The EconomistAugust 29th 2020 Special reportDementia 112 According to figures from the oecd, Ja-
pan spends a total of 1.8% of gdpon long-
term care. That is above the oecdaverage,
but far below the Netherlands, which spent
3.7% of gdpin 2018. And that was a decline
from 3.9% of gdpin 2013, after a revamp of
the scheme in 2015. In the Netherlands de-
mentia accounts for a greater share of
health spending (5.5% in 2011) than in most
countries. The Dutch have had mandatory
universal long-term-care insurance since
- Contributions and co-payments were linked to income. But
coverage was generous compared with almost everywhere else. In
2000-13 spending on long-term care increased by an average of
over 4% a year. The system came to be seen as unsustainable.
Economies were made, including a tightening of admission crite-
ria for residential care, to rule out those with relatively mild im-
pairments. Some group homes had to close, or be converted into
nursing homes.
A central element of the reform in 2015 was to separate three
sorts of coverage, with different sources of financing, depending
on the level of institutional and home-care need. This has
stemmed spiralling costs. But it has created its own problems,
since the barriers between different types of care are fuzzy, and the
municipalities responsible for providing services have an incen-
tive to shunt people into the third category, where the burden falls
on the central government. The scheme is complex to navigate.
At least the Dutch have tried to tackle the issue. In America,
Medicare, a public-health programme for those aged 65 and over,
covers hospital care, some doctors’ fees and many medicines, but
no more than 100 days of skilled nursing care. Residential care is
not covered. And the cost of private long-term-care insurance is
beyond the reach of many of those who will need it.
Social carelessness
In Britain the issue of social care for those who need it has become
a political football. Many Britons wrongly believe that the National
Health Service covers them for all eventualities. In fact, though
they are entitled to free treatment for cancer or other physical dis-
eases, they must bear the costs of their own social care, down to the
last £23,250 ($30,300) they have, after selling their homes. This
strikes many people as unfair, and is frequently bemoaned as a
“dementia lottery”, since the costs of social care for those with de-
mentia are likely to be far higher than for others. Making matters
worse, as the years have gone by, less money has been available for
this means-tested system, even as the number of old people need-
ing it has grown.
Repeated efforts have been made to tackle what has long been
portrayed (more urgently since covid-19 infiltrated so many care
homes) as a social-care emergency, both for people needing care
and for those struggling to provide it. One, a commission led by Sir
Andrew Dilnot, an economist, produced a report in 2011 that came
close to producing legislation in 2015. It suggested that the state
should put a cap on people’s total lifetime liability for the cost of
social care (£35,000) and be responsible for anything above that. It
would be, in Sir Andrew’s words “social insurance, collective pro-
vision with a relatively large excess”. But he points out that only
about one in ten people needs such a big excess.
The suggestion was shelved as British politics was seized by the
paroxysms of a series of elections and Brexit. In the 2017 election
the Conservative Party’s proposals for what became derided as a
“dementia tax” (it would have raised the £23,250 savings limit to
£100,000) were partly blamed for its disappointing performance.
In his first speech as prime minister in July 2019, Boris Johnson
promised: “We will fix the crisis in social care once and for all, witha clear plan we have prepared.” He was rumoured to be contem-
plating a voluntary-insurance model. Speaking on a podcast last
year for the King’s Fund, a British health-care think-tank, Sir An-
drew said he found that improbable, since such a model has
worked nowhere else. In March, when Mr Johnson’s chancellor of
the exchequer delivered his first budget, consideration of social-
care finance was deferred, as he understandably concentrated on
the threat from covid-19. Few could argue with his priorities. How-
ever, campaigners for people with dementia complain that there is
always an issue more urgent than theirs.
If the governments of elderly, well-off Western countries are
unable to make adequate financial arrangements to look after
their old people, it is unsurprising that in the developing world
preparations for a future in which people live longer and need
more care in their later years are also limited. In China, the biggest
of all, private insurance is virtually unavailable and “public fi-
nancing for long-term care is minimal”, according to a note from
the World Bank last year. It is confined to basic support for a mi-
nority of people who have no income and no family to support
them, though some local governments also provide subsidies.
Public spending on elderly-care services amounts to about 0.04%
of gdp. Since 2016, 15 cities across the country have been running
pilot schemes to test a long-term-care insurance facility. But it
does not normally cover mental-health problems or dementia.
Financing the cost of care is just one aspect of the economic
shift that ageing populations will bring. As Mr Goodhart and Mr
Pradhan put it in their book, “the basic problem is that ageing is go-
ing to require increasing amounts of labour to be redirected to-
wards elderly care at exactly the same time that the labour force
starts shrinking.” They point out that, combined with other
changes, such as the rising ages at which people marry and women
have their first child, this has transformed life cycles. In the “old”
cycle, 40 or 50 years ago, people could expect to spend the ages
from 40 to 60 working with no surviving elderly relatives and no
dependent children. In the new one, from 30 to 50, people will be
both working and supporting children. From 50 to 67, they will still
be working but will have parents dependent on them. In China, as
those born under the “one child” policy from 1980 reach old age,
many sets of four grandparents will have but one grandchild be-
tween them.
The diversion of much of the labour force to the care industry
means that the rest of it will have to raise its productivity to com-
pensate. In most rich countries there will be a chronic shortage of
workers willing and able to take on jobs in the care sector. The au-
thors agree with Japan’s health ministry: finance is a huge pro-
blem. But the real crisis will be a lack of carers. 7Ageing is going to
require increasing
amounts of labour
to be redirected
towards elderly
careCaring for grandma
Spendingonlong-termcare*,2018,%ofGDPSource:OECD *Governmentandcompulsoryschemes †201 7ItalyIrelandBritainGermanyJapan†FranceSwedenNorwayNetherlands0 1 1.7 2 3 4OECD average of 17 countries that report
health & social long-term care