|Implemented in this survey?|
Financial sustainability of LTCI shall be achieved by: Building of a capital stock. The Rürup Commission by demanding pensioners to pay a larger contribution rate until 2030. The Herzog Commission by broadening the income basis, increasing contribution rates and demanding employees to renounce another public holiday or holiday. Additionally both commissions demand quality measures and adjustment of benefits to inflation.
In November 2002 after the German Social Democratic Party (SPD) and the Green Party won the parliamentary elections, the Minister of Health, Ulla Schmidt (SPD), appointed a commission in order to
develop proposals in terms of financial sustainability for the German social security system. The commission was set up, as immediately after the elections a huge financial gap in the pension fund
was discovered. Especially the Green Party and also parts of the SPD insisted on exploring the issue with a long-term perspective accompanying short term measures.
Bert Rürup (SPD), a professor for national economy, especially public finance, and member of the Advisory Council for National Economic Development, directed the consultations. The other members were coming from the scientific community, the industry, the unions, statutory and private health insurance companies, consulting agencies, representatives of the States (Länder) and the German cities and towns.
Under the scope of financial sustainability for social security systems, reforming of the Statutory Long-term Care Insurance was one of the main issues the commission dealt with. The so called Rürup Commission submitted its final report at the end of August 2003.
The opposition in parliament the German Christian Democratic Party (CDU/CSU) also appointed a commission, the so called "Social Security Commission", with the same task under the direction of Roman Herzog (CDU), former German President. Members of this commission were also coming from the scientific community, industry, health insurance companies and representatives from states, towns and cities. The calculations were assisted by a famous consulting company. The Herzog Commission also provided a report, published at the end of September 2003.
The Rürup Commission provided a reform proposal based on different measures:
Similar to the reform proposal concerning SHI there was a minority group vote against this suggestion. The reform idea provided by the Herzog Commission is also consisting of different steps:
Adjustment of LTCI benefits to inflation and nursing labour costs.
Sustainable Financing of LTCI
The whole population, Rürup: increased burden on pensioners, Herzog: increased burden on employees
|Degree of Innovation||traditional||innovative|
|Degree of Controversy||consensual||highly controversial|
|Structural or Systemic Impact||marginal||fundamental|
|Public Visibility||very low||very high|
The overall economic situation is characterised by a rising pressure on the German national budget, the national economy and thereby on the social security systems. Against the background of
excessive national debts and the requirements of the Maastricht criteria, Germany has to work on the national budget deficit.
The height of work related costs is regarded as an obstacle to competitive capacity and more employment. These factors are estimated as condition precedent to recovery of the national economy. As contribution rates to the social security system are connected with employment and wage, the overall economic situation has a strong impact on the social insurance system as well as on demand and consumption.
The LTCI was introduced in 1995 as the last pillar of the German social security system. In previous years being in need for long-term care often meant being in need for social assistance. The LTCI relieved pressure from municipalities which were responsible for providing social assistance. From 1995 until 1999 the LTCI balance was positive or at least equal. Since 2000 the expenditure is exceeding the revenue which is expected to become really difficult in the future, as the shortfalls are expected to increase. Against the background of an increasingly ageing society with approximately 1.9 million nursing cases in 2003 and an estimated 3.1 million nursing cases in 2030, while a decreasing share of the population is working and thereby contributing to the funding of the LTCI the financial situation is becoming more and more critical.
Another reason for the amendment of Social Code Book XI is a judgement of the Federal Constitutional Court (BvR 2014/95) from April 3rd 2001, which demands the consideration of bringing up children. Citizens bringing up children shall be relieved during the child-raising period e.g. by means of reduced contribution rates. The amendment of Social Code Book XI has to be passed until 31st of December 2004.
After all it became more and more evident that mentally ill persons (e.g. patients with Alzheimer's Disease) are not covered sufficiently by LTCI. Consumer associations called for amendments since the commencement of Social Code Book XI.
Furthermore in recent years the gap between actual costs and reimbursement of care increased as the reimbursement was not adjusted to inflation. Care providers were applying for higher reimbursement rates to cover expenses. Under this scope and due to the fact that care infrastructure had to be established quality problems and gaps in supply became more and more evident.
Judgement of the Federal Constitutional Court (BvR 2014/95)
Sustainability for social security systems
|Implemented in this survey?|
The approach of the idea is described as:
amended: Amendment of the Social Code book XI, which came into force in 1995
There is a demand of legislation concerning the LTCI due to a Federal Constitutional Court judgement from April 2001.
Rürup: Concerning funding, the most affected group will be the pensioners, thereafter employers and employees. At the moment it is difficult to anticipate the
reaction of pensioners and pensioners associations. It is very likely that they will oppose to the proposal. It will therefore depend to what extend they are willing to account to the solidarity
principle and realize that they will also benefit from this solution.
Concerning supply people with dementia and other kinds of mental diseases will gain more benefits. Care givers will earn more, but will also be bound to quality management. For both groups (people who are in need of care and care givers) there are financial incentives. Nevertheless people being afflicted with dementia still do not have an official accepted status of being in need of care as compared to people with physical ailments. Care givers may still argue that the remuneration is too little.
Herzog: Concerning funding the most affected group will be employees and unions, thereafter people not living on paid employment but on other sources of income and employers. Representatives of the unions are opposing the proposal. People living on income different from dependent employment may also oppose, but this might be not visible as they will probably try to hide income from the fiscal authorities.
Concerning supply the measures do not defer substantially as far as they are worked out by now.
Small scale examples are planned for a new form of budgeting à non-transferable personal budgets. These examples have to be evaluated to decide whether this type of budgeting will become a
constant part of the Social Code Book XI.
At this stage there is no information on a review mechanism for the amendment of the Social Code Book XI at large.
As both proposals are based on some model calculations it is difficult to asses the overall outcome of the funding reform. Furthermore it is difficult to foresee the changes to occur in the course
of the negotiation process.
If the estimated calculations are sound, the funding gap which is expected to occur during the next decades, could be closed. This may improve the economical situation as people may consume more, if they are not afraid of the future anymore.
The Minister of Health announced that with some amendments the main proposals from the Rürup Commission will be taken into account at the amelioration bill to be discussed in parliament.
Susanne Weinbrenner, Reinhard Busse