Ageing Socio economic implications for health care

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Published on April 22, 2008

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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 Population Ageing: Implications for Health and Long Term Care Financing Health Care Financing and Population Ageing:  Health Care Financing and Population Ageing Population Dynamics Socio-economic Development Health Status Rate of Population Ageing Rate of Health Care Costs Demographic Trends:  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 Population Ageing: Impact on Health Expenditure:  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 Slide5:  4 8 12 16 20 24 28 0 2 4 6 8 10 12 14 France Switzerland Russia Germany Italy Finland Norway Sweden Belgium United Kingdom Denmark Spain Portugal Greece Japan Ireland Czechoslovakia New Zealand Australia Canada United States Poland Argentina Hong Kong Taiwan Mexico Korea Turkey Singapore Health Expenditure as % of GDP Aged Dependency Ratio (>65/Aged 15-64) Health Expenditures and Ageing Slide6:  Comparative Health Expenditure in Singapore and Selected Countries U.S. Germany Canada Japan U.K. Singapore Year Slide7:  Health expenditure as % of GDP IMR per 1,000 live births Health Expenditures and Infant Mortality Comparative Health Expenditure and Ageing - WHO Report 2000 :  Comparative Health Expenditure and Ageing - WHO Report 2000 $/capita (Int $) Public/Total %GNP %Pop>60 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 Laos 13 (53) 62.7 3.6 5.2 46.1 Slide9:  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 Health Systems Performance WHO Rankings 2000 WHO Health Systems Performance Assessment:  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 Some Reasons for Singapore’s High Ranking and Low Expenditure:  Some Reasons for Singapore’s 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 Health Expenditures as % of GDP in Asian Economies (2000):  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 Healthcare Expenditure in Asia:  Healthcare Expenditure in Asia % GNP Public:Private Slide15:  Public-Private Health Expenditure in Singapore (1965-2000) Singapore Health Statistics – Past and Present:  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 Population Ageing in Singapore by 2030:  Population Ageing in Singapore by 2030 Slide18:  4 8 12 16 20 24 28 0 2 4 6 8 10 12 14 France Switzerland Russia Germany Italy Finland Norway Sweden Belgium United Kingdom Denmark Spain Portugal Greece Japan Ireland Czechoslovakia New Zealand Australia Canada United States Poland Argentina Hong Kong Taiwan Mexico Korea Turkey Singapore Health Expenditure as % of GDP Aged Dependency Ratio (>65/Aged 15-64) Health Expenditures and Ageing Slide19:  Singapore’s 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 Healthcare Financing Strategies Instill personal and family responsibility (Cost-sharing) + Ensure future sustainability with ageing and avoid inter-generational problems (Savings) + Enhance risk-pooling and social protection (Insurance) + Target subsidy and equitable distribution (Taxation):  Healthcare Financing Strategies Instill personal and family responsibility (Cost-sharing) + Ensure future sustainability with ageing and avoid inter-generational problems (Savings) + Enhance risk-pooling and social protection (Insurance) + Target subsidy and equitable distribution (Taxation) Slide21:  Medisave Medishield Medifund PRIMARY CARE ACUTE CARE CATASTROPHIC (LONG TERM CARE) Financing Method Private Payment Compulsory Savings Social/Private Insurance PUBLIC SUBSIDIES Source: Dr. Phua Kai Hong Taxes PUBLIC HEALTH SERVICES (Eldershield) (Eldercare fund) Health Care Financing in Singapore Sources of Healthcare Financing in Singapore:  Sources of Healthcare Financing in Singapore Medisave 8% Medishield 2% Private Insurance 5% Out of pocket 25% Government subsidies 25% Employer Benefits 35% Ministry of Health Sectoral FY Budget :  Ministry of Health Sectoral FY Budget Public Hospitals: Bed Distribution:  Public Hospitals: Bed Distribution Features of the Singapore Health Care System:  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 Slide26:  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 Health Care Financing Reforms in East Asia:  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) Health Care Financing Reforms in East Asia:  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 Consultant’s Report (1999) Consultative Paper on “Lifelong Investments in Health Care” (2000) Health and Long Term Care Financing in Japan:  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 Health and Long Term Care Financing in Singapore:  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) Past Financing System for Long Term Care:  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) Financial Security & Healthcare:  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% Provisions for Health Care Financing among the Elderly:  Provisions for Health Care Financing among the Elderly National Survey of Senior Citizens (1995) Men Women Children’s Medisave 43.8% 65.0% Spouse’s 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% Health Care Needs of the Elderly:  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% Socio-cultural & Gender Issues in Health Care Financing:  Socio-cultural & Gender Issues in 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? Inter-Ministerial Committee on Health Care for the Elderly 1998:  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 Inter-Ministerial Committee on the Ageing Population 1999:  Inter-Ministerial Committee on 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 IMC on the Ageing Population - Sub-Committee for Resource Funding:  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 Government’s 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 Recommendations of IMC on the Aged Population – Health Care:  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 Future Community Long Term Care Model in Singapore:  Future Community Long Term Care Model in Singapore Involvement of voluntary welfare organizations Co-financing from government of 3:1 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) The Singapore Health Care Model:  The Singapore Health Care Model Singapore’s 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 Similar Approaches to Old Age Security and Health Care Financing:  Similar Approaches to Old Age Security and Health Care Financing World Bank’s 3 Pillars for Old Age Security Redistribution Savings Insurance Singapore’s 3M for Health Care Financing Savings (avoids inter-generational transfers) Insurance (pools risks for catastrophic care) Taxation (subsidizes the poor and indigent) Effects of Health Care Financing and Payment Methods:  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 Policy Options for Health Care Financing:  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 Policy Implications – Financing the Levels of Care:  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 Policy Implications – Towards Cost-effective Care:  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 The Future of Eldercare Financing?:  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) Special Conditions in Asia:  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

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