Can we afford to get old? : Hamburg Center for Health Economics : University of Hamburg

Nursing homes, ambulatory care, or informal care: how can we ensure that everyone in need receives the best possible care?

1. As populations age and long-term care needs rise, governments must carefully balance patient welfare and costs for social security systems.

2. Do the expectations and realities of care professionals and recipients align?

3. How can we better support informal care?

1. Public payments influence patient choice

Photo: HCHE

Inpatient, outpatient, informal: The models of care

The universal long-term care (LTC) insurance program offers people in need of care the choice between in-kind services in one of the 16,500 nursing homes (Market share: 42%) or a cash benefit to use for one of the 15,500 ambulatory care services (22%) or informal care.

Photo: HCHE

Possible scenarios

The graphic illustrates what would happen if state-provided long-term care insurance benefits were changed: cost increases would result from a stronger focus on professional care or nursing homes, despite minimal welfare gains. Conversely, savings would be achieved by moving away from expensive inpatient care.

Photo: HCHE

New approaches to ease the financial situation

To ease the financial burden, funding for informal care could be increased and insurance benefits tied to income levels: higher-income individuals would then receive less support. In addition, government coverage of high nursing home costs could be consistently limited to low-cost facilities in order to reduce system costs.

Further study

2. Do the expectations of those in need of care match up with professional care?

Photo: HCHE

Differing interests

Nursing home providers desire full-time staff, low price sensitivity, and low staff turnover. Those requiring care prefer single rooms, low prices, and non-profit providers. Caregivers, demand relief from their workload, fair wages, and flexibility. These conflicting expectations highlight the tension between quality and affordability.

* Staff turnover increased from ≈15.3% (2020-2021) to ≈20.6% (2022-2023) **Gesundheitsversorgungsweiterentwicklungsgesetz

Photo: HCHE

Conflicting goals: fair wages versus cost dynamics

Most nursing home residents are either rich or poor. The wealthy can afford the high additional payments required by nursing homes, while the poor are covered by social assistance (regardless of the amount of the additional payment). The middle class stays at home for as long as possible, as they are the most price-sensitive group.

Photo: HCHE

What can we do?

A further increase in salaries would not increase the number of nursing staff, but would threaten to exclude the middle class from nursing homes. Higher educational qualifications, more foreign staff, and the use of technology, e.g., robotics and artificial intelligence, can contribute to staffing and efficiency improvements.

Further study

3. Informal care: The savior in the strained care market?

Photo: HCHE

Can future demand for informal care be met?

The German long-term care system faces the challenge of balancing social security, rising costs, and a shortage of skilled workers. Since a large majority of the public and policymakers prefer home-based care, informal care plays a central role in ensuring the stability of the entire system in the future.

4 out of 5 are willing to provide informal care in the future, especially for the partner and parents.

Photo: HCHE

Efficient division of tasks

To relieve the burden on family caregivers, outpatient services should focus on basic care. In addition, expanding short-term care options to maintain social contact, as well as providing training and exercise programs are essential. These measures promote the well-being of both caregivers and foster the sustainability of home-based care.

Further study

The future of care?

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Technological innovations such as robotics and artificial intelligence already offer diverse possibilities for supporting care, even if they will not replace human professionals in the foreseeable future. For example, mobile systems such as telepresence robots serve as an "extended arm" of professionals, doctors, or family members and are particularly valuable support in home care or in nursing homes where there is a shortage of specialists.