Development of Financial Service Methods for People with Dementia during Digitalization: A Partnership between Citizens and the Russian State

There is a need to achieve complex quality services for people suffering from dementia based on significant reductions in the material and moral capabilities of the family and state in a limited period of time. A method of forming a personal fund is proposed, in which citizens can save their personal funds, and the state will provide quality services in case of illness. Data are presented about three groups of elderly people, whose representatives differ in terms of social activity and health status. It is substantiated that the third group, belonging to the retirement age (people aged 80–85), is burdened to the largest extent by medical and social-care problems, including the susceptibility to dementia. The paper analyzes the volume and structure of financial resources for treatment and presents a forecast of the burden on the able-bodied population of the country for the timely treatment and service of these persons. The proposed creation of citizens’ personal funds makes it possible to transfer the psychophysiological burden experienced by members of society with dementia to specially trained personnel in order to save their families money in the event of an insured event—dementia. This will reduce household costs, ensuring the provision of qualified, comprehensive, high-quality services that not just alleviate the condition of elderly people with dementia but also create guaranteed decent living conditions. The organic blending of this suggestion with the introduction of a new cumulative pension scheme (guaranteed retirement plan, GRP) that envisages numerous tax incentives and state guarantees can ensure the effective support of people with dementia. It will contribute to the fair distribution of responsibilities to finance the social services provided to dementia patients between the families and the state.

Dementia; Family; Guarantee; Personal fund; Service

      The aging of the population is a process common for most countries in Europe and North America, which generates a wide range of social, economic, and political problems. The major economic problems include a growing burden on the pension system (Sinyavskaya, 2017), while the social objectives are defined by the need to ensure active longevity (Second World Assembly on Ageing, 2020). The political objectives are preconditioned by a growing share of the elderly-aged electorate and significant risks of remonstrative moods in this group of electors as well as the negative impact on the military-mobilization potential of the state (Erokhin, 2018). One of the factors of the growing burden on the social and economic system is higher costs of services for disabled, elderly people, among which there is a group requiring various expenses. These are people suffering from dementia, who experience a steady, progressive decline in cognitive functions expressed as a loss of existing knowledge, skills and abilities, and mental handicap (Malofeev, 2013; World Health Organization, 2017; Alzheimer’s Disease International, 2019).

According to experts, the proportion of people with dementia in the world increased from 20.2 million in 1990 to 43.8 million in 2016 (2020 XXII Century: Discoveries Expectations Threats, n.d.), increasing by 2.17 times. The average annual growth is 8.3%, and experts believe that the share of patients with dementia is going to double every 20 years. Their number will reach 65.7 million by 2030 and roughly 115 million by 2050. The frequency of registration of new cases of dementia in the world is once every four seconds (Bogolepova, 2015). According to this trend, growth can be forecasted in:

•     The costs that households bear to service patients with dementia;
•     The share of employable people that have to quit their jobs or transfer to part-time jobs because of a need to provide 24-hour care to dementia patients.

Possible ways to reduce this foreseeable impact are related to the need to transform the labor resources under the “Digital Economy” program (Rudskaia, 2018; Kudryavtseva et al., 2019).

With a growing share of the population in the majority of developed countries becoming “elderly,” the increase in the number of people suffering from dementia will be one more factor reducing the quantity of economically active workers/professionals, which poses a threat to economic growth. This threat cannot be neutralized by increasing the income of the elderly based on non-government retirement plans because the citizens of the country have little trust in the savings schemes of non-government organizations, the stability of the national currency, and the inflation expectations, which can devaluate long-term savings. On the other hand, state funding of the expenses arising from the need to pay for the comprehensive services related to the health care and leisure of elderly dementia sufferers, during a time of a growing pension burden caused by the aging population, does not seem possible at first glance. At the same time, effective organizational and financial mechanisms ensuring citizens' employment during this time of growing retirement age are suggested.

Thus, providing guaranteed, comprehensive, high-quality health care services, medical treatment, and leisure to the elderly is an important issue that, if tackled, will:

•     Reduce, in the long run, the economic and psychological burden on households that have to take care of a disabled, elderly person due to the simultaneous use of the public-private partnership (Ivanov et al., 2019);
•      Ensure larger employment in the social sphere (Rodionov et al., 2018);
•     Contribute to the growth in productivity of citizens of employable ages due to their liberation from having to take care of the people suffering from dementia and elimination of psychotraumatic factors;
•     Create prerequisites for changing the services for people suffering from dementia into high-quality ones of mass proportion, making it possible to reduce the per-unit costs of services to become widely-accessible due to innovations (Zaborovskaya, 2020) and mass scale (Zhilyaeva and Rodionov, 2016).

This paper aimed to develop an approach providing comprehensive, high-quality health care services to people with dementia (CSPD), including accommodation, care, medical treatment, and leisure at a level guaranteed by the state.

The research hypothesizes that the participation of citizens and guarantees of the state are a mandatory component for providing comprehensive, high-quality services that ensure comfortable living, care, medical treatment, and leisure to the elderly, including those suffering from dementia, in cases where personal savings are established by citizens. 

In practice, the idea of forming a personal fund for the provision of the CSPD is very problematic due to the following reasons: (a) The population has very little trust in making long-term savings without being able to withdraw the deposits due to the high instability of the financial and pension systems of the country over the last 30 years; (b) So far, the citizens of Russia, especially the youth, have not overcome the low level of personal responsibility for the formation of their own healthcare capital; (c) It is essential to expand the legislative environment for the formation, use, and inheritance of a means of personal CSPD funding, as well as the conditions for obtaining the CSPD in case of disability of the person who has initiated the personal account.

The calculations show that if citizens with above-average incomes allocate 1% to the personal CSPD fund, they can receive this service in case of disease under the state's guarantees. However, citizens with a low income are unlikely to form such funds because it is far more important for them to resolve their current needs rather than view this problem, which may or may not arise, from the long-term perspective.

        Nevertheless, the approach suggested helps transfer the burden of extreme psychological and physiological stress experienced by the family members of patients with dementia to specially-trained personnel in order to reduce the costs of households and ensure rendering of qualified services that help ease the condition of elderly dementia patients. It simultaneously takes into account the possibilities of sustainable development of technologies and their scaling (Berawi, 2019), including smart home services. If this proposal is organically blended with the new pension saving plan (guaranteed retirement plan, GRP), which envisages numerous tax incentives and state guarantees, it will be possible to effectively support people suffering from dementia (RG, n.d.). Given the abilities of the state during this time of economic digitalization, it will be possible to account or the incomes of the entire families rather than individual citizens, which will help to impartially distribute the responsibilities related to the funding of social services between the family members of patients with dementia and the state (Interfax, 2020).

This research work was supported by the Academic Excellence Project 5-100 proposed by Peter the Great, St. Petersburg Polytechnic University.

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