LTC Bullet: Don't Look to Germany for a Long-Term Care Model

Wednesday, October 29, 2003

Lincoln, NE--

LTC Comment: Not long ago, academics and advocates in the U.S. were touting Germany's government-mandated long-term care financing system as a model for America. Not lately. More after the ***news.***

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LTC BULLET: DON'T LOOK TO GERMANY FOR A LONG-TERM CARE MODEL

LTC Comment: Germany launched a compulsory, tax-funded long-term care insurance program (LTCI) in 1995. We reported on it in "LTC Bullet--LTCI in Germany" on August 15, 2002 http://www.centerltc.com/bullets/archives2002/379.htm . The program was already running a deficit after only seven years of operation and Germany was depending increasingly on its struggling welfare system to subsidize long-term care. We noted in our review that the German system had been proposed as a model for the United States and that Hawaii was considering a similarly tax-funded, mandatory LTC insurance program. See "LTC Bullet: Hawaii's CarePlus Program," June 28, 2002, http://www.centerltc.com/bullets/archives2002/367.htm . In the meantime, Hawaii's legislature passed "CarePlus," but the state's new Governor vetoed the program and her veto has not been overturned. Recent reports from and about Germany, summarized and linked below, suggest its social insurance programs are strained more and more. We know that the Age Wave will hit sooner and harder in Europe than in the U.S. because of the continent's aging demographics and heavier reliance on pay-as-you go social programs. See "LTC Bullet: If You Think We've Got Problems . . .," April 9, 2003 http://www.centerltc.com/bullets/archives2003/430.htm and "LTC Bullet: The Global Retirement Crisis," July 2, 2002 http://www.centerltc.com/bullets/archives2002/368.htm . We conclude that mandatory, pay-as-you-go social insurance programs are poor models for the United States to follow. Americans are lucky to be able to observe the fate of such programs in Europe and to adjust our domestic public policy in time to avoid the same consequences. Here's what's been happening lately in Germany:

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Source: National Center for Policy Analysis, DAILY POLICY DIGEST
Thursday, September 9, 2003

RATIONING HEALTH CARE FOR ELDERLY GERMANS

German patients over 85 years old should not receive new hips or dentures, says the head of the youth organization of Germany's opposition Christian Democratic party. In doing so, 23-year-old Philip Missfelder has reopened a public debate on the rationing of health care in Germany.

o Earlier this summer a television report quoted two experts, professor Wiemeyer (Bochum University) and professor Breyer (Konstanz University), who asked the government to abstain from operations for patients older than 75.

o Professor Breyer later suggested his real goal was a policy debate that would lead to clear rationing rules decided by politicians, rather than doctors.

o Individual doctors or medical institutions should not have to take rationing decisions based on their limited budgets, he argued.

Some experts in Germany warn that rationing -- in the form of limited budgets for drugs and hospitals -- is already implicit in the system and that it will have to be increased. For instance, a study by a sociology professor from Bremen University found that elderly patients receive less expensive care than younger patients and that the decisions were made mainly by doctors.

The German government has presented a new health reform with the aim of rationalizing health care and saving unnecessary costs.

However, experts and politicians agree that a major reconstruction of the entire German social security system is also needed in order to prevent a cost explosion in the closely linked areas of health care, special care for sick elderly people and pension funds, which have to be shouldered by the younger generation.

Source: Annette Tuffs, "Germany at centre of rationing row as budget in crisis," British Medical Journal, August 23, 2003.

For text
http://bmj.com/cgi/content/full/327/7412/414-g?etoc

For more on Health Care (Rationing Issues) http://www.ncpa.org/iss/hea/

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Source: National Center for Policy Analysis, DAILY POLICY DIGEST
Thursday, October 17, 2003

WELFARE UNDER THE PALM TREES

When the German Parliament votes today on a sweeping package of tax cuts and welfare reforms, it is not a stretch to say it will be responding, at least in part, to the anger aroused by people like "Florida" John Rolf, the 64-year-old former German banker living in Miami on $2,200 a month in German welfare checks.

While his case is extreme -- and the German Health and Social Security Ministry has since said it will stop paying his benefits if he stays abroad -- it is not unusual. Stories of welfare recipients who own yachts and luxury cars are a staple of the German news media:

o Germany has only loosely regulated the welfare benefits it extends to German citizens abroad; John's package includes $1,023 a month for rent, an $854 living allowance and $170 to pay for a housekeeper, since he is considered disabled.

o After John's case was publicized, the Health and Social Security Ministry researched other cases of Germans living abroad on welfare and discovered 1,055 people in more than 80 countries are claiming benefits at an annual cost to Germany of roughly $6.4 million.

"It's the perfect case for everybody to get upset about," said Josef Joffe, the editor of the weekly Die Zeit. "In a welfare state that was not collapsing under its load, you would just accept it and move on to the next case file. But we're living in another world in Germany today."

German Chancellor Gerhard Schröder is expected to win Friday's vote after trying for months to persuade left-wing members of his coalition that Germany must finally take a scalpel to its welfare system, which can make being unemployed more lucrative than working.

Source: Mark Landler, "A German Banker on Welfare Among Miami's Palms," New York Times, October 17, 2003.

For text
http://www.nytimes.com/2003/10/17/international/europe/17GERM.html

For more on International (Welfare)
http://www.ncpa.org/iss/int/

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Source: Andrea Thomas, "Germany Admits Defeat on Deficit, Berlin Will Break EU Rule For Third Year in a Row As Growth Forecast Is Cut," Wall Street Journal, October 24, 2003, http://online.wsj.com/article/0,,SB106693839365040300,00.html?mod=economy%5Flead%5Fstory%5Flsc (requires subscription to WSJ Online.)

"The German government sharply lowered its economic-growth forecast and conceded it would violate European fiscal rules for the third straight year in 2004.

"'Until now, Chancellor Gerhard Schroder's center-left government had been more optimistic about the state of Europe's largest economy than most economists. 'We have to get honest with ourselves,' Economics Minister Wolfgang Clement said at a news conference. . . .

Although economists had long expected it, Finance Minister Hans Eichel said for the first time that the budget deficit will exceed 3% of GDP until 2005, surpassing the deficit cap for European Union countries. France has already said it will overshoot the 3% limit for the third straight year in 2004. . . ."