Can the US Continue to be an Outlier in Long Term Care?

Timothy Taylor 20/07/2022

As the population ages, it seems plausible that more people will rely on long-term care.

Such care could be delivered in a variety of ways: for example, within their own home, or a specialty adapted house where care is available 24/7, or or in an institutionalized setting, and by some mixture of paid providers, volunteers, and family members. Compared with other high-income nations of the world, the US is something of an outlier when it comes to long-term care: spending less, fewer recipients of long-term care, as a result a healthier over-65 population. The figures below come from the OECD data book published a couple of years ago.

Here’s a figure showing public spending on long-term care as a share of GDP. The OECD average is 1.7% of GDP. The US spends 0.5% of GDP. The other countries that spend this little tend to have lower GDP per capita than the rest of this comparison group.

The main reason for this lower level of spending on long-term care seems to be that a much smaller share of the US population is receiving long-term care. For the OECD countries with data available, an average of 2.3% of the population is receiving long-term care; for the US, it’s just 0.4%.

In turn, a main reason why the share of over-65 Americans receiving long-term care is so low is because, compared with other countries, the American cohort feels it’s in pretty good physical shape. In the US and Canada, about 80% of the over-65 population reports being in good or very good health. For comparison, less than half of the over-65 population in the other OECD countries is reported being in good or very good health.

It’s wise to take these kinds of international comparisons with a bit of skepticism. For example, the figure above shows public spending on long-term care. The Congressional Budget Office estimated that the value of informal care provided in the US without compensation by family and friends was slightly larger than the amount of paid-for care. But other countries presumably have some long-term care that is informally provided, too. One might also wonder if Americans (and Canadians) over-65 are actually in better health than their counterparts in other countries, or just more likely to say that they are in better health.

However, the US is falling so far below the average in its spending on long-term care and number of recipient of long-term care, and so far above the average in self-reported health status for the over-65 population, that it seems unlikely that either a greater prevalence of informal care or a greater degree of optimism about health status explains the difference.

As I argued back in a previous article, provision of long-term care is just one of many adjustments that countries will need to make in response to aging populations. The easy, costly, and unsatisfactory answer is to make it quite easy for elderly people to qualify for receiving long-term care in an institutional setting. The less costly, harder-to-implement, and more satisfactory answer is to encourage ways for people to receive only the degree of assistance they really need, so that they can live in their homes or their communities as long as possible while being supported by family and friends, but still have a backstop of public support for institutional care when needed.

The ”baby boom generation” refers to those born from roughly 1945-1960. Thus, members of that group will be turning 65 over the 15 years from 2010 to 2025, and will be reaching 80 over the 15 years from 2025 to 2040. As that generation ages, designing and implementing long-term care policies will be a continual work in progress.

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Timothy Taylor

Global Economy Expert

Timothy Taylor is an American economist. He is managing editor of the Journal of Economic Perspectives, a quarterly academic journal produced at Macalester College and published by the American Economic Association. Taylor received his Bachelor of Arts degree from Haverford College and a master's degree in economics from Stanford University. At Stanford, he was winner of the award for excellent teaching in a large class (more than 30 students) given by the Associated Students of Stanford University. At Minnesota, he was named a Distinguished Lecturer by the Department of Economics and voted Teacher of the Year by the master's degree students at the Hubert H. Humphrey Institute of Public Affairs. Taylor has been a guest speaker for groups of teachers of high school economics, visiting diplomats from eastern Europe, talk-radio shows, and community groups. From 1989 to 1997, Professor Taylor wrote an economics opinion column for the San Jose Mercury-News. He has published multiple lectures on economics through The Teaching Company. With Rudolph Penner and Isabel Sawhill, he is co-author of Updating America's Social Contract (2000), whose first chapter provided an early radical centrist perspective, "An Agenda for the Radical Middle". Taylor is also the author of The Instant Economist: Everything You Need to Know About How the Economy Works, published by the Penguin Group in 2012. The fourth edition of Taylor's Principles of Economics textbook was published by Textbook Media in 2017.

Can the US Continue to be an Outlier in Long Term Care?