Chapter 3.6 addresses how payment mechanisms can foster value for money and quality in long term care. Payment and resource allocation mechanisms for long-term care (LTC) are distinct from those for health care for a number of reasons. Key learning includes that

• LTC is particularly prone to poor quality or inadequate care, under-provision, overmedicalization and to delivery in sub-optimal settings.

• The challenges for LTC reflect its differences from conventional health care markets, including that:

• – In health care the focus is on curing disease whereas, once an individual needs LTC, that need for care is permanent and the emphasis shifts to maintaining quality of life

• – LTC is often provided by low-paid or informal (often unpaid) caregivers rather than professionals.

• – LTC markets are generally fragmented, with a multitude of funding sources and purchasers involved.

• – Collecting data on LTC quality is difficult and makes value-based payments particularly challenging.

• Well-designed economic incentives can influence the type, setting, volume and quality of care offered, particularly when

• – Payments are adjusted to reflect cost variations between patients

• – Payment types are combined and include mechanisms to reward quality and cost containment.

• Informal caregivers may be compensated either with cash or non-monetary benefits. Although these do not normally cover the full costs of providing care, they acknowledge carers’ contributions and to some extent address issues such as working hours lost.

The private health insurance market in Israel offers two voluntary products: the first, offered by the non-profit health plans (HPs), is referred to as supplemental insurance (SI); the second, provided by for-profit insurers, is known as commercial insurance (CI). Both types of cover play a complementary role, covering benefits excluded from the National Health Insurance (NHI) scheme such as dental health care for adults. They also play a supplementary role, providing faster access to care, greater choice of provider and improved amenities (in the private sector), and extended cover of services included in the NHI, such as more physiotherapy or psychotherapy sessions compared with what the NHI offers. The Israeli private health insurance market’s main distinctive feature is the very high levels of population coverage and dual coverage (almost all people who own CI also own SI).

Individual choice of insurance is used in several health systems as a means to empower citizens. This is based on the assumption that the insurers will act strategically on behalf of their clients to meet their needs and preferences and ensure access to high quality services, or else risk losing them to a competing insurer. Competition among insurance funds is expected to lead to improved health system efficiency, higher satisfaction with insurer services for clients (such as timely provision of information, easy administration, low waiting times, waiting list mediation, etc.). There is also an expectation that insurance competition will lead to improved care quality and could stimulate the development of more person-centred services.

The degree of choice and competition between insurers varies between health systems that have introduced this approach, as do the expectations that policy-makers in individual settings associate with choice and competition.