Overview

Population aging is a pervasive, unprecedented global phenomenon. The trend is expected to continue into the twenty-first century. The older population is itself aging; the fastest growing age group is the oldest-old, those aged 80 years or older.

The chapter begins by highlighting the consequences and implications of the global aging of the population. In the economic area, population aging will have an impact on economic growth, savings, investments, and consumption, labor markets, pensions, and taxation. Also, this phenomenon will have a direct bearing on the intergenerational and intragenerational equity and solidarity that are the foundations of our societies. In the social sphere, population aging will affect health and health care, family composition and living arrangements, housing, and migration. Some of the inadequacies of health professional education and health care delivery systems in meeting the chronic health care needs of aging populations around the world are discussed.

The second section of the chapter describes how health care systems around the world are preparing to deal with patients with multiple chronic, degenerative diseases. Information is provided about developed countries in four continents including Canada and United States for North America; Iceland, Norway, United Kingdom, France, and Italy for Europe; Japan for Asia; and Australia for Oceania. The current situation in China is discussed as an example of the preparedness of the more densely populated developing countries and those with the fastest growing economies. For each country, the following information is presented: the principal characteristics of the health care system; the organizational approaches and the services available for older adults; and positive aspects, weaknesses, and specific peculiarities. Each nation’s description ends with a description of what would happen in a hypothetical example of an 87-year-old widow hoping to return home after suffering a stroke with motor and speech deficits.

The third section of the chapter illustrates the difficulty in addressing these epidemiological changes without a global, standard way of assessing the needs of older individuals. The chapter describes the development of a minimum data set of information that can be applied, independent of nationality, language, and culture, to any health care setting. Data are presented to suggest that this global assessment is one strategy for capturing the essential aspects, variables, and solutions that make a local or a national health care system work more efficiently by responding to the needs of their older clients. Also, the chapter summarizes the results of the real-world application of such instruments by governmental mandate in the Canadian province of Ontario and in health services research conducted in Europe.

Finally, the chapter discusses the evidence that the unprecedented demographic changes, which had their origins in the nineteenth and twentieth centuries, are continuing well into the twenty-first century. The number of older persons has tripled over the last 50 years but it will more than triple again over the next 50 years. In contrast with the slow process of population aging experienced by the more developed countries, the aging process in most of the less developed countries is taking place in a much shorter period of time, and is occurring on larger population bases. Such rapid growth will require far-reaching economic and social adjustments in most countries. Effective and efficient health care for the chronic health problems facing this growing population of older adults will be a daunting challenge for all countries.

Demography of the Aging Global Population (See Also Chapter 5)

Notwithstanding some heterogeneity, life expectancy is increasing across the globe. In most industrialized countries, this increase in life expectancy has mostly occurred over the last century. However, in the most recent decades, its pace has progressed at an unprecedented speed, reaching estimates far beyond those predicted by most international organizations such as the United Nations. The increase in life expectancy, seen in many countries throughout the world, does not seem to be levelling off (Figure 6-1).

The increase of life expectancy has resulted in increased proportion of individuals reaching the eight and ninth decade of life. Individuals 80 years+ are consistently found to be the fastest growing segment of the population. Similarly, there is an unprecedented and increasing appearance of centenarians and supercentenarians (Figure 6-2).

The disproportionate life advantage favoring women over men has created a progressive feminization of the older population. Among individuals 85 years+, there are, on average, 55 men for every 100 women.

The increase in life expectancy has been paralleled—especially in the western world—by declining fertility rates. In most countries, the fertility rate is much below the mortality rate and below what it is considered the minimum for population replacement and conservation. The concomitance of an increased life expectancy with a reduced fertility rate has produced profound effects on the labor market, the financial resources, and other societal factors. One example is the potential support ratio, i.e., the number of persons aged 15 to 64 years per one older person aged 65 years and over. Between 1950 and 2000, the potential support ratio fell from 12 to 9 people per each person 65 years or older. By midcentury, the potential support ratio is projected to fall to 4 working-age persons for each person 65 years or older. Potential support ratios have important implications for social security schemes, particularly traditional systems in which current workers pay for the benefits of current retirees (Figure 6-3).

Effect of Population Aging on Health and Health Care

Epidemiological evidence shows that as age increases, there is a progressive, exponential increase in the occurrence of most chronic, degenerative, and progressive diseases, including cardiovascular disease, cancer, chronic obstructive pulmonary disease, dementia, and other degenerative conditions. Furthermore, there is an increase in the cooccurrence of these diseases, resulting in comorbidity.

