Without reforms, financing for long-term care is in serious danger

15 August 2019 The authors of the study are Prof. Dr. Martin Eling, Professor of Insurance Management at HSG, and Mauro Elvedi, Project Manager and Assistant Professor at the I.VW-HSG. They point out that the organisation and financing of long-term care is one of the most important social tasks of the 21st century. Due to the rapid increase in the number of people living past 80, expenditure on long-term care in relation to GDP is expected to increase significantly in the coming decades. “According to the reference scenario, long-term care costs will double by 2050, from 15.6 billion Swiss francs today to 31.3 billion Swiss francs per year”, the report states .

Personal contributions are already high

In the 234-page study, published as volume 66 in the “I.VW HSG Schriftenreihe” series, the two authors present alternative models for the financing of care costs. In it, they take into account criteria such as social justice, economic efficiency and sustainability. They emphasise that the personal contributions made by those in need of long-term care in Switzerland are already very high by international standards. The financial burden on cantons would also very quickly reach the limits of feasibility if the the status quo were to continue. 

In contrast to other countries, innovative approaches to the financing of care are practically non-existent in Switzerland. This is due in part to a lack of institutional incentives. Singapore, for example, has introduced inheritable private savings accounts. This financing system obliges every person of a certain age to pay fixed contributions into a private savings account. The comparison and evaluation of the various alternative financing models shows that each proposal has its own strengths and weaknesses in terms of social justice, economic impact and sustainability of financing.

None of the concepts proposed is capable of meeting the challenges faced in the financing of long-term care alone. “Instead of radical restructuring, we recommend supplementing the current financing system with additional sources of financing. For example, a funded system that needs time to unfold its full potential could be supported by temporary and earmarked taxes”, states one of the report’s various conclusions and recommendations for policymakers. 

Achieving better cost-efficiency in the organisation of care

Martin Eling and Mauro Elvedi are also investigating possibilities for achieving more cost-efficient organisation within care. They encourage others to be open to new directions within the care industry. In specific terms, they call for greater recognition of informal care, a discussion regarding positively re-evaluating care as a profession and the use of nursing robots. The options they list include outpatient-assisted living communities, making credits to so-called time accounts or awarding leave to enable workers to care for parents, spouses or siblings.

“The development of new sources of financing and efficient organisation of the care system must be made a top priority. This is the only way to ensure the quality and scope of long-term care in the coming decades”, the study concludes. The two authors also point out that there is a wide range of further research needed in the field of long-term care.

Volume 66 of the “I.VW HSG Schriftenreihe” can be found at the following link: https://www.ivw.unisg.ch/forschung/anwendungsorientiert/#schriftreihe

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