Barend van Lieshout thinks only the health of insurers and pension funds would benefit from a healthcare saving scheme.
The Actuarieel Genootschap, the number crunchers of pension funds and insurers, has presented a plan to introduce saving for care. In order to meet the explosion in healthcare costs we must create a collective nest egg. Their enthusiasm is understandable enough: saving for care would effectively keep the draught off their employers. The scheme wouldn’t benefit citizens, however.
Plans to save for care surface every now and then. The logic behind them is simple: healthcare will soon be extremely expensive so let’s start putting by some money so we can pay for it. We just finance the missing millions. The Genootschap have consulted the death statistics and have found that if we start saving up now and invest wisely, the gap won’t be as big.
But collective saving, via insurers or pension funds, is not an attractive option. It’s inefficient, not future-proof and it doesn’t solve the shortage of care staff.
The alternative would be to save via the national debt, either by lowering it now or by increasing it in the longer term. It really isn’t such a bad solution. It’s cheaper, because the administration for it is already in place. The tax office wouldn’t have to employ a single extra civil servant to do the job.
If the saving idea were to be adopted, the cost of implementing such a system would be considerable: it would mean decades of administrating who pays what.
The task of determining eligibility is another formidable hurdle. It’s not very complicated for pensions: you get one from age 67 until you die. But who is going to determine how much healthcare we need and the kinds of treatment we are entitled to? The present system is neither simple nor cheap.
The pension crisis has taught us that pension systems cannot guarantee pension payments will rise at the same rate as pay. The same is true of a saving system for care. We simply can’t be sure the promised care is going to materialise. This will depend on the financial markets, the quality of the investments, inflation, etc.The only thing that can be reliably predicted is that it would cost a lot to implement; i.e. the income of the insurers or pension funds.
But the biggest uncertainty is probably the lack of care staff. If there is no one to look after us the saving up scheme can’t deliver.
There’s a political risk, too. Will it be politically acceptable for one part of the population to receive more care than the rest? It’s a difficult question already and that’s without the problems of an aging population and a huge hole in the budget.
Some variants of a collective saving scheme have been proposed. Individual care saving schemes are no more than a savings account and there are enough of those. A purely financial saving scheme, the proceeds of which will be spent on care when the saver reaches a certain age, could work but, again, this doesn’t differ greatly from the financial products already on offer.
It could be the Genootschap is not at all interested in achieving fiscal advantages for yet another pension product in order to compensate the life insurers for the investment insurance disaster. Perhaps they are genuinely worried about what will happen to state debt once the consequences of an ageing population really make themselves felt.
In that case it would be good to look at what is happening abroad. If other European countries decide not to save and so choose to increase state debt it would not be a very attractive option to be the odd one out.
Should we just wait and see? No. What we must do is to use the time to find better ways of developing a system which delivers value for money. At the same time we will have to get used to the idea that we will have to look after each other more and accept (as we must) that care will become a more limited resource.
Barend van Lieshout is a healthcare advisor at Rebel.
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