The demand for long-term care is increasing rapidly around the world due to the aging population and rising levels of multimorbidity as the leading cause of disability [1]. In Hong Kong, the elderly population (aged 65 and over) is projected to increase from 20.5% in 2021 to 27.6% in 2031 [2, 3]. Traditionally, informal care by family members has played a key role in providing assistance with basic self-care, mobility and household tasks and enabling elderly people to stay in the community [4, 5]. However, family support has become less prevalent due to population trends in aging, lower marriage and fertility rates, and higher divorce rates [6]. The demand for formal long-term care, such as residential care services, has been increasing. Hong Kong has a higher institutionalization rate (nearly 7% in 2009) than many other developed countries, which might be partly due to the inadequacy of community services [7]. Government spending on elderly people for residential care, community care and support, and transitional care has been gradually increasing from 10.5% of the overall social care budget in 2011–12 to 11.8% in 2016–17 and to 13.6% in 2021–22, reflecting an overall increasing trend in long-term care expenditure in Hong Kong [8,9,10]. These demographic and epidemiological shifts call for innovative ways to finance and deliver long-term care. Policy-makers have made it a priority to contain costs and provide affordable and sustainable long-term care services [4, 7, 11].
Residential long-term care in Hong Kong
The provision of residential care services in Hong Kong is largely a publicly funded model. The government provides significant financial subsidies to nongovernmental organizations (NGOs) or private organizations to operate subsidized places in homes for elderly people. There are four types of residential care homes for elderly people (RCHEs; Fig. 1). Subvented homes are operated by NGOs that receive government funding that subsidizes 90% of the operating costs. Contract homes are operated by NGOs or private for-profit organizations that hold government contracts to operate subsidized RCHEs. In the private market, NGOs also operate not-for-profit self-financing homes to cater to more affluent elderly people seeking high-quality residential care. Private homes operated by private for-profit organizations dominate the RCHE market, accounting for 75.4% of all RCHEs [12]. The growth of private homes has occurred in response to the unmet needs of the elderly who may face waiting times of 3–4 years for a place in public sector homes or for those who can afford higher-quality homes. The government offered cash transfers to low-income elderly to be able to afford a place in private for-profit homes under the Comprehensive Social Security Assistance (CSSA) Scheme [7, 13]. However, this had an unintended effect on quality because the average cash transfers were very modest at approximately US$1400 per month, and private homes had little incentive beyond meeting the minimum space and licensing standards.
To meet the demand pressures and to improve the quality of private RCHEs, in 1998, the government introduced the Enhanced Bought Place Scheme (EBPS) and started to purchase residential care places that met a high standard of space and manpower provision. In addition, the government implemented a Standardized Care Need Assessment Mechanism for Elderly Services (SCNAMES) to better assess people’ needs and determine the care provision to be assigned [14]. In 2003, the government created a Central Waiting List for public subsidized placements of elderly people assessed by SCNAMES.
In 2022, the monthly payment for a public subsidized place was $263 (USD) per month without regard to financial means. In comparison, the monthly payment for a private nonsubsidized place was much more expensive, ranging from $573–2676 (USD) per month [15]. Compared to private subsidized homes, the service quality of public subsidized homes is set by the government at a relatively higher standard of space and staff requirements and is funded at a higher level of operating costs [4, 6, 13, 16, 17]. This has created a segmentation of high-quality, low-cost publicly subsidized residential care places and generally lower-quality, high-cost private residential care places serving a common pool of elderly people who need residential care. In this policy environment, elderly people prefer to wait for a publicly subsidized place. As of August 2022, there were 18,128 applicants on the waiting list for placement in 29,143 subsidized residential care places, with a waiting time of 41 months for public subsidized places and 6 months for subsidized places in private homes under the EBPS [18]. It was projected that some 64,000 subsidized residential care places would be required by elderly people in 2030.
