The operation concept of long-term care insurance system and its enlightenment to China

In 1974, a report by the German Foundation for the Care of the Elderly on the long-term care insurance system drew attention to the long-term care needs of the elderly, but it was not until 1994 that the Long-term Care Act (Pflege-Versicherungsgesetz) was introduced. A universal, non-means-tested, co-contribution-paid long-term care insurance system was established, effective 1 January 1995.

At this time, the reform of Germany's welfare system has changed from the period of welfare expansion to the period of welfare contraction and transformation: Chancellor Helmut Kohl (1930-2017) advocated a full return to the idea of a social market economy, reducing state intervention in economic life, placing greater emphasis on the role of the family and the market in welfare provision, and introducing liberal elements such as "markets" and "competition" into his reforms in the field of social policy.

What, then, led to the establishment of long-term care insurance at a time of austerity in the German welfare state? What are the implications for the development of long-term care insurance system in China? This is the question that this article tries to answer.

I. The institutional logic of long-term care insurance in Germany

(I) The direct cause of the establishment: long-term care risks overflow from the family to the society

long term care, also known as long-term care, means that a person needs regular, frequent, or long-term care for at least six months due to physical or mental illness or disability. To help them complete "activities of daily life" (ADL) and "instrumental activities of daily life" (IADL).

The demand for long-term care has the characteristics of long-term and persistent, which means that families should have both the ability to supply care services and the corresponding ability to pay. As a typical "conservative/combinationist" welfare state, Germany has traditionally identified long-term care as a family risk that should be provided by female members of the family. Social policy has a clear "auxiliary" feature, and the state will intervene only when the family is unable to provide services and security for its members.

Since 1962, the support for long-term care provided by German law can be divided into two levels: the first level is to provide medical services through statutory medical insurance for more serious diseases, but does not provide daily care type of monitoring; The second level incorporates long-term care services into the social assistance system, funded by state taxes and providing means-tested benefits to seniors who cannot afford care. Non-profit charities provide services and have priority in service delivery - only when the charity cannot provide services. Municipal governments can start their own service organizations or purchase the services of for-profit organizations.

At this time, the support for long-term care policy is more inclined to the characteristics of the liberal welfare system: the asset-based social assistance is dominated, the institutional payment is based on demand selective payment rather than universal, people who do not need social assistance are more dependent on the family and the market, and social policy only plays a supporting function.

But as the population ages and female employment rates rise, and fertility rates continue to decline, the demand for long-term care is increasing, and the basis for providing care to women is eroding. In this situation, the long-term care responsibility, which is traditionally regarded as the family responsibility, continues to overflow into the social assistance system, and the demand for long-term care is gradually unbalanced with the institutional supply.

On the one hand, Germany is the country with the highest degree of aging in Europe. In the 1960s, the proportion of the elderly population over the age of 65 in Germany was 11.6%, and it has increased to 14.9% in 1990, while the care risk increases with the increase of age: The proportion of elderly people with care needs between 75 and 85 years old is 14.1%, between 85 and 90 years old is 39.7%, and over 90 years old is as high as 66.1%. On the other hand, due to the increasing participation rate of women in the Labour market, the ability to rely on female members of the family to provide care services is constantly reduced. Once the family is unable to provide services and support, the elderly have to choose nursing institutions, which are generally more expensive than personal pensions. More and more elderly people have to submit to a means test and give up their possessions to apply for social assistance. From 1963 to 1994, the number of people eligible for care allowance increased from 16,500 to 563,452, accounting for 43.1% of the total number of social assistance, and the total expenditure accounted for 35.6% of the total social assistance expenditure, and the expenditure of long-term care has become an unbearable burden for the social assistance system.

