Whereas life expectancy continues to grow in France, life expectancy without disability is struggling to keep pace. Reaching old age naturally increases the risk of loss of autonomy, which brings with it a procession of new needs: medical follow-up, home help, specialised accommodation … The expenses related to these new needs, mostly covered by society at large, are expected to increase in the coming decades. How can we face this challenge? This is one of the topics addressed by the Libault report made public a few months ago. Here are three questions to help clarify things.
Long-term care (LTC) services: what does it all cost?
According to the statistical body DREES, in 2015 more than two million people over 60 living at home or in specialised institutions were suffering from loss of autonomy. Of these, nearly 1.3 million were drawing APA (Personal Autonomy Allowance). According to an intermediate scenario put forward by DREES, they will be close to 1.6 million in 2030 and 2.2 million in 2050.
Today the cost of LTC services is estimated to be €30bn, borne 80% by the community i.e. €24bn. This corresponds to 1.1% of GDP. By 2030, DREES can see the burden of LTC services rising to 1.4% of GDP simply as a result of population ageing. But, the Libault report argues for a massive and urgent investment in LTC. The report points to staff shortages, recruitment difficulties, deterioration in working conditions, and the lack of time spent with dependent individuals by professionals. The situation in care homes for dependent elderly people – EHPADs – regularly hits media headlines causing public indignation. In total, the Libault report recommends raising public spending to 1.6% of GDP, equivalent currently to the Defence budget. This means extra financing of more than €9m p.a. by the year 2030.
Who finances LTC services?
Today, the €30bn spent on LTC services is borne, half, by the Social Security (SS) budget: nursing, equipment and physiotherapy … but also an exemption from N.I. contributions on certain benefits. The State and local authorities, in particular the Departments (counties), are responsible for 8 billion, either directly or via tax cuts to finance APA, home monitoring, and the financing of accommodation. This system is particularly complicated and not easily understood, and places an administrative burden on care homes. Families are still left with a copay of around 6 million. The greatest burden here is the cost of specialised accommodation where the copay can be on average nearly €1,800 a month.
What does the Libault report offer in terms of LTC financing?
Prior to all other proposals, the Libault report advocates recognition of the dependency (LTC) risk as being distinct from the healthcare and old-age categories. This is one way, not only to simplify arrangements, but also to clearly mobilise national solidarity and public finances to deal with people’s loss of autonomy. The report insists, nevertheless, that this would not mean creating new contributions for employers nor for taxpayers. If that is the case, where will the money come from? From surpluses in the basic SS healthcare system or, from 2024 onwards, taking over the CRDS levy which is due to disappear after elimination of the social services debt. Not so straightforward, however, now that the SS, which it was hoped would break even in 2019, is plunging once again into debt of between 1.7bn and 4.4bn. As an alternative, the report raises the possibility of using the savings generated by cutting back on the indexing of pensions. This is but a way of getting retired people to finance a risk that they themselves are primarily subject to. Finally, the Libault report suggests creating tools, such as a “life-long LTC loan” so as to mobilise private investment for LTC financing. Yet, in reality, these solutions do not appear to measure up to the challenges. Something which has prompted the Minister of Health to state that there is no other way out than to work longer and find savings in other areas of social insurance. Even if a dependency (LTC) risk is recognised it will remain closely linked to healthcare and pensions.