Demand-side subsidy
Demand-side subsidies are a demand-side financing tool that was first used in developing countries to improve service utilization by underprivileged groups by giving them subsidies to purchase services from designated providers [19]. The subsidy can take the form of a conditional cash transfer, tax rebate, or voucher that is a token that can be exchanged for services. Typically, vouchers are funded either by a donor or the government and are distributed to the target group in paper or electronic form for specified services from private service providers enrolled in the program. In addition to reducing the financial hardship of service users in accessing services [20,21,22,23,24], vouchers can be designed to facilitate consumer-directed care by giving greater autonomy, choice and control to the recipients to select care providers and services that best fit their needs and can improve service efficiency by introducing a choice of private sector providers in the care market and creating competition [21, 22, 25, 26]. There is a wealth of literature on health vouchers in developing countries, especially regarding immunization and maternal and child health. Evidence for the effectiveness of the vouchers has been mixed and is affected not only by the design and the context but also by how they are implemented. Although voucher schemes have been found to be more successful in specified health preventive services, particularly those that are well defined and time limited [21, 23,24,25, 27], there is very limited literature on health care voucher schemes in developed economies, particularly for long-term care. This gap is particularly apparent in long-term care in Asia, where there is a predominant mixed public–private economic model in financing health care.
Residential care service vouchers in Hong Kong
In March 2017, the Social Welfare Department (SWD) of the Hong Kong Special Administrative Region government introduced a novel means-tested pilot scheme for residential care services vouchers to enable consumer-directed care in the purchase of private sector places. This voucher scheme will be regularized in 2022–23. The targeted beneficiaries of the voucher scheme are elderly people who have been assessed by SCNAMES as moderately impaired and are on the central waiting list.
There are several features in the design of the voucher scheme (Fig. 1). First, the demand-side “money-following-the-user” principle of the scheme provides greater flexibility and choice for elderly people to purchase nonsubsidized residential care places from contract/subvented homes, self-financing homes and private homes. Voucher users can freely choose and switch between participating homes for elderly people under the voucher scheme. Second, the principle that “users pay in accordance with affordability” allows elderly people who can afford less to receive a larger subsidy from the government. The current voucher value is $2043 per month (USD), which is adjusted annually according to inflation. Voucher applicants are means-tested on an individual basis according to elderly people’ income and assets to determine copayment levels ranging from Level 0–7 [28]. Those assessed at copayment level 0, including those who meet the CSSA eligibility requirements, do not pay a copayment. Currently, voucher users pay between $204 (copayment level 1) and $1532 (copayment level 7) compared to a no-mean-tested payment ($263) for subsidized public homes for elderly people. Voucher users can also contribute up to 150% of the voucher value to purchase enhanced services, such as additional physiotherapy/occupational therapy sessions to meet their needs. Third, there is a 6-month trial period for first-time voucher users to adapt to life in the participating homes for elderly people, during which time they can withdraw from the scheme and be reinstated on the central waiting list. Other features of the voucher scheme include casework services that are provided by social workers to assist users in understanding the scheme, choosing suitable services, offering follow-up support after admission, and conducting regular visits. To ensure service quality under the voucher scheme, participating homes for elderly people need to meet the space and staffing requirements set by the government and to provide “a standard service package” including meals, basic and special nursing care, rehabilitative services sessions per week, and social or recreational activities. As of November 2019, there were 1617 cumulative voucher users [29]. In July 2021, among 671 homes for elderly people that provided private residential care services (including homes that were not previously recognized as being able to meet the standards required for participation), 23.4% (157) joined the voucher scheme. A total of 18.5% of participating homes for elderly people were subvented/contract homes, while the remaining majority were self-financed or private homes [30,31,32].
The objectives of this paper are to analyze the perspectives of voucher users and their carers toward residential care service vouchers, including their perceived needs, choices and experience, and to identify key elements in the design that will contribute to meeting the objectives of the voucher scheme. Evidence generated from this study will inform long-term care systems in other economies about how the design and implementation of a voucher scheme can improve access to residential care services and enable choice and flexibility to meet the needs of elderly people.