Can Slovenia Make Long-Term Care Financially Sustainable as Its Population Ages?

Slovenia has solved one long-standing long-term care problem by creating a dedicated financing mechanism. It has not, and realistically could not, remove the underlying economic challenge. The country is introducing broader long-term care entitlements at the same time as the population most likely to need intensive support is expanding and the proportion of people of conventional working age is projected to decline.

The scale of that demographic transition is substantial. Recent population projections indicate that people aged 65 and over could account for around three in ten Slovenian residents by the middle of the century, while the share aged 80 and over is expected to rise particularly strongly. The financial implications extend beyond long-term care into pensions, healthcare and the labour market. Within the Slovenia Ageing, Long-Term Care & Community Support Knowledge Hub, this makes sustainability one of the central questions connecting almost every part of the reform.

Slovenia enters this period with a stronger financing architecture than it had before the Long-Term Care Act, ZDOsk-1. A compulsory long-term care contribution has been collected since July 2025, the state budget can provide additional financing, and the new system separates recognised long-term care entitlements more clearly from accommodation costs and from healthcare financed through compulsory health insurance.

But sustainable financing cannot mean simply collecting enough money to meet this year’s expenditure. A durable system has to maintain the value of entitlements, secure enough workers to deliver them, distribute capacity geographically, use institutional and community services appropriately, prevent avoidable dependency and adjust when evidence shows that costs or demand are moving differently from forecasts.

The central question is therefore not whether ageing makes Slovenian long-term care “unaffordable”. It is whether the country can continuously align rights, resources and delivery capacity as the demographic structure changes.

Slovenia has moved long-term care onto a more explicit financial foundation

Before the current reform, long-term support in Slovenia was financed and organised through a mixture of health insurance, social protection, municipal responsibilities, individual payments and informal family care. The fragmentation was not only administrative. It made the total cost of dependency difficult to see because financial responsibility was distributed across different systems and households.

ZDOsk-1 changes that architecture by establishing compulsory long-term care insurance and a dedicated contribution. Since 1 July 2025, employees generally contribute 1% of gross salary and employers another 1%. Pensioners contribute 1% of net pension, while self-employed people and farmers with a registered activity generally contribute 2% of the relevant contribution base.

The contribution is accompanied by a state-budget financing route of up to €190 million annually. Government financial planning anticipated approximately €650 million in contribution revenue during 2026 as the system moved into fuller implementation.

This matters because long-term care now has a visible recurring revenue stream rather than relying solely on annual competition within general public expenditure.

The architecture also clarifies important boundaries. Long-term care services within institutional provision are financed through compulsory long-term care insurance, while residents remain responsible for accommodation and food within the applicable pricing framework. Healthcare and rehabilitation that belong to the healthcare system continue to be financed through compulsory health insurance.

Those distinctions are essential to financial governance. Without them, cost can migrate between systems without anyone being able to determine whether spending has actually fallen or merely moved elsewhere.

Demography changes both sides of the financial equation

Population ageing is often described primarily as a demand problem: more older people will mean more people requiring care. That is only half of the equation.

Ageing also changes the population from which contributions, taxation and care workers are drawn. Slovenia’s latest demographic projections indicate that the share of people aged 65 and over could rise from around a quarter of the population around 2030 to more than 30% around the middle of the century. The population aged 80 and over, for whom dependency rates are generally higher, is projected to rise even faster.

At the same time, the share aged 15–64 is projected to fall. That matters even though not everyone in that age range is employed and people increasingly work beyond traditional age boundaries. The broad direction remains important: public systems will need to support a larger older population from a relatively smaller potential workforce.

The implications reach beyond the long-term care contribution. Slovenia must finance pensions and healthcare while employers across the economy compete for labour. Long-term care therefore faces both fiscal and productive constraints.

A government could theoretically increase spending significantly, but money alone cannot deliver 110 monthly hours of home-based support to a category 5 user if no qualified worker is available to provide them.

This is why workforce planning is also financial planning. The sustainable capacity of long-term care depends partly on how many people can be recruited, trained and retained and how effectively their time is converted into meaningful support.

Sustainability is about preserving the entitlement, not merely controlling expenditure

A narrow approach to financial sustainability asks how expenditure can be contained. A social-insurance system requires a broader question: how can the entitlement remain credible as need changes?

