Population aging is accelerating across OECD countries, significantly increasing the demand for long-term care (LTC). According to the OECD, the proportion of individuals aged 80 and above is expected to double by 2050, which will intensify the need for LTC services. Many older adults face difficulties performing activities of daily living (ADLs), such as bathing and eating, and instrumental activities of daily living (IADLs), such as managing finances and household chores. However, access to affordable care remains a critical issue, particularly for those with lower incomes and severe needs.

Currently, LTC costs represent a significant financial burden on individuals. Out-of-pocket costs amount to an average of 70% of an older person’s median income across OECD countries. In some nations, institutional care is entirely unaffordable for those with severe LTC needs, as costs exceed their total income. High expenses force many individuals to allocate most of their income to care services, leaving little for basic necessities such as housing, food, and clothing. Public benefits and services help reduce poverty risks, but their impact varies widely among countries. In some cases, these benefits lower poverty risks by over 70 percentage points, while in others, their effect is minimal.

With LTC demand projected to rise by more than one-third by 2050, budget pressures on governments will increase. Current LTC expenditures are expected to multiply by 2.5 times by 2050, and if policies are implemented to improve benefit adequacy, costs could quadruple. Policymakers must address these challenges while ensuring financial sustainability.

The OECD suggests three key policy options to improve LTC systems:

1. Expanding Funding Sources – Countries can explore alternative funding mechanisms beyond labor income, including LTC insurance and private contributions. Some nations, such as Germany and Luxembourg, have already implemented pre-funding mechanisms.
2. Improving Benefit Targeting – Prioritizing individuals with the highest needs and lowest incomes can enhance fairness and ensure resources are allocated efficiently. Countries like Italy and Spain have adopted this approach to balance spending with social protection.
3. Enhancing Efficiency and Cost Containment – Implementing preventive measures, such as home visits and rehabilitation programs, can reduce care dependency. Additionally, integrating technology and optimizing workforce management can improve productivity and service quality.

In conclusion, the rising demand for LTC requires immediate policy action to secure sustainable and equitable care systems. Without intervention, the economic strain on individuals and governments will intensify, exacerbating poverty and social inequality among aging populations.

Is Care Affordable for Older People? OECD