We know we’ll need to spend more on long-term care, but how are we going to do it?

This is the first time I ever write a blog post about my work. I am a researcher and it seems sensible to use my first “work” post to explain the questions that I have now spent many years trying to help answer, together with my colleagues.

Here it goes.

The future is, by definition, uncertain. But if there is one thing we can be quite sure about, is that over the next twenty years, as a society, we will need to spend considerably more on long-term care than we do today. This is, of course, the result of many more people living longer lives which is a great achievement and mostly a great opportunity.

It is also a major challenge. More people reaching older ages also means that more people will need long-term care and, probably, for longer. The most recent projections for EU countries suggest that, given current demographic trends, needs profiles and levels of use of formal care, public long-term care expenditure would need to more than double in most countries.

The ideal solution would be to moderate the need for care: healthy older people do not require long-term care, and there is great potential for improving prevention and management of chronic illnesses and their disabling consequences. However, it does not look like health improvements will happen fast enough to be able to rely on a “compression of morbidity” to compensate for the increases in the future numbers of people requiring long-term care in future years. Therefore, as a society, we will need to increase the share of resources used to fund long-term care.

So where will these additional resources for long-term care come from?

At a time when public expenditure is under enormous strain, with many countries trying to reduce, or at least contain, their welfare spending, it may become more difficult for public spending on long-term care to expand to keep pace with the increase in needs. And this raises very important questions, as if public spending does not keep up with increased costs, it means a higher proportion of the costs of care will be paid by individuals needing care and their families. This will happen either in kind (providing what we call informal care), or through paying privately for care services which, if care is needed for a very long time may have a very serious effect on the family’s resources and wellbeing.

Public financing of long-term care offers important advantages over private financing in most developed countries: the risk of facing high costs of long-term care are shared among the entire population, people are covered for this risk (especially if they are not well-off) and resources are redistributed so that those with higher resources tend to contribute more that those with fewer resources.

In long-term care financing policy discussions we spend a lot of time discussing the best mechanisms to finance care publicly. But there is a much more fundamental question, which is whether there really is a constraint in the ability of public funding to keep pace with increased future long-term care expenditure? And if that is the case, can we find new solutions to cover the gap in public funding that combine the advantages of public financing, with the potential ability of the private sector to innovate, adapt to changing environments and raise more funds?

And, perhaps the most difficult question of all, do we trust public and private institutions enough to put a bigger part of our financial future in their hands?

These are hefty questions. And there aren’t straightforward answers. But quite a few of us, in various countries, are working on it.

boira

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One thought on “We know we’ll need to spend more on long-term care, but how are we going to do it?

  1. Pingback: Longevity: opportunities, honesty and planning | Adelina's blog of blogs

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