Slovenia’s reform gives eligible people defined rights. Following assessment through the long-term care entry points at Centres for Social Work, people are allocated to one of five categories according to the extent of their dependency. Home-based long-term care currently provides 20, 40, 60, 80 or 110 hours of direct service each month across categories 1 to 5 respectively.

Once such entitlements exist, sustainability has at least four dimensions:

• financial sustainability: sufficient revenue to meet legitimate expenditure;
• workforce sustainability: enough appropriately skilled people to convert funded rights into real services;
• service sustainability: a provider network capable of delivering support across different parts of Slovenia; and
• social sustainability: public confidence that contributions produce fair and meaningful protection when dependency occurs.

Weakness in any one can undermine the others. A financially balanced scheme with long waits or inaccessible provision is not operationally sustainable. Generous service promises without sufficient revenue are not fiscally sustainable. A model that depends on families absorbing every capacity gap may reduce formal expenditure while transferring the cost into unpaid labour, reduced employment and caregiver health.

Financial sustainability should therefore be judged alongside quality, safety and governance in ageing-well services, rather than as an independent accounting objective.

A household illustrates why cost cannot be viewed through one budget

Consider a retired couple living outside Ljubljana. Both receive pensions. One develops Parkinson’s disease and gradually needs increasing help with dressing, transfers, household activities and daily routines. The other spouse initially provides most support.

From the perspective of formal public expenditure, this can appear inexpensive. But the apparent saving may depend on substantial unpaid care. The supporting spouse stops attending community activities, experiences back pain and increasingly struggles with interrupted sleep.

As needs increase, the person is assessed for long-term care and begins receiving home-based support. Public expenditure rises because compulsory long-term care insurance is now paying for recognised services.

That does not necessarily mean the system has become less economically sustainable.

If formal support allows the couple to remain safely at home, protects the caregiver from physical exhaustion and delays an unwanted move into institutional care, the relevant calculation extends beyond the cost of the home-care hours. It includes health consequences, family sustainability, the potential cost of residential provision and the person’s own outcomes.

If the couple had been younger and the caregiver still employed, the economic effects could also include lost earnings, lower tax receipts and withdrawal from the labour market.

The scenario demonstrates why a sustainable system cannot treat informal care as a free substitute for formal provision. Family support has enormous social value, but its economic cost does not disappear merely because it is absent from the long-term care insurance account.

Contribution revenue creates stability but remains sensitive to the economy

A dedicated contribution gives Slovenia an important advantage: revenue is linked explicitly to the purpose for which it is being collected. It makes the financing of long-term care more transparent and creates a social-insurance relationship between contribution and protection.

It does not make revenue immune from economic change.

Contribution receipts depend partly on employment, wages, pensions and the wider contribution base. Economic growth can strengthen revenues, while weak employment or slower wage growth can constrain them. Demographic change can alter the balance between contributors and beneficiaries. Migration can affect both the labour force and future entitlement patterns.

The state-budget component provides another layer of support, but general taxation faces its own demands from healthcare, pensions, housing, education, infrastructure and other public priorities.

Slovenia has therefore incorporated a sustainability mechanism requiring periodic examination of the long-term financial position and possible measures to maintain it. This is important because a financing formula set at the beginning of a major reform should not be assumed to remain perfectly calibrated for decades.

The stronger governance approach is adaptive rather than reactive: monitor revenue, eligible population, service utilisation, workforce costs and unmet demand together and identify structural divergence before it becomes an immediate funding problem.

Organisations examining comparable questions can use the Digital Twin Scenario Modeller to explore how changes in demand, workforce and service capacity interact. It is not a Slovenian public-finance model, but the scenario principle is relevant: long-term sustainability is better tested across several variables than through a single expenditure forecast.

The possibility of future co-payments needs careful interpretation

Slovenia’s legislation provides a further financial safeguard. If the planned financing sources prove insufficient, co-payments can potentially be introduced from 2028 under the statutory arrangements.

This is a contingency within the financing framework, not a current general charge for long-term care services. The distinction is important.

Under the present statutory design, potential future co-payments could reach 10% of the value of specified long-term care services, including home-based and institutional long-term care, while a higher percentage can apply to services for strengthening and maintaining independence. Whether and how such provisions are activated depends on the future financial position and the legal mechanism in force at that time.

