The Long-Term Costs of Public Long-Term Care Insurance in Germany. Some Guesstimates

Abstract

After almost twenty years of discussion [see e.g. Götting/Hinrichs (1993); Haug/ Rothgang (1994) or Götting et al. (1995) for an overview of the sequence of events in policy development and Schmähl (1992) for an analysis of the different proposals discussed] in 1994 a Federal Act was passed concerning the introduction of a new public statutory Long-Term Care Insurance (LTCI)1 effective April 1, 1995.2 While at least for the last decade the necessity to cover the risk of long-term care comprehensively has been widely acknowledged, the main obstacle against any solution has been the fear of a ‘cost explosion’ resulting automatically from any newly introduced system of coverage. Particularly, any attempt to include long-term care into the social insurance system was criticised for this reason, not least from business representatives [see e.g. Engels (1991); Felderer (1992); Dinkel (1993); Ruf (1992), or the declaration of the Federation of Employers reprinted in Soziale Selbstverwaltung (1992)]. Concerns pertaining to this still exist. The aim of this paper therefore is to check to what extent such developments are likely to occur and to identify the main determinants of future expenditure developments within the new insurance’s framework.KeywordsNursing HomeHome CarePension FundContribution RateNursing Home CareThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.