Long term care spending around the world – Healthcare Economist

A great article by Gruber et al. 2023 analyzes the evolution of long-term care in ten countries: Canada, Denmark, England, Germany, Italy, Japan, the Netherlands, Singapore, Spain and the United States. Long-term care is divided into three categories: institutional care, formal home care, and informal care. For the 10 countries examined, the paper finds that:

  • National spending on LTC. Spending on long-term care represents 2.1% of GDP on average and has grown by 60% as a percentage of GDP between 2000 and 2019.
  • Cost to patients. The cost of long-term care would be beyond the financial means of a large fraction of older people in each country. Because of this, the public sector bears most of the cost (e.g. ~2/3 of the cost of LTC in the US is covered by the government).
  • Spending on formal versus informal care. The proportion of countries’ spending on home care (vs. institutional) varies from 23% in Spain to 63% in Japan.
  • Cost of informal care. Informal care comprises a substantial portion of total long-term care, and the cost of this informal care, in terms of lost wages and other costs, must be included in any measure of the true cost of long-term care.
  • LTC risk: Long-term care needs increase rapidly with age and disability
  • Formal versus informal care: A minority of older people who receive assistance depend only in formal care (i.e., institutional care or paid home care), while the majority receive at least some informal care from family members or other unpaid caregivers
  • Worker gender. Women provide the vast majority of formal care in all of these countries, but there is a somewhat more equal distribution of care between genders in informal than in formal care provision.
  • Workers’ salaries: Highly skilled formal caregivers in all countries are paid fairly well, generally equal to or above the economy-wide average wage, but there is substantial variation between countries in the compensation of low-skilled caregivers, with salaries ranging from less from half the average salary in the United States to more than three-quarters of the average in Denmark and Japan


Created from Table 4, https://www.nber.org/system/files/working_papers/w31882/w31882.pdf


What data sets can be used to study long-term care needs? Gruber et al. The article uses the following sources, all of which are largely based on HRS. They are nationally representative longitudinal surveys of people starting around age 50.

  • US. Health and Retirement Study (HRS)
  • Europe: The Survey on Health, Aging and Retirement in Europe (SHARE)
  • United Kingdom. English Longitudinal Study on Aging (ELSA),
  • Japan. Japanese Study on Aging and Retirement (JSTAR)

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