From a sustainability perspective, co-payment can share part of future expenditure with users. From an access perspective, however, it can also create financial barriers, particularly for people living on lower incomes or requiring intensive services for long periods.

That creates an important governance test. The financial effect cannot be evaluated only by calculating additional revenue. Decision-makers would also need to understand whether user charges change take-up, delay support, increase reliance on relatives or produce higher costs elsewhere.

A charge that reduces formal long-term care expenditure but leads to avoidable deterioration or hospital use may simply transfer cost between systems.

The wider lesson is that every financing lever changes behaviour. Contribution rates, co-payments, cash benefits and service entitlements all influence decisions by users, families, providers and workers. Sustainable design therefore requires behavioural as well as accounting analysis.

Home-based care can support sustainability, but it is not automatically cheaper

Slovenia’s reform places significant emphasis on strengthening support in the community so that people can remain at home where that is their preference. This is consistent with both personal choice and a broader shift away from assuming institutional care is the default response to dependency.

Home-based support can also use infrastructure differently. Accommodation remains the person’s own responsibility, and services can be targeted around assessed needs rather than providing a complete residential environment.

Yet it would be misleading to assume that home care is always the lower-cost option.

Travel time, dispersed settlements, multiple daily visits, lone working, fragmented schedules and high-intensity needs can make home provision resource-intensive. For somebody requiring frequent support throughout the day and night, an institutional setting may achieve staffing efficiencies that cannot be replicated across separate households.

The financial question is therefore not “home or institution: which is cheaper?” It is which arrangement best meets the person’s needs and preferences with a sustainable use of resources.

Consider a category 4 user living in a rural municipality. Eighty hours of monthly home-based long-term care may be formally funded, but the provider has to travel significant distances between users. The nominal hour of care therefore requires additional workforce time that is not spent face-to-face.

If several people in the same area require support, better route planning and workforce deployment may improve productivity. If demand remains sparse, the system may need to accept a higher delivery cost to maintain equitable geographical access.

This is where home-care workforce and scheduling become questions of national sustainability rather than merely provider administration.

Efficiency should not be confused with forcing every geography into the same cost model. Rural equity may legitimately cost more.

Workforce economics may become the decisive constraint

Long-term care is labour-intensive. Personal care, transfers, supervision, relationship-based support and many nursing activities cannot simply be automated away. As Slovenia’s population ages, the sector will be competing for workers in an economy where demographic change is itself reducing labour availability.

This makes wages, conditions, migration, training and productivity central to financial sustainability.

Pay that is too low may appear to control unit costs but contribute to vacancies, turnover and dependence on temporary solutions. Recruitment expenditure, overtime, instability and lost capacity can then increase the real cost of provision. Conversely, higher employment costs need to be financed and can increase pressure on the insurance system.

Slovenia’s current implementation phase demonstrates this tension directly. Temporary measures adopted in September 2026 include additional payments intended to support workers involved in establishing and delivering the new long-term care system, alongside measures designed to increase flexibility while capacity develops. These are transitional interventions rather than evidence that the underlying workforce challenge has been permanently resolved.

Longer-term sustainability will require a workforce proposition capable of attracting people into care, developing their competence and retaining them.

International recruitment can form part of that response, but it carries its own requirements: language support, recognition of qualifications, integration, supervision and ethical recruitment. Migration also cannot be assumed to provide an unlimited workforce in a European region where many countries are ageing simultaneously.

The Predictive Workforce Risk Module can help organisations structure analysis of vacancy, turnover, retention and continuity risks. For Slovenia, the wider principle is that workforce indicators should be treated as leading financial indicators. Persistent vacancies today may signal service and expenditure pressure tomorrow.

Productivity in care needs a more intelligent definition

As costs rise, productivity inevitably becomes part of the sustainability discussion. In long-term care, however, crude productivity measures can be counterproductive.

A worker completing more visits in a shift may appear more productive. If shorter visits reduce continuity, miss deterioration or remove opportunities to maintain a person’s abilities, downstream need can increase. Equally, excessive administrative processes can consume skilled time without improving the person’s experience or system assurance.

Productivity should therefore mean achieving more useful care capacity from available resources without degrading quality.

That can include better scheduling, reducing duplicated recording, improving information exchange, matching skill level to task, using digital systems to remove avoidable administration and enabling specialists to support several teams rather than repeatedly solving the same problem in isolation.