Health care systems around the world have been modeled around the ideology of the disease model. Diagnosis and treatment is focused on eliminating or ameliorating the underlying pathology; health outcomes are determined by the disease. Also, functional impairment and quality of life are assumed to be improved by treating the “causative” disease. The disease model has resulted in the creation of health systems centered on acute care hospitals and disease-based specialists. This model has informed the way we have developed and accrued knowledge. For example, evidence-based medicine (EBM) has been promoted as the best approach to improving health and health care. The randomized, controlled trials on which EBM recommendations are based typically provide evidence of modest reductions in the relative risk of the disease-specific outcomes that are associated with the use of various interventions such as medications. Older patients and patients with multiple health conditions and therapies have been excluded from many evidence-generating randomized, controlled trials. Arguments have been made for extrapolating the evidence from such trials to subpopulations of elderly patients, but the generalizability of the results to these patients remains unknown.

Consequently, physicians and health personnel are facing a “new” type of patient who presents with an array of concomitant clinical conditions. These combinations of conditions result in varying degrees of functional deficits, cognitive deterioration, nutritional problems, and geriatric syndromes (delirium, falls, incontinence), often in the face of inadequate social support and financial resources.

This “new” complex, older patient presents a degree of complexity not previously considered by the traditional understanding of medicine and its role. The traditionally envisioned health care system, whether operating under universal coverage or private mechanisms, is challenged by this complex patient.

The response to the challenge of the complex older patient has been heterogeneous around over the world; differences in resource availability and economical and cultural issues have resulted in different organizations of health care systems. In addition, the methodological approaches adopted by systems to evaluate the needs of such complex patients have been highly variable and not standardized. In particular, the organization of services to care for geriatric patients, including geriatric assessment and management, remains highly variable. This variation is seen among nurses, physicians, therapists, nursing homes, home care services, and health systems.

To display this intercountry variability, each country’s section will end with the description of likely sequences of events in a clinical case scenario. The clinical scenario is an 87-year-old widow who was independent in activities of daily living, cognitively intact, and living in her own house albeit with few social supports prior to suffering a stroke with resultant motor, speech, and swallowing deficits. Despite these deficits and lack of supports, she strongly wishes to return home. The types of treatments and services offered to her in each country will be presented.

In order to illustrate the way countries in the most developed world have prepared to cope with population aging we have selected nine countries in four continents with large percentages of persons older than age 65, including Canada and the United States for North America, Iceland, Norway, United Kingdom, France, and Italy for Europe, Japan for Asia, and Australia for Oceania (Figure 6-4).

These countries have among the highest life expectancy at birth, well over 80 years for all but the United States and United Kingdom. The percentage of the population in that is aged 65 years and older ranges from 11% in Iceland to approximately 20% in Italy and Japan (Table 6-1). In the next 50 years, the percentage of older adults will almost double in each country, estimated to reach over a third of the population in Italy and Japan (Table 6-2).

More alarming, the dependency ratio (ratio of inactive population aged 65 years and older to the labor force) is projected to be close to 50% in France, Italy, and Japan by 2020. This means that, for every older adult, there will be only two persons in the labor force. Iceland will be characterized by the lowest dependency ratio. Regardless, all countries will experience a further increase in the dependency ratio over the period 2020 to 2050. By that time in Italy, for every retired older adult, there will only one person in the labor force (Figure 6-5).

In most nine Organization for Economic Cooperation and Development (OECD) countries, expenditures on health are a large and growing share of both public and private expenditures (see Table 6-1). The level of health spending varies widely across countries, reflecting different market and social factors as well as the different financing and organizational structures of the health system in each country. In terms of total health spending per capita, the United States is well ahead of the next highest spending countries, including Norway, and well over double the unweighted average of all OECD countries (Figure 6-6).

Since 1990, health spending has grown faster than gross domestic product in every OECD country except Finland, although this growth has not been constant. In most OECD countries, the bulk of health care costs are financed through taxes, with 73% of health spending, on average, being publicly funded in 2004.

The strategy and the organizational approach to deal with complex patients with multiple chronic conditions differ substantially across countries. In part, these differences are historical, cultural, demographic, and financial, and societal. For each country, we present key characteristics of the health care system, and organizational approaches and services available for older adults.

America: United States

Type of Health Care System

At the time this chapter is being written, the United States does not have universal health care. In the year 2007, as many as 50 000 000 Americans are uninsured. Nonetheless almost the entire older population is covered for some health care services under a federal insurance program known as Medicare (see Chapter 15).

