A public long-term care insurance plan would allow us to better allocate our resources where they are needed by older Canadians.
Underfunding might seem like the most logical reason behind the tragically high rate of COVID-19-related deaths in Canada’s long-term care facilities – and yet Canada does not rank poorly in that area internationally. The source of the problem instead is two-fold: reliance on for-profit delivery of services, but also a lack of public coverage for a broad range of long-term care needs – not just the ones in institutions. We may have too many residents in our facilities who could otherwise live in the community if public funding for home care were more generous. To solve these issues, we need some form of public long-term care insurance and stronger public involvement in long-term care delivery.
The current pandemic is revealing the fault lines in our reliance on for-profit long-term care in Canada. Whereas for-profit LTC facilities represent 24 percent of all residential care facilities in France, they represent 37 percent in Canada and over 51 percent in Ontario. If profit is the main motive in care delivery, quality may suffer if it doesn’t result in a boost to dividends. This is especially true when it comes to adequate staffing. Daily average hours worked per long-term care resident (weighted by the severity of their needs) was 3.7 in for-profit institutions, versus 4.3 and 4.2 in not-for-profit and municipal ones, respectively, in Ontario.
Using data on COVID-19 outbreaks published on the website of the Ontario Ministry of Long-Term Care, as well as information on ownership status for each of the 173 institutions with an outbreak, we find that for-profit institutions represent 51 percent of beds in institutions with an outbreak (versus 30 percent for not-for-profit and 19 percent for municipal institutions), but 67 percent of deaths (versus 25 percent and 8 percent respectively), despite the fact that the needs of residents are more severe in municipal and not-for-profit. These numbers seem to suggest strongly that ownership status matters and that somehow, when quality is hard to monitor and even harder to define in contractual terms, market mechanisms have clear failings.
Beside this for-profit delivery, long-term care facilities in Canada also suffer from a financing issue that impacts the sort of people we see in LTC homes. Ideally, admission to long-term care facilities should be determined on the basis of need – both clinical (limitation in performing activities of daily living) and social (amount of support available in the community) – rather than financial considerations. In a perfect world, only those with the highest level of need and who cannot be cared for in the community should be admitted to institutions. In Canada, however, this is not how things work. Individual and family financial considerations are a big reason why.
For many families, institutionalized care is more affordable than home care. Most provinces cover the cost of care in LTC institutions for residents, with relatively minor cost-sharing mechanisms. Overall, 75 percent of the total cost of accommodation and care is publicly financed. Residents are expected to pay out-of-pocket a set fee each month.
The situation is very different for long-term care services, such as home care, provided in the community. These services are less generously financed and often unpredictably. Total formal spending is much lower on home care: 82 percent of long-term care spending in Canada goes to institutions and the bulk of home support is provided informally by relatives. This difference in financing mechanisms distorts choices made by individuals as to where they live and receive their care. Even though most individuals would prefer to live in the community rather than in an institution, coverage considerations encourage some who could stay at home to instead transition to a facility, where their costs of care are better covered and the burden of care on their relatives is greatly reduced.
Whereas 32 percent of long-term care recipients are in an institution in Canada, the proportion is lower in Denmark, Norway and Germany (around 26 percent) and much lower in Japan (at 21 percent). Placing older Canadians in facilities who could instead be taken care of at home, with formal help, means facilities must provide services for a wide range of care needs. In Ontario, 20 percent of residents of long-term care facilities have no cognitive problems and only physical limitations, while 60 percent have dementia and another 20 percent suffer from psychosis. Caring for these different populations adds to the difficulties of institutions that deliver care, and they would benefit from caring for residents with similar needs. Perhaps counter-intuitively, more funding for home care would make the situation more manageable in our long-term care institutions and would prevent crises such as the one we are facing now.
What to do?
We need to make sure individuals have a greater choice of where to receive care according to their needs and not their financial considerations. To do so, we need a clear and transparent financing mechanism that provides individuals a right to get a given level of care determined by their level of need, which would be assessed by an independent (publicly funded) team. This is how things work in many OECD countries, such as in Germany, the Netherlands, France and Japan.
The general idea is as follows: when a person, relative, social or health care worker suspects that an individual cannot live entirely autonomously, they can request a needs assessment. Soon after, a social team will provide a home visit. The assessment determines a level of need and a corresponding level of financial support, often with some co-payments determined by the income level of the beneficiary.
This financial support can be in-kind, such as a right to get a given amount of services, or can be delivered in cash and can be used by beneficiaries across various types of services. Importantly, it covers home care as well as institutional care so as not to financially distort decisions in terms of where long-term care services are received.
The benefits are drawn from a public fund: a mandatory long-term care public insurance fund that people pay into while they are working and then draw down upon in their later years if they need long-term care services. Mandatory contributions into the fund are determined by an individual’s ability to pay, rather than by the individual’s risk of potentially needing long-term care services. Those with higher incomes contribute more into the insurance fund.
With a provincial or national long-term care insurance plan, Canadians would have a right to access to all forms of long-term care services, regardless of location, and put aside money for this while in the workforce. A public long-term care insurance plan will be our best fix to the woes afflicting the sector: it will allow us to better allocate our resources where they are needed, make sure we minimize the number of residents in long-term care facilities, and ensure that residents in those facilities have more homogeneous needs than is currently the case. Also, a national public insurance program would help collect enough public revenue to reduce our reliance on for-profit arrangements. Last, it would set the provincial standard of care in long-term care institutions.
We certainly need an inquiry to examine what has gone wrong in long-term care facilities during the pandemic. More importantly, we need to use the crisis to rethink the way we pay for long-term care in the community and in institutions. A long-term care public insurance should be the order of the day post-COVID-19.
This article is part of the Facing up to Canada’s long-term care policy crisis special feature.
For related content, check out the IRPP’s Faces of Aging research program.