Germany's Approach to Long-Term Care Financing Offers Key Considerations for U.S. Reforms
WASHINGTON, Oct. 30 /PRNewswire-USNewswire/ --- A new AARP report released today finds --- in sharp contrast to the U.S. system --- that everyone in Germany who needs long-term care receives benefits in the setting that best meets their needs. Germany is able to do this while spending about the same proportion of its gross domestic product on long-term care as the U.S.
The new study, "Comparing Long-Term Care in Germany and the United States," offers critical lessons to help us improve the long-term care system in the U.S. The full study findings will be released by AARP and the German government at "The US/German Dialogue on Long-Term Care Conference."
"Our current long-term care system offers no peace of mind, is confusing and costly," said Bill Novelli, Chief Executive Officer of AARP. "Private long-term care insurance is not filling the void, in part because people are in denial that they will need long-term care. Once they realize the need to plan and pay for services, it is generally too late. As a last resort, faced with the financial burden of long-term care expenses, people become impoverished to qualify for Medicaid, a means-tested government program that is the primary payer for long-term care."
The population in America age 85 and older is expected to increase 43 percent by 2020. It is highly likely that this fast growing segment of our population will increase demand for long-term care, which few Americans are insured for. Today, Medicaid pays for 49 percent of all long-term care expenditures and almost half of all nursing home care costs. The program also has an institutional bias towards delivering services in nursing homes, and requires people to become impoverished to qualify. In addition, because of budget concerns, states often restrict eligibility to contain costs. These facts, combined with an impending demographic trend, highlight the need for improvements in our current long-term care system.
"All of the industrialized nations have one thing in common -- their populations enjoy ever greater longevity. This confronts us with major challenges. Every citizen in Germany has long-term care coverage with their health insurance fund. We are undertaking what is the biggest reform since long-term care insurance came into existence in 1995. The reform must enable persons in need of long-term care to lead as independent and self-determined a life as possible. This is what I understand as humanity in a society which respects human dignity. Four elements are central: 1. adjusting the benefits to trends in the economy, 2. organizing care in an easier, better and less bureaucratic way, 3. strengthening domiciliary care and 4. improving the quality of care," said Ulla Schmidt, Minister of Health for the Federal Republic of Germany. "My aim is to achieve more quality and transparency in day-to-day care provision. Precisely in terms of the important issue of transparency, we were able to learn from the U.S. With our current reform, and specifically the quality reports, we in Germany will also pursue the avenue of transparency!"
Unlike the American system, everyone in Germany who meets the eligibility criteria has a choice of benefits in the settings they believe best meets their needs. Germany provides a choice of home care benefits as a cash allowance, as formal services, or as a combination of the two. This is a trend which is growing more popular in the U.S., but often faces hurdles. Approximately 90 percent of the German population is covered through a public social insurance approach, and 10 percent is covered under private mandatory long-term care insurance.
The report, prepared by AARP's Public Policy Institute, demonstrates Germany's exper