Overall Organization and Services Available for Older Adults (See Chapter 15)

To be eligible to receive benefits, either the individual or the person’s spouse must have worked for 10 years or more in a Medicare-covered capacity and be at least 65 years of age and a citizen or a legal resident of the country. Under most circumstances, enrolment in the program is automatic at age 65 years. Medicare Part A pays for most acute hospital level care services and many postacute care inpatient services for a limited period of time as well as some skilled home care and hospice services. For individuals who meet economic criteria, nonskilled home care services are provided by the states, using either Medicaid or state funds; their availability differs dramatically across the states.

Unlike Part A, the older person must request and pay for Medicare Part B insurance. This is the major payer for most physician services as well as ambulatory care. In 2007, it cost the individual about $100 per month, the exact amount being determined by the age at which the individual signs up for the plan.

Medicare Part D is an elective insurance plan that pays for pharmaceuticals. The individual desiring this insurance program usually must choose from among a large number of plans offered by different insurance companies, each of which may cost a different amount and have a somewhat different formulary.

Long-term care is not covered under Medicare. Multiple plans are offered by the insurance industry, each of which may differ with respect to the cost, waiting period for eligibility, and duration of coverage. Medicaid provides for long-term institutional care and many other health care services for the indigent population. However, the eligibility requirements and the exact services available vary from state to state as Medicaid is a joint federal and state program of insurance.

The number of residential nursing home beds varies by state from a low of 21 beds per 1000 people older than 65 years to a high of 80 beds. The median is 49 beds. There are now more long-term care beds than there are acute care beds in the country. The percent of people aged 65 years and older with long-term care needs who do and do not reside in institutions and the proportion of the older Americans who reside in institutions are displayed in Figure 6-7.

An entirely separate health care system is provided by the Veterans Administration for military veterans who have limited assets. It has its own hospitals and ambulatory settings and employs its own physicians. Many of these facilities are attached to a varying degree to academic institutions.

There have been some important developments in the availability of physician services for older adults in the last 20 years. In 1988, geriatric medicine was recognized as an area of “Added Competence” by both the American Board of Internal Medicine and the American Board of Family Medicine. Training programs in geriatric medicine for graduates of these two primary boards were designed and approved by the national accrediting body, the Accrediting Council for Graduate Medical Education. Similarly, geriatric psychiatry programs were established. In 2006, the American Board of Internal Medicine “upgraded” the field by making geriatric medicine a full specialty equivalent to, for example, cardiology and gastroenterology.

Nonetheless in the United States, geriatric medicine has recruited few physicians to its ranks with perhaps as few as 200 physicians entering the specialty annually. Likely, in no small part, this is a consequence of the marked difference in reimbursement for different types of services. For example, a comprehensive assessment of an older person is reimbursed at a far lesser amount than most any procedure that lasts a half an hour or more.

In the United States, most medical students have a limited geriatric experience, perhaps in part because of the inability of medical schools to be able to recruit sufficient numbers of faculty. In addition, elders usually have a multiplicity of chronic conditions whereas the traditional emphasis in the medical curriculum has been on acute medical issues in a hospital setting, and more recently but still to a lesser extent, on ambulatory medicine. Most medical students have little or no exposure to such concepts as functional status or to such sites of care as the home or the nursing home. Modest efforts are underway to encourage specialists who care for large numbers of elders, such as gynaecologists and urologists, to have exposure to geriatrics.

The perception remains that the care of elders is not viewed as glamorously by either the public or the health profession as most other medical specialties. As elders tend to have multiple chronic conditions, multiple consultations may be viewed as necessary with the geriatrician serving in a lesser role, merely orchestrating the visits to specialists.

Peculiarities

The extraordinary cost of the health care system in the United States, as compared to other developed nations, has become increasingly visible to American industry, which traditionally has funded the health care insurance programs for its workers, to the American people, and to the politicians. Yet large numbers of citizens remain uninsured; the aging population is likely to need more care, increasing the per capita costs in the years ahead (Figure 6-8).