In the face of the increasing needs of the elderly for long-term care, the existing system cannot be sustained. Under such circumstances, after nearly two decades of discussion and negotiation, the final long-term care insurance Act was passed by the Bundestag and the Bundesrat in 1994, and the mandatory change of the system was realized in the form of law. Compared with other European countries, Germany has a strong family culture, and long-term care has long been regarded as the responsibility of the family. With the deepening of the aging of the population and the increase of the employment rate of women, the demand for long-term care continues to flow from the family to the society and promote the rising cost of social assistance in the medium and long term care. The social assistance system is increasingly deviating from its original goal, but the right to survival of the elderly is still not effectively guaranteed, which is the direct reason for promoting the establishment of long-term care in Germany. (Although "social hospitalization" due to long-term care theoretically exists in Germany, it is not covered in this article because the disease foundation treats "illness" separately from "custodian care" and only provides treatment for disease, and it is difficult to find valid data to prove the erosion of long-term care on health insurance funds.

(2) The root cause of the establishment: Germany's social state principle and strong nationalist tradition

On the one hand, the introduction of long-term care security system in the form of social insurance reflects the particularity of long-term care risk: although long-term care can be used as an insurable risk, its risk is more uncertain than that of medical insurance, and the premium is difficult to calculate accurately. On the other hand, it reflects the "path dependence" of the German welfare system: due to the coalition of German political parties, the exercise of veto by either party will make it difficult to pass the legislative draft in the end. In addition, the social insurance system has been proved to be effective in long-term practice, so all parties tend to adopt relatively conservative social insurance schemes.

From the perspective of the development history of German social security, the introduction of the German long-term care insurance system reflects the integration of the "Sozialstaat" principle and the nationalistic tradition, which is deeply embedded in the German cultural tradition and historical context. The principle of social state originated from the idea of risk sharing among different guilds in the early 19th century and emphasized social solidarity among different classes. A strong nationalist tradition requires that the superrational state exercise its legitimate authority for the common good.

Long-term care first came into view out of a common concern for the fate of older people in need of long-term care, reflecting a deep tradition of social solidarity. At a time when local governments are unable to bear the financial burden of long-term care, the introduction of the new system transfers the responsibility of long-term care for disabled and semi-disabled people to the federal government, which means the retreat of local governments in the field of welfare state and the strengthening of the responsibility of the federal government, reflecting a very strong nationalistic color: When families are unable to provide services and the state government's social policies are difficult to maintain, the federal government naturally assumes the responsibility of replacing the old system with a new system. Through discussion and debate in all sectors of the society, the mandatory change of the system "top-down" and the rapid development of the long-term care insurance system in various federal states are finally realized through legislation.

Thus, the idea of deep social solidarity gives rise to a common concern for the fate of the elderly in need of long-term care, while a strong tradition of nationalism makes the state unhesitantly take on the responsibility of caring for society and its people in times of need, even in times of austerity in the welfare state. There are deep reasons why the long-term care insurance system can still pass legislation.

Second, the operation concept of social long-term care insurance system

Germany's long-term care insurance system has three components. The first is the social long term care insurance (SLTCI), which covered 86.7% of the population in 2017. The second is private long term care insurance (PLTCI), which covered 11.3% of the population in 2017. Both the social long term care insurance system and the private long term care insurance system were established when the long term care Insurance legislation was enacted in 1994. The third is the supplementary care insurance system, established in 2013, about 2% to 3% of the population participated in the supplementary long-term care insurance system. As the social long-term care insurance system covers the widest population and is the main system of long-term care insurance in Germany, this paper focuses on the German social long-term care insurance system.

Since its establishment, Germany's Social long-term care Insurance system (SLTCI) has been responsible for three functions: for local governments, it means to reduce the financial burden of social assistance; For people in need of long-term care, the burden on individuals and families can be reduced through the mutual assistance of the whole society; For the system itself, it is necessary to control the increase of expenses to stabilize the payment rate of the system. Therefore, the system design and operation of SLTCI in Germany follows the following concepts: first, the governance concept of combining state centralization and decentralization; Second, the principle of universality based on nursing needs assessment; The third is to adopt the principle of budget and cost control in the system payment; The fourth is to emphasize the concept of welfare pluralism in the system financing. This part will analyze the concept and operation of the German long-term care insurance system from these four aspects.

