Matching dementia policy aspirations with funding realities: a role for social insurance?

The more we learn about all the things that we can do to help people affected by dementia to live well, the more pressing it becomes to find a way to bring more funding into the dementia care system. This additional funding is needed not just to keep up an increase numbers of people affected with dementia, but also to make more widely available the treatments, care and support that are shown to be beneficial. The prospect of new disease modifying drug treatments also raise questions about how they would be funded.

An increasing number of countries have articulated their aspirations to improve the lives of people affected by dementia in National Dementia Plans, in fact some countries are already on their second or third plans. There are, however, not that many countries that can be confident that they have the ability to raise the resources needed to meet the goals outlined in those plans.

At a UK-Korean workshop on “Optimizing the Impacts of National Dementia Strategies” today it was striking to hear how the ambitious goals in South Korea’s third dementia plan are accompanied by very clear implementation planning, and backed with funding, mostly from the Korean Long-Term Care social insurance system.

The context for England is very different, while there is the same wish to improve the lives of those affected by dementia, in practice implementation depends of local decision making processes, at a time of very constrained funding.

It has been a while since social insurance as a mechanism for funding long-term care (and therefore a very large proportion of the costs of dementia) or health care has been debated in England. There are now five countries (Germany, the Netherlands, Luxembourg, Japan and South Korea) where long-term care is funded through social insurance (with varying levels of additional funding from taxation and co-payments).

The main difference between social-insurance funding and taxation is that funds raised from social insurance contributions can only be used for the purpose for which they are raised, and as a result are protected from other claims on the public purse. Social insurance is not a perfect financing mechanism, for example it tends to be less progressive than taxation (this means that people with high earnings pay a smaller proportion of their income into the system than those with lower wages), and it often relies only on revenue from wages (whereas taxation usually draws revenue from a wider variety of economic activities).

However, a key advantage of social insurance is that there is much more transparency about the relationship between what people pay into the system and what they are entitled to as a result. Increasing taxes is not seen as a vote winner by most politicians, but it is possible that the public would be more willing to accept increases in social insurance contribution rates for a specific purpose which they value particularly.

For example in 2015 Germany reformed its long-term care insurance system, with the aim of equalising the entitlement to care benefits for people with dementia and other mental health conditions to the entitlements already enjoyed by people with physical conditions. This was also accompanied by an increase in the value of the benefits for people with dementia, and of the support to family carers. This additional spending commitment has been funded by an increase in contribution rates, phased in two steps (of 0.3% in 2015 and an additional 0.2% from 2017).

Social insurance may not be a completely ideal solution to meeting the funding challenges posed by dementia and other chronic conditions associated with ageing, however, by decoupling decisions on how much to spend from other political pressures and other competing spending claims, it may be able to provide a more flexible and transparent funding mechanism to make a reality the aspiration of enabling those affected by dementia to live well.

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