As a consequence of escalating costs, the health care system in the United States is changing. For example, under a pay-for-performance program, the Center for Medicare and Medicaid Services (CMS), the federal agency that oversees Medicare and Medicaid, has begun to offer financial incentives to improve the quality of medical care. This agency began by focusing attention on conditions such as an acute myocardial infarction and pneumonia in the hospital setting. There is some, albeit limited, evidence that such a program will improve the care of the older person requiring hospitalization for an acute illness. Symptoms and geriatric syndromes, rather than discrete diseases, however, are often the most concerning health problems for older adults in many settings (Figure 6-9). Pay-for-performance programs have just begun addressing geriatric syndromes such as falls and urinary incontinence. Functional deficits have not yet been a focus of pay-for-performance efforts. Only recently has there been an interest in beginning to consider quality in other settings, such as ambulatory care and postacute, nursing home care. CMS has at its disposal a wide variety of quality indictors that could be applied to persons in postacute and nursing home settings. Yet, long-term care and home care remain the stepchildren within the health care system. Because Medicare does not pay for long-term care needs, it is not clear how this might change.

Difficulties and Solutions for a Typical Geriatric Patient

What type of treatment and services would likely be offered to an 87-year-old widow who was independent in activities of daily living (ADL) functioning, cognitively intact, and living in her own house but with few social supports who suffers a stroke with motor deficits and speech and swallowing troubles?

An 87-year-old widow who was living at home independently and presented to an Emergency Department with signs of an acute stroke would be evaluated immediately.

If seen within three hours of the onset of the symptoms she would undergo a computed tomography scan of her brain and likely a magnetic resonance imaging scan to determine if the stroke was due to a thrombosis or a bleed. If there was a thrombosis and if the elder did not have a contraindication, she might be treated with a drug intravenously with an eye to dissolving the thrombosis although few people get to the Emergency Department in time and few older persons are offered this treatment. She would have appropriate studies to rule out marked carotid artery stenosis as well as a myocardial infarction and a cardiac arrhythmia.

If no immediate intervention was indicated, she would be managed at an acute level of care for about 3 or 4 days. If she had a hemiplegia, she would be evaluated by a physical therapist, and possibly, an occupational therapist. She might also be evaluated for speech deficits and aphasia and likely would undergo a swallowing evaluation.

Most such individuals would then be transferred to an acute rehabilitation facility or perhaps to a subacute level of care for rehabilitation. If the individual was transferred to a subacute facility, she would first have had to spend three days (i.e., midnights) at an acute level of care before Medicare would pay for the service. If she were transferred directly to rehabilitation facility, this duration of acute care would not be necessary.

If the woman wished to return home and had no informal support, it would be necessary to determine her functional status. If it was felt that she could manage at home independently, then some home care services, such as nursing and physical therapy, and perhaps a home health aide, would be available for a limited period of time. However no long-term support services, such as assistance with bathing, shopping, or house cleaning, would be available unless the individual paid for them herself or was indigent and eligible for Medicaid. There are charitable organizations in some locations, but not all, that might offer to provide a very limited degree of support. But in all likelihood, these could not be counted on when arranging for discharge from a facility.

If she could not manage reasonably independently at home, it would be necessary for her to go to a long-stay nursing facility or, if she had a significant measure of functional ability, to an assisted living facility. Both would be quite expensive and only the former would be paid for by Medicaid if she had insufficient assets of her own.

America: Canada

Type of Health Care System

Health care in Canada is a joint federal–provincial responsibility. It is delivered and managed at the provincial–territorial level, with the majority of funding provided by provinces. The federal government transfers funds to the provinces and territories to pay for a portion of public expenditures in health care, and sets national standards that govern the delivery of hospital and physician services. The federal government is also responsible for health protection related to product safety and pharmaceuticals, and it provides funding for research and health promotion at the national level.

Hospital and physician services have been publicly funded under a “single-payer” system in Canada since the 1957 Hospital Insurance and Diagnostic Services Act and the 1966 Medical Care Act established a shared approach to payment between the two layers of government. The Canada Health Act (CHA) of 1984 represented a major development in defining health care in Canada, by establishing five principles that would govern the delivery of services:

1. 
   

   Public administration—provincial health care insurance must be operated and administered publicly on a not-for-profit basis.

   
   
2. 
   

   Universality—all citizens must be covered equally with the same benefits and entitlements, irrespective of ability to pay.

   
   
3. 
   

   Accessibility—no financial or other barriers (e.g., user fees) are permitted to ensure equity of access among citizens.

   
   
4. 
   

   Portability—provides funding for Canadians visiting or moving to other parts of the country or travelling outside of Canada.

   
   
5. 
   

   Comprehensiveness—ensures full coverage for “medically necessary services” provided by physicians or in hospitals (including dental surgery).

