” FINANCIAL ANALYSIS BENEFICIARIES PROJECTIONS COST PROJECTIONS* *Based On: J. Koettl, B. Więckowska, POLAND: Who will care for the elderly and who will pay for it? Current and future public expenditures on long-term care, World Bank Raport, January 2010 Polish society is aging rapidly, yet not at a constant rate, but in waves These waves will lead to sudden increases in the number of dependent people There will be much less non-hampered people, and more and more dependent people Who will then care for the dependent? There will be much less young people, and more and more old people Who will then pay the care for the dependent?

Scenario 1 - assumes that real expenditures per beneficiary continue to grow at the average rate over the last three years. Scenario 2, on the other hand, represents to opposite extreme, assuming that real expenditures per beneficiary stay constant at 2008 levels for in-kind benefits. For cash benefits, Scenario 2 assumes a moderate annual increase of 20 percent of GDP per capita growth. Scenario 3 therefore assumes that real expenditures per beneficiary for the different types of benefits will grow at the same rate as real GDP per capita

Projected public expenditures on LTC by benefit type (Scenario 1, percent of real GDP, 2008 to 2060) ® Barbara Więckowska

Projected annual change of public expenditures (as share of real GDP) on LTC by benefit type (Scenario 1, percent, 2009 to 2060)

Projected public expenditures on LTC by benefit type (Scenario 2, percent of real GDP, 2008 to 2060) ® Barbara Więckowska

Projected annual change of public expenditures (as share of real GDP) on LTC by benefit type (Scenario 2, percent, 2009 to 2060) ® Barbara Więckowska

Projected public expenditures on LTC by benefit type (Scenario 3, percent of real GDP, 2008 to 2060) ® Barbara Więckowska

Projected annual change of public expenditures (as share of real GDP) on LTC by benefit type (Scenario 3, percent, 2009 to 2060) ® Barbara Więckowska

the policy responses fall into three categories: securing financing of future LTC expenditures, controlling demand for LTC services controlling costs of publicly provided LTC services and cash benefits. Risk-pooling is essential to avoid old-age poverty Private LTC insurance has not been very successful Market failures (adverse selection, risk selection) Unpredictability of costs lead to high mark-ups Large role for public sector Tax-financed (cash benefits, social assistance) Contribution financed (social security) Both are pay-as-you-go mechanisms Who will pay? Age eligibility leads to large cost increases Base eligibility on need, not on age Unified, scaled needs assessment Consolidate funding across ZUS, KRUS, social assistance