Technology can contribute substantially here, but its strongest financial value may come from redesigning workflow rather than replacing workers.

A mobile record that prevents staff entering the same information into several systems can return time to care. Reliable interoperability can reduce repeated assessments. E-care can supplement some forms of reassurance or monitoring where the person wants it. Digital scheduling can reduce unnecessary travel.

This is why automation, workflow and operational productivity need to be assessed in relation to the whole care process.

The Digital Transformation Readiness Assessment offers a framework for examining whether governance, digital capability, workforce readiness and resilience are strong enough to translate technology investment into operational benefit. It does not determine Slovenian investment priorities, but it illustrates the distinction between buying technology and redesigning care around it.

Prevention is a financial strategy only when it changes real trajectories

Healthy ageing and prevention are frequently presented as answers to the rising cost of long-term care. The argument is directionally sound but can easily become overstated.

Not all dependency is preventable. People with progressive neurological conditions, severe disability or advanced frailty may require substantial support despite excellent prevention. Longer lives can also mean people survive conditions that previously shortened life and therefore live for longer with support needs.

Nevertheless, delaying avoidable functional decline across a population can have meaningful consequences.

Slovenia’s inclusion of services for strengthening and maintaining independence within long-term care is therefore financially relevant as well as person-centred. Mobility support, occupational intervention, appropriate equipment, post-diagnostic support and environmental adaptation can help some people maintain abilities that would otherwise be lost.

The important test is evidence.

Counting preventive contacts or professional hours does not establish that dependency has been delayed. Sustainability analysis needs to examine trajectories: changes in functional ability, movement between long-term care categories, avoidable complications, hospital use, caregiver sustainability and the duration for which people maintain meaningful independence.

This connects prevention with outcomes, independence and community inclusion. A financially sustainable system should understand not only what it spends, but what capability that spending protects.

Institutional care remains part of a sustainable system

A stronger home-based system should not lead to institutional long-term care being treated as evidence of policy failure.

For some people, particularly those with very high dependency, complex health-related needs or an unsuitable home environment, institutional provision may offer the most appropriate and sustainable arrangement. Some people may also prefer it.

Slovenia’s reform changes the financial relationship by covering recognised long-term care services within institutions through compulsory long-term care insurance, while residents pay accommodation and food costs within the relevant rules. Healthcare and rehabilitation remain financed through compulsory health insurance where they belong to the health system.

The sustainability challenge is to develop the right balance of capacity.

Too little institutional capacity can leave people in inappropriate settings or place excessive pressure on households. Too much can lock capital and workforce into a model that does not reflect growing preference for support at home.

Capacity planning therefore needs to follow changing dependency, geography, housing conditions and user preference rather than an ideological target for either institutionalisation or deinstitutionalisation.

It also needs to recognise that institutional providers and home-based services compete for many of the same workers. Expanding one part of the system without considering the workforce consequences for another can create nominal capacity without usable capacity.

Geographical inequality has a financial dimension

National entitlement does not automatically produce nationally consistent access. Slovenia’s municipalities differ in population density, age structure, transport, existing service infrastructure and proximity to available workers.

A densely populated urban area can often organise home-based services more efficiently than a dispersed rural area because staff spend less time travelling. Specialist expertise is also easier to concentrate where there is sufficient demand.

If reimbursement or resource allocation ignores these differences, providers in more difficult geographies may struggle to sustain services. If funding fully reflects every local cost without effective scrutiny, however, the system can lose incentives to improve operational efficiency.

This creates a classic sustainability problem: how to recognise legitimate cost variation without accepting avoidable inefficiency.

Imagine two providers supporting the same number of people with similar assessed dependency. One operates in a compact urban area; the other serves villages spread across a large territory. Comparing cost per direct-care hour without examining travel and deployment would make the rural provider appear less efficient even if its operation were well managed.

A more useful assessment separates structural cost from controllable performance. It examines travel patterns, vacancy levels, continuity, missed or delayed services, use of digital support, local workforce availability and outcomes.

This is where national governance needs enough granularity to see variation rather than relying solely on averages. The purpose is not to eliminate all difference but to understand it.

The principle aligns with quality data, KPIs and performance metrics: information becomes useful when it explains why performance differs and what can realistically be changed.

