Cost of Long Term Care to Double by 2050

Posted on May 23, 2011 by Sergio Ulloa (G+)

Aging populations will cause global spending on long-term care to double or even triple by 2050, according to a new analysis report issued by the Organization for Economic Cooperation and Development (OECD), which will be presented in Paris this week. The report, titled "Help Wanted?: Providing and Paying for Long-Term Care" reveals that half of all people who require long term care are those over 80 years old. The share of the population in this age group throughout the 34 OECD member countries is projected to reach nearly one in ten by 2050, a sharp rise from the one in 25 average measured in 2010 and less than 1 percent in 1950. This percentage of elderly citizens by 2050 will be highest in Japan and Germany, with 17 and 15 percent of their populations respectively. Spending on long-term care, currently 1.5 percent of GDP on average across the OECD, will rise in conjunction with the ageing population. Currently Sweden and the Netherlands spend the most, at 3.5 and 3.6 percent respectively of their GDP, while Portugal, the Czech Republic and the Slovak Republic spend the least. Angel Gurría, OECD Secretary-General, remarked on the findings: "With costs rising fast, countries must get better value for money from their spending on long-term care." "The piecemeal policies in place in many countries must be overhauled in order to boost productivity and support family carers who are the backbone of long-term care systems," she added. Edward Whitehouse, OECD head of pension policy analysis, singled out the UK as a country projected to have "among the highest long-term care expenditures by 2050", saying "I don't think that future governments will be able to afford that, which brings us on to how we are going to pay for that system,". Mr. Whitehouse continued, "The money has got to be found from somewhere. It is going to have to be higher taxes or cuts in public spending on other programs." The significant ageing of all OECD nations comes as traditional family ties and social support structures are breaking down. The pool of potential family carers will continue to shrink as families become smaller and more women enter the work force. Furthermore, most social policies will no longer support early retirement, meaning the elderly will have to stay in work longer and save more towards their own private pensions. The need for community involvement and resources to care for frail and disabled senior citizens is growing and will continue to do so more rapidly in OECD countries OECD governments have a difficult task on their hands: finding a balance between providing accesses to good-quality healthcare and ensuring their systems remain financially sustainable. The report presents several opportunities to begin a transition towards a more cost-effective system. For example, around 70 percent of long-term care patients currently receive their services at home, but spending in institutional care takes in 62 percent of total long term healthcare expenditure. Correcting this inefficiency, encouraging part-time work for the elderly, and paying benefits to family care workers can all be productive policies, helping to reduce the demand for expensive institutional care. The report further claims that major reforms will be needed to ensure there are enough qualified care workers in the future to meet demand. Currently, less than 2 percent of the total OECD workforce is employed in long term care provision. The OECD report suggests that countries should look be looking to attract more migrant labor as they have thus far supplied a substantial share of long-term care workers in many countries. Around one in four long term care workers in Australia, the UK and US have migrant roots while the ratio is as high as one in two in Austria, Greece, Israel and Italy. The report further claims that there is not only a need for more long-term care workers, but to increase their salaries; as the current low wage environment generates excessive turnover in vital care workers. Private insurance schemes could be used to ameliorate long-term healthcare expenses in some countries but, according to the report, they are more likely to remain a niche market product unless made compulsory. In the largest private insurance markets in the OECD, the United States and France, currently only 5 and 15 percent respectively of people aged over 40 have long-term care policies in force. The report concludes that in the face of rising costs, seeking better value for money in long-term care will be a priority. Efficiency discussions regarding long-term care expenses have thus far received relatively little attention and better evidence and proactive action based upon what works and under what conditions is urgently required..