Following a protracted debate between federal and provincial governments, the Romanow Commission on the Future of Health Care in Canada was assembled to address issues such as the share of federal contributions to health expenditures and the scope of the Canada Health Act. The commission made numerous recommendations, but two that had the potential for a direct impact on the older persons were (1) expansion of the Canada Health Act to include home care and (2) addition of “accountability” to the Canada Health Act as a new principle governing health care in Canada. Ultimately, both recommendations were only partially implemented. Although almost every province provides substantial public funding for home care, there was tremendous resistance to its inclusion under the Canada Health Act. Following a meeting of the Prime Minister and provincial premiers, an agreement was reached that additional federal funds would flow to the provinces to expand existing home care services in targeted areas (mental health, postacute care, rehabilitation, and palliative care) without bringing it under the Canada Health Act. The Canadian Health Quality Council was established as a vehicle to improving accountability in health care, but it has not achieved full participation by all provinces and the Canada Health Act was not modified to include “accountability” as a new principle. Many provinces have launched their own accountability initiatives over the last 5 years, but there is no national consensus on what should be done to ensure quality, appropriateness, and cost-effectiveness of health care.

Another major development in the Canadian health care system has been the move toward regional management of health services. Provincial governments have played a diminishing role in the actual delivery of health care, with most organizational decision-making and resource allocation made at the local levels. The role of provincial ministries of health has changed to a stewardship function instead of direct management and oversight. While this model may mean that health care is delivered and managed in a way that is tailored to needs at the local level, it is increasingly difficult to speak of a “Canadian” health care system. While the Canada Health Act does provide some national standards for certain services and there are many commonalities in models of care, the specific services available and the terms under which they are provided vary substantially between about 50 health authorities managing services in 10 provinces and three territories.

Overall Organization and Services Available for Older Adults

As noted above, there is no singular model of Canadian health care. Rather, health policy and service delivery in Canada are best understood as multiple variants on a set of common, high-level principles. With that caveat in mind, it can be said that health care for older adults in Canada involves several common services and care settings—home care, nursing homes, and hospitals are the constants across provinces, but the precise function of these services, payment systems, and eligibility criteria vary from province to province.

There is no exact estimate of the size of the home care population in Canada, in part because there are widely divergent definitions of home care. If one considers services such as nursing, personal support, home health aides, and rehabilitation, it would be reasonable to estimate that between 11% and 15% of older adults receive home care services. However, this value will generally be much higher if one expands the definition to include services such as transportation, meals on wheels, and other community supports offered by social service agencies.

A distinctive feature of home care in many provinces is the use of the case management approach to assessing needs, allocating resources, and managing community based services for frail older adults. For example, in Ontario, Community Care Access Centres (CCACs) use case managers to complete an assessment of long-stay home care clients (using the Resident Assessment Instrument for Home Care, the RAI-HC). Case managers use the assessment information to prioritize clients for access to community- and facility-based services and to establish a care plan based on the clinical findings of the assessment. They then contract with home care companies (both for-profit and not-for-profit) to provide the services needed by the client. Typical services include nursing for wound care and intravenous management, personal support for bathing and homemaking, and physical or occupational therapy; social work, speech language pathology, nutrition, and mental health services are only provided infrequently. A common concern in Ontario, however, is that caps on home care expenditures may limit the capacity of case managers to allocate services that would fully address clients’ needs. In contrast, preliminary evidence from the Province of Manitoba suggests that if case managers have more resources for home care and they are better able to calibrate them to client needs, then a lower rate of nursing home admissions results.

Definitional problems also plague any estimates of nursing home utilization in Canada. Different provinces refer to nursing homes with different names. There is also substantial variation across Canada in how nursing home stays are paid. Several provinces employ a copayment system where the resident pays a share of the costs of the stay, while other provinces require the person to pay for all costs of nursing home care until they have spent down their income and assets.

An important change underway in Canada is the introduction of assisted living as a lower cost alternative to nursing home care for a population with lighter care needs. However, in some provinces, the movement toward assisted living appears to be driven by an interest in replacing regulated nursing home care with unregulated care.

As in other countries, acute hospitals in some Canadian provinces have employed a DRG-like system to manage hospital resources. Over the last two decades, this has resulted in dramatic reductions in average length of stay. However, in some provinces, a major concern has arisen with respect to alternative level of care (ALC) patients —those who no longer have acute care needs and are now in the hospital awaiting placement in a less intensive care setting. Frail older adults make up the vast majority of ALC; the size of this population has grown with the ongoing pressures to reduce hospital length of stay and the limited availability of long-term care beds or supportive housing options. This is further complicated by current case-mix systems for nursing homes that are not responsive to clinical complexity, resulting in a financial disincentive for these homes to accept heavy care residents.