Cash benefits create flexibility but change the economics of care

Slovenia’s long-term care architecture does not rely solely on services delivered in kind. The cash benefit provides an alternative for eligible people who choose that route, with the amount linked to their long-term care category.

Cash benefits can support autonomy and allow households greater flexibility in organising assistance. They can also recognise that formal service networks may not be the preferred or immediately available solution in every circumstance.

From a financial perspective, however, cash and in-kind provision create different incentives and risks.

A cash benefit gives the public system greater predictability over the direct amount paid for an individual. But the payment does not necessarily represent the full economic cost of their care. Relatives may provide substantial unpaid assistance around it, or households may purchase additional support privately.

This means comparisons between cash and services need to avoid concluding that one model is inherently more efficient simply because its public expenditure is lower.

Consider an eligible older person whose daughter reduces her working hours to provide daily support alongside the cash benefit. The arrangement may reflect genuine family preference and work well for both people. It may alternatively be the only practical option because formal services are unavailable locally.

The financial figures can look identical in both situations while the underlying quality and sustainability are very different.

Good governance therefore needs to examine choice, adequacy, caregiver burden and service availability around the payment, not merely the benefit expenditure itself. The principle of involving families and advocates is especially important where relatives are carrying a significant share of practical support.

Separate funding systems require shared financial intelligence

One of the most important risks in evaluating long-term care sustainability is looking only at the long-term care account.

Slovenia deliberately retains different financing responsibilities for long-term care, healthcare, municipal social services and individual living costs. These boundaries are legitimate, but the person moves across them.

A reduction in home-based support might reduce long-term care expenditure while increasing hospital admissions. Insufficient rehabilitation could increase later dependency. A lack of suitable housing may make institutional care necessary earlier. Inadequate support for an informal caregiver may result in both people requiring healthcare.

Conversely, spending more in one system can produce benefits elsewhere.

This does not mean every euro of healthcare, housing or social expenditure should be pooled into a single budget. Slovenia’s institutional architecture does not require that. It does mean that national financial intelligence should examine interactions across those boundaries.

For example, a significant rise in hospital use among people waiting for long-term care would be relevant to the assessment of system capacity even though the immediate expenditure appears in healthcare. Repeated reassessment into higher dependency categories may indicate changing population need, but it could also prompt investigation into whether rehabilitation or preventive support is reaching people early enough.

This is the practical importance of interoperability and system integration. Better information exchange is not only a clinical or operational issue. It can improve understanding of where public costs are actually being created.

Financial governance needs to distinguish price, volume and complexity

As Slovenia gathers several years of operational data, headline expenditure growth will become less informative on its own.

Higher spending can result from more eligible people entering the system, people moving into higher categories, wage increases, greater utilisation of existing entitlements, new provider capacity, inflation or changes in the mix between home and institutional care.

Those causes have different policy implications.

If expenditure rises primarily because previously unsupported people are finally exercising a legitimate new entitlement, describing the increase as overspending would misunderstand the purpose of the reform. If costs rise because workforce turnover is creating repeated recruitment and agency expenditure, the response is different. If regional variation reflects inadequate provider capacity, a national average may hide the problem entirely.

A mature sustainability dashboard should therefore connect financial and operational evidence, including:

• contribution and budget revenue against expenditure;
• numbers of insured people, applicants, eligible users and actual service users;
• distribution across dependency categories and types of entitlement;
• unit costs, workforce costs, vacancies and available provider capacity;
• waiting or implementation time between recognised entitlement and effective support;
• regional variation in access and delivery; and
• quality, independence and continuity outcomes alongside expenditure.

The Quality Dashboard Builder provides a practical framework for organisations exploring how financial, workforce and quality measures can be brought into one assurance view. It is not a substitute for Slovenia’s national reporting arrangements, but the governance principle is transferable: sustainability cannot be understood through finance data alone.

Public confidence is an economic asset

Compulsory social insurance depends partly on legitimacy. People contribute while healthy or independent because the system is intended to protect them if qualifying dependency develops.

If contributors believe that formal rights cannot be accessed in practice, support for the financing model can weaken. The same can happen if people cannot understand what the contribution covers, why they still pay some living costs in an institution or why healthcare and long-term care are financed differently.

Transparency therefore has economic importance.

