On the Inclusion of Dementia Patients into Compulsory Long-Term Care Insurance – A Sustainable Step?

The increasing scope of claims to which dementia patients are entitled to under the German Long-term Care Insurance (LTCI) has for quite some time been a topic of political debate. A question has arisen about the extent to which additional LTC benefits should be made available to this steadily growing subgroup. However, since the LTCI is already struggling financially to maintain the status quo as it is, the situation would not seem to allow for any further extension of benefits. This has only recently become apparent in the deficit of 820 million Euro in 2004. The reason for the increasing financial imbalance in LTCI is its method of financing, namely of the pay-as-you-go type, in combination with the demographic changes in Germany in form of an aging population. According to the pay-as-you-go principle the expenditures of each period have to be covered by the revenues. Hence the greater the proportion of the old population in relation to the young working population, the more the working population has to contribute to LTCI to finance those in need of long-term care. This leads to continuously rising contribution rates. Relaxing the eligibility criteria for the subgroup of dementia patients further aggravates the burden of rising contribution rates for today’s young and future generations. Granting additional transfers is financially not feasible without shifting further implicit debt onto future generations. Nevertheless, two reform concepts for LTCI have recently been brought forward. They claim not only to achieve a stabilization of the contribution rate, but at the same time to be able to raise long-term care transfers for dementia patients. One proposal envisages turning LTCI into an insurance for all citizens, the so called citizens’ insurance or Bürgerversicherung, thereby extending the pay-as-you-go principle. The second reform proposal intends to reduce the pay-as-you-go financed part of