Mental health services for older adults are provided in a variety of ways. In the community, home care services often exclude persons with severe mental illness. Instead, these individuals receive support from community mental health agencies that may or may not work in concert with home care. In addition, community mental health agencies often provide consultation services to nursing homes to assist them in meeting the needs of residents with complex psychiatric issues or high levels of behavior disturbance. However, it is not uncommon for nursing homes to discharge residents with frequent and severe behavior disturbance to inpatient geriatric psychiatry units because they do not have the expertise or resources to cope with these residents. Hence, there is a growing awareness in Canada of the need to find more cost-effective methods to respond to the mental health needs of nursing home residents.

Pecularities

About 80% of the population lives in urban settings, mainly in the southern regions of the country near the U.S. border. However, the rest of the population lives in rural settings, sometimes covering vast geographic areas that make it difficult to offer home care programs or nearby primary care services. About one-third (12.2 million) of the population of Canada lives in the province of Ontario. Toronto (the capital city of the province) has 2.5 million residents living in a 630 km2 area with a population density of 3972 persons/km2. In contrast, the 10 000 residents of Yukon Territory who live outside its capital city (Whitehorse) in the northwest region of Canada are dispersed over a 474 000 km2 area with a density of 0.1 persons per km2.

A further consideration is that many residents of remote regions of the country are aboriginal peoples with unique cultural needs and health concerns. Persons with an aboriginal identity comprise 0.5% of the population of the city of Toronto and 1.7% of the Ontario population; however, they represent 15.9% and 36.8% of the population of Whitehorse and rural Yukon, respectively. Health care for aboriginal people on reserves is the responsibility of federal government, and off-reserve care is typically provided for by the provincial government. For most health indicators, persons of aboriginal origin are at disadvantage compared with general population. Although life expectancy has been improving, the gap between aboriginal and nonaboriginal people is 7.4 and 5.2 years for males and females, respectively. Morbidity rates are also notably higher in the aboriginal population for conditions like diabetes, heart disease, and tuberculosis.

Difficulties/Solutions for a Typical Geriatric Patient

What type of treatment and services would likely be offered to an 87-year-old widow who was independent in ADL functioning, cognitively intact, and living in her own house but with few social supports who suffers a stroke with motor deficits and speech and swallowing troubles?

An 87-year-old widow with an acute stroke and few comorbidities would typically receive care in a general medical ward of acute hospital ward. According to a 1999 study, only 4% of Ontario acute hospitals have a dedicated stroke unit. Rehabilitation in the postacute phase may be provided in a rehabilitation hospital or unit, or in a complex continuing care hospital (Ontario only). Depending on the patient’s functional ability, medical condition, and access to informal support (in this case probably children), she may be transferred home with home care. Rehabilitation may be provided by the home care program or by community-based clinics. The home care program will also offer personal care, homemaking services, and nursing, if needed. If the patient’s medical needs exceed the ability of family members to provide adequate support, then she may be placed in a long-term care home or an assisted living setting depending on the severity of impairment.

Europe: Iceland

Type of Health Care System

Iceland’s health care system is nationalized, though there are private sector providers. On the purchaser side of the system, two structures fund services: (1) the National Institute of Social Security, which is financed through the central government’s budget and through employers’ and employees’ contributions and (2) the central government’s annual appropriation, financed through general taxation, which directly allocates financial resources to hospitals and primary care services. The rich and the less well-off use the same system, contributing copayments of 25% to 30% of the cost (with a limit on maximum expenditure). However, the copayments of older adults amount only to one-third of what actively working citizens pay; no copayments are required for hospitalization or rehabilitation or home nursing care for older adults.

Care of older adults has two components: health care and social services. Health care is organized regionally, through primary health care centers, and is paid for by the state, funded through the central government’s budget. Social services are also organized regionally (albeit differently than health care) and are paid for by county councils, which are funded by local governments. Social services include assistance with home care and daycare. Geriatric hospital care, which has developed rapidly during the last 20 years, is financed by the state.

Nursing home placement costs the older person up to US$2000 per month (if their pensions are generous enough) and Iceland’s national health insurance both pays the balance of about US$5000 per month (2006) and covers whatever portion of the cost is not covered by a resident’s pension. Older adults do not have to spend down assets other than their pension fund to pay for their care.