"Nursing cases have exceeded predictions by one million"

There are a million extra nursing cases than what was anticipated.

Health Minister Lauterbach talks about a "huge" rise: More than 360,000 individuals are now in need of care. This is much higher than the predicted increase of 50,000. Health economist Jürgen Wasem shares his perspective in an interview with ntv.de: this surge isn't a shock, he states.

ntv.de: Could the increase in the number of care recipients be as dramatic and astonishing as Federal Health Minister Karl Lauterbach suggests?

Jürgen Wasem: I need to clarify this quickly: following the nursing reform of 2016, a new concept of care-dependent persons was introduced. For the first time, people with dementia and cognitive issues could be recognized as care-dependent for health insurance purposes and receive benefits. Prior to this, only those with physical disabilities were considered care-dependent. Since the introduction of this new concept, we've been overestimating case estimations. And now, a million extra cases exist in comparison to the predictions. And in terms of this development, the number for the past year fits in nicely. We estimated a raise of 50,000 cases, but it's become 360,000.

This increase isn't shocking.

We've been surprised every year since 2017 that we have more additional care recipients than we anticipated. At this point, you could say that we're getting used to such surprises.

Why is this frequent miscalculation happening?

It's probably because we're dealing with a new group eligible for health insurance: individuals with cognitive impairments. And these have increased more quickly than we expected. I assume that this was also the case in the past year. It appears it's taking some time for physicians and families everywhere to realize that there's this new policy.

What's this "sandwich effect" that Lauterbach mentions as a plausible explanation for the increase in cases?

With this, Lauterbach refers to: now, baby boomers have reached the point of needing care. They and their parents are both care-dependent and make up this sandwich. I've taken his idea to mean that this effect is what explains the high increase in case numbers. However, I find this quite improbable. Boomers are only in their early 70s, most are still in their late 60s. The care-dependence rate is still quite low. It significantly increases around 70, 80 years old.

If the forecasts have been wrong for years, wouldn't that point to a need for a new forecast?

It's not that straightforward. However, I predict that this effect will calm down within a year or two due to the new concept. Nevertheless, there aren't any reliable data on this.

Why is it so difficult to estimate?

It's obvious that the affected individuals and their families are hesitant to report issues such as dementia and cognitive limitations in interviews. This is associated with shame. However, now that there are advantages, we're getting closer to the actual figures. Nonetheless, I don't want to create the impression that people are attempting to claim benefits. Doctors from the Medical Service of the Health Insurance Funds affirm that patients are trying to seem more capable than they are, because dementia is connected to shame.

What does this increase in cases imply for the funding of long-term care insurance?

We still don't know all the details about these extra 300,000 individuals in need of care. But if we assume that they're all being cared for at home and cost as much as an ordinary home care case, then this means 2.8 billion euros in additional expenses. If you convert that into contributions towards long-term care insurance, that would be 0.16 contribution points. This would raise the current rate of 3.5% for long-term care insurance.

0.16 percentage points doesn't sound terribly drastic now. Yet, won't that prove insufficient for financing long-term care insurance in the long run, doesn't it?

We're only at the start of population aging. The demographic shift will affect long-term care insurance gradually, followed by a more rapid impact. This is because care rates are incredibly age-dependent: 4-5% of those who are 70 years old are care-dependent, 35% of those who are 85 years old are, and 80% of those who are 95 years old are. In twenty years, the birth-rich generation will be in their mid-80s to early 90s. They'll have fewer working individuals to support them.

How can we prepare for this?

Several alternatives exist. One choice is to decide whether we'd prefer to pay more or to reduce the standard of care. It's likely that the additional labor costs for staff in nursing homes will be too high. This would mean cutting social perks or reducing staffing ratios in care homes. If we don't want that, we'll need to finance the growing requirement. There are also various options to achieve this.

The initial choice is: If we decide against modifying the current set-up, contributions will inevitably rise. Another option is to gather more money through taxes. Of course, this would also be a strain on future staff members. As a different alternative, we could also impose additional financial burdens on privately insured citizens through civil insurance. This move could be justified on grounds of fairness, but it wouldn't result in much financially. The fourth possibility is to utilize the reality that most baby boomers are still about two decades away from requiring care and encourage them to contribute more to the retirement fund for care coverage from their private savings. Since baby boomers are currently approaching the end of their careers and have relatively high incomes, they would still be able to contribute substantially towards the capital-backed pillar of care insurance. This would help decouple the contribution growth more significantly from the aging process in twenty years. However, there's a downside: It would mean that, in addition to the already looming contribution increases, contributors would have to shoulder the extra responsibility of saving for their future.

As a financial expert, how confident are you that we can adequately fund long-term care in Germany despite population changes?

There's still another issue we haven't touched on: the need for workforce will also increase. This means that care, which is already experiencing a shortage of workers, must become more appealing, which would imply we need to increase their pay. This aspect will be a dilemma for our society! As long as our economy is in decent shape, I believe we'll manage it fine. In 1970, the average insurance fund contribution was eight percent, while currently, it's sixteen percent. The average contribution has increased two-fold over the past fifty years. This increment was manageable because we had a growing economy. If our economy keeps growing, I'm hopeful about the future. But it'll be incredibly difficult if it stagnates.