Global Perspectives on Financing Long-Term Care

Abstract

The vast majority of the world's nations will experience a dramatic change in the structure of their "population pyramids" over the next forty years. Longer life expectancies and decreasing birth rates in all but a handful of countries will result in an enormous increase in the number and percentage of elderly persons relative to the non-elderly population, with elderly populations tripling or quadrupling between 2000 and 2050 in many nations. In less than twenty-five years, some 1.5 billion of the world's 8 billion persons will be 65 older, compared to fewer than 500 million today. The number of persons 80 and over will increase by more than 500% during that period. Sixty-two percent of these "oldest old" will be women.

As the world's population ages, and its old get even older, industrialized and developing nations alike must re-evaluate social, economic, and cultural institutions that historically have had little need to account for particularly large elderly populations. Global aging has the potential to generate a crisis with regard to the financing of long term care for elderly individuals who are disabled or significantly compromised by disease or frailty. Although most elderly persons do not need long term care at the level typically provided in a skilled nursing home or similar residential institutions, as a group they suffer disproportionately from conditions and diseases that mean they will need assistance to live independently. Some will become debilitated enough that they must in institutional facilities such as "aged care" or "nursing" homes that can provided intense, around-the-clock assistance and medical care.

Until recently, very few nations have been confronted with significantly large enough populations of elderly persons in need of long term care to perceive long term care financing as a matter imperative - a lack of immediacy has kept the issue under the radar of laypersons and politicians alike. But as the number and percentage of elderly has crept upward in both the industrialized and developing world, the need to address deficiencies in the way in which long term care is financed and delivered has become paramount. Long term care is a product that, until very recently, has not been bought or sold. Family caregiving of the elderly is the norm in virtually all of the developing and developed world, and in nations where it is not existing resources have until recently been largely adequate to serve the relatively small elderly population. It is only in the last fifteen years or so that the demographic "sea change" described above has begun to threaten public resources and private lives so significantly as to merit closer scrutiny of the inability of social welfare and insurance systems to support long term care for the elderly under current funding schemes.

This paper describes how three particular nations - Japan, the United States, and Italy - currently deliver and pay for the principal components of "long term care" for those elderly who may need it, and suggests how these mechanisms may or may not offer solutions to the world's future need to provide quality of life to all its citizens, including the oldest of them. It proposes what should be regarded as the minimum components of an economically sustainable, gender-neutral, and inter-generationally just system of providing long term care to the disabled elderly.

Keywords: long-term care, population aging, older people, financing, healthcare, disability, care-giving, demographics