The world population is aging. In the next few decades, a much larger number of people are going to need long-term care.
The United States, like most countries, doesn’t really have even a preliminary set of guidelines for how this might best happen. Here’s some background information from Health at a Glance 2023: OECD Indicators (November 2023), specifically from “Chapter 10: Aging and Long-Term Care.”
As a starting point, here’s a figure showing the share of the population that is 80 or older, with actual data for 2021 and then projected to 2050. These projections should be viewed as fairly solid: after all, anyone who is going to be 80 or older in 2050 was already born in 1970 or earlier, and projecting life expectancy for the group of people who are already in their 50s or older is fairly straightforward
For the OECD countries as a whole, the projection is roughly a doubling in the share of the over-80 age group, from about 5% at present to about 10% in 2050. For countries with very low birth rates, like Korea, Japan, and Italy at the top of the table, the over-80 share of population will be much larger, reaching or exceeding 15% of the total population. The US will also experience roughly a doubling of the over-80 share of the population, but from a lower base than the average country listed here.
The current models that countries have for long-term care differ quite a bit. To illustrate the point, consider current spending on care as a share of GDP. In the Netherlands, Norway, Sweden and Denmark, total spending on long-term care is already more than 3% of GDP.
Here’s how the OECD explains these differences:
This variation partly mirrors differences in the population structure, but mostly reflects the stage of development of formal LTC systems, as opposed to more informal arrangements based mainly on care provided by unpaid family members. … Across OECD countries, four out of five dollars spent on LTC come from public sources. Across OECD countries, around half of health and social LTC spending in 2021 occurred in nursing homes. … In most OECD countries, these providers account for the majority of LTC spending. On average, around one-fifth of all LTC spending was used for professional (health) care provision at home. Other LTC providers include hospitals, households – if a care allowance exists that remunerates the informal provision of such services – and LTC providers with a clear social focus. These service providers each account for around one-tenth of total LTC spending across OECD countries. …Without public financial support, the total costs of LTC would be higher than median incomes among older people in most OECD countries. On average across OECD countries, institutional care for severe needs would cost more than twice the median income among older people …
When it comes time for a certain share of the elderly to need long-term care, a rough measure of the capacity of a nation’s long-term care system is the number of beds. The figure shows the number of long-term care beds per population of 1,000 over age 65. Some countries, like Japan and Korea, have a large share of long-term care beds inside hospitals. But for most countries shown here, including the United States, most long-term care beds are not in hospitals. The US is substantially below the international average in the number of beds.
Compared with these other countries, the US both spends less on long-term care as a share of GDP and has lower number of long-term care beds per capita because a much smaller share of Americans aged 65 or older end up in long-term care institutions: the average across the 28 OECD countries is 11.5%, while the US share is 1.7%.
These differences seem too large to reflect underlying differences in health. Instead, they reflect a mixture of social expectations and the design of government programs to support the elderly. The US, along with Canada, Japan, and a few others, has so far managed to have only a small proportion of the elderly in long-term care institutions.
Of course, many older people would prefer to live at home as long as possible, before moving to a long-term care institution, and many countries have policies to support this option. In practice, the live-at-home option also ends up relying on whether a family member can be a regular care-giver, either weekly or even daily. With lower birthrates in the last few decades, and a higher share of women in the workforce, relying on care from a family member is likely to be harder in the future. As the over-65 and especially the over-80 population rises in the US in the next few decades, the existing low use of long-term care institutions in the US is likely to come under severe stress.
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.