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OECD inhabitants are living longer and healthier lives. But while health is an important driver of welfare expenses, the cost of elderly care also has a major impact on budgets. When the cohorts of the babyboom generation reach the oldest age groups over the next three decades, demand for long-term care will rise steeply. That is why many OECD countries have stepped up services that allow older people to stay at home as long as possible. Home care now accounts for more than 30% of public resources in more than a third of the OECD countries.

Total expenditure on long-term care in the OECD countries ranges from below 0.2% to around 3% of GDP, yet most countries spend less than 1.6% of GDP. Only Norway and Sweden spend more; although both countries have the highest share of persons aged 80 and over, they also provide generous publicly funded services for residents in nursing homes.

Spending on care in institutions accounts in all countries for over half of public spending on long-term care. It accounts for 82.8% of total expenditure in Canada, and 54.7% in Germany. Public spending for home care is highest in Sweden and Norway (0.78% and 0.66% of GDP) and is lowest in Spain, New Zealand, Canada and the US (between 0.05% and 0.17% of GDP).

Public funding remains the most important source of financing for long-term care services in general. Where private spending is important, it is mainly focused on institutional care. For home care, private expenditure is highest in Spain and in the US (0.18% and 0.16% of GDP respectively), but is still relatively low in GDP terms.

©OECD Observer No 246/247, December 2004-January 2005

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