People need clear information about eligibility, the distinction between insurance-funded care and other costs, the choices between forms of long-term care and the circumstances under which arrangements may change.

The system also needs to be transparent about uncertainty. Demographic and expenditure projections are scenarios rather than guarantees. Future governments may need to adjust financing as evidence develops. Explaining that adaptive process is more credible than implying that a contribution rate established during implementation can settle financing for several decades.

Accountability also requires evidence that additional resources are improving access and outcomes rather than simply increasing expenditure. That is where quality assurance, governance and oversight connect directly with the social legitimacy of the insurance model.

The strongest sustainability strategy uses several levers together

There is unlikely to be one financial mechanism capable of absorbing Slovenia’s demographic transition.

Increasing contributions can generate revenue but affects workers, employers, pensioners and the self-employed. Greater state-budget support competes with other priorities. Co-payments can raise funds but may affect access. Holding down provider prices can weaken workforce recruitment. Relying more heavily on families can hide rather than eliminate economic cost.

The more resilient strategy therefore combines several approaches.

It protects a broad and transparent financing base while improving the productivity of delivery. It invests in workforce retention rather than treating vacancies as a temporary operational inconvenience. It develops home-based care without assuming home provision is always inexpensive. It retains sufficient institutional capacity for people who need it. It supports prevention where evidence shows functional benefit. It uses technology to remove waste and strengthen coordination rather than merely digitising existing bureaucracy.

Above all, it treats financial sustainability as an iterative governance task.

Slovenia’s requirement to review the system’s longer-term financial position provides a mechanism for that adaptation. The quality of those reviews will depend on whether they combine demographic projections with real implementation evidence rather than relying primarily on aggregate spending.

Organisations examining the strength of similar oversight arrangements can use the Governance Maturity Assessment to structure questions around accountability, risk, evidence and decision-making. For a national long-term care system, the underlying principle is the same at a much larger scale: leaders need sufficiently early evidence to act before a known pressure becomes an unmanaged problem.

Slovenia’s experience offers a broader international lesson

Many countries face the same fundamental tension: populations are living longer, the number of people at ages associated with greater long-term care need is increasing, families are changing, and the workforce required to provide formal care is itself constrained.

Slovenia’s answer is institutionally specific. Its compulsory long-term care insurance, contribution structure, Centres for Social Work, Health Insurance Institute of Slovenia, municipal responsibilities and relationship with compulsory health insurance cannot simply be transplanted into another country.

The transferable lesson lies in making the financing problem explicit.

Fragmented systems can appear cheaper because some costs remain hidden in healthcare, household expenditure or unpaid family labour. Establishing a dedicated entitlement and financing stream reveals more of the real demand. Expenditure may therefore rise partly because previously obscured need has become visible.

The policy response should not be to interpret visibility as failure. It should be to use better information to determine what combination of financing, prevention, workforce, service design and family support can sustain the entitlement over time.

Slovenia’s next phase will therefore be as important as the initial reform. Creating the insurance system establishes the architecture. Maintaining its financial and social legitimacy as the population ages will require continuous adjustment.

Conclusion

Slovenia has entered demographic ageing with a substantially clearer long-term care financing structure than it possessed before ZDOsk-1. The compulsory contribution, state-budget role and clearer division between long-term care, healthcare and accommodation costs give the country a platform from which to manage future demand. They do not make the demographic arithmetic disappear.

Financial sustainability will depend on what happens around the financing mechanism. Slovenia needs sufficient workers to deliver funded entitlements, viable provider capacity across different geographies, effective home and institutional pathways, credible prevention and rehabilitation, and information capable of showing whether expenditure is producing independence, continuity and quality.

The strongest approach is therefore neither simple cost containment nor an assumption that contributions can rise indefinitely. It is adaptive stewardship: understanding how demography, eligibility, workforce, prices, utilisation and outcomes are changing and adjusting the system before those pressures become disconnected.

That also protects the central purpose of the reform. Long-term care insurance exists to provide social protection when sustained dependency occurs. Its financial model will remain legitimate only if people can see that contributions translate into meaningful support rather than nominal rights.

Slovenia’s long-term challenge is consequently larger than balancing a long-term care account. It is to maintain a settlement between generations in which adequate care remains fundable, deliverable and trusted as the structure of the population changes.