Equity and efficiency in funding long-term care from an EU perspective

It is shown the usefulness of spreading the risk of long-term care funding over the entire population by a national public scheme that works on a pay-as-you-go basis using equity and efficiency criteria as an evaluation framework.

Abstract

A combination of demographic, social and macroeconomic developments have put European Union (EU) long-term care schemes under severe pressure with which they were never intended to cope. Adopting a cross-national comparative approach and combining existing literature with empirical findings, this article discusses advantages and disadvantages of different long-term care funding options using equity and efficiency criteria as an evaluation framework. Thereby, it shows the usefulness of spreading the risk of long-term care funding over the entire population by a national public scheme that works on a pay-as-you-go basis. From the point of both efficiency and equity in countries with a tradition of financing health care from tax revenues, care provision should be paid for by general taxation. In countries with an established tradition of social insurance schemes, it would seem most profitable to integrate a universal scheme alongside other insurance sectors combined. This, however, should be combined with a reduction of dependency on labour markets.