(1) Governance concept: the combination of state centralization and decentralization of governance

After the formal establishment of SLTCI, the responsibility of long-term care rose from the local government to the federal government, and SLTCI became a governance arrangement at the national level, which meant the strengthening of national centralization and the withdrawal of local governments in the field of welfare state, and the social assistance system returned to its institutional origin.

At the time of its creation, the SLTCI was a national rather than a regional scheme, with contribution rates determined by the Bundestag, entitlements regulated at the national level, and all regional entitlements disbursed from a pool of funds. It has no administrative body of its own and is managed by the existing statutory Medical Insurance Fund Association, and there is no competition between the different foundations. Therefore, compared with the German social medical insurance system, the system design of SLTCI reflects a more obvious centralized feature of "state intervention". Between 1986 and 1994, before the SLTCI was officially launched, the social assistance medium and long-term care expenditure increased from €7.595 billion to €17.723 billion, in stark contrast to the three years after the SLTCI was officially launched. The expenditure of social assistance medium - and long-term care insurance decreased from 17.473 billion euros in 1995 to 3.01 billion euros in 1998, a decrease of 82.8%. At the same time, SLTCI expenses began to increase rapidly (see Figure 1), which realized the transfer of long-term care expenses from the social assistance system to the social insurance system.

However, the governance of long-term care still retains the characteristics of decentralized governance: local governments still bear the responsibility of social assistance, and social assistance still provides support for nursing expenses for those who need to meet the conditions. The formal establishment of SLTCI has made a significant qualitative change in the proportion of the social insurance system interfered by the federal government and the local government's tax support for nursing costs. However, because SLTCI adopts the design concept of payment according to budget, those who cannot get enough payment from SLTCI and cannot afford their own out-of-pocket expenses. Eventually they had to turn to the social assistance system. It can also be clearly seen from Figure 1 that although the medium - and long-term care costs of the social assistance system increased slowly after 1998, they still showed an upward trend on the whole. In 2015, the medium - and long-term care costs of the social assistance system accounted for 13.47% of the total social assistance expenditures. Social assistance accounts for 7 to 8 percent of the total cost of long-term care, and more than a third of people who choose institutional care still apply for social assistance.

It can be said that the transfer of long-term care authority has greatly reduced the financial burden of local governments. But this upward shift of authority is neither complete nor permanent, and the tax-funded social assistance system still acts as a backstop.

(2) System coverage: the principle of universality based on the assessment of nursing needs

Similar to the medical insurance system, Germany's long-term care insurance system also implements a "dual-track system" : members of the Sickness fund association are automatically enrolled in SLTCI, and spouses and children are automatically covered by the system; Private health insurance enrollees must purchase Private long-term care Insurance (PLTCI) and can also voluntarily enroll in SLTCI; Others who voluntarily join the social health insurance system are automatically enrolled in SLTCI. Therefore, in terms of the coverage of the system, the German SLTCI covers all residents as much as possible, especially those who are enrolled in high income private medical insurance. In the statutory health insurance system, people with incomes above a certain limit must participate in the private health insurance system, while in the setting of the nursing insurance system, people with high incomes can choose to participate in either the social long-term care insurance system or the private health insurance system. This practice expands the financial resources of the social long-term care insurance system, and also reflects the particularity of long-term care risks from the side.

When the system was established in 1995, the enrollment rate of SLTCI reached 88.03%, of which 29.19% entered the long-term care insurance system through family insurance (see Table 1). Since then, the participation rate has fluctuated around 85%. The benefits of the system are only related to the nursing needs of the insured, and the insured with different levels of nursing needs have different benefits, independent of the age and income of the insured. Therefore, compared with the long-term care services provided by the previous "filling-in" social assistance, the new SLTCI has a clear principle of universality.