New NBER Volume on Long-Term Care Around the World

The developed world is in the midst of a demographic transition caused by rising life expectancy and falling fertility. This shift will bring new challenges in caring for a rapidly aging population, many of whom are living with Alzheimer’s disease or a related dementia.

A new NBER volume, Long-Term Care around the World, edited by Jonathan Gruber and Kathleen McGarry, documents and compares mechanisms for providing long-term care in 10 developed countries with varying healthcare structures. 

Drawing on original analyses of survey data and government statistics, the findings suggest that the costs of long-term care are beyond the financial means of a large fraction of the elderly population in most countries, particularly the oldest and most disabled. As a result, public systems bear most of the cost of formal long-term care, whether it is provided in an institution or via paid home care. 

The majority of countries in the volume spend more on nursing homes than on home care, but the relationship between the two varies widely—as does the mix of care needs and the level of resources that are used to define eligibility for public funding. Despite the large expenditures and the presence of national long-term care programs in many countries, most care is provided informally, typically by family members. 

Estimates of the cost of informal care, which include the foregone earnings of caregivers, suggest that averaged across countries, this care accounts for about half of all long-term care spending. It accounts for at least one-third of all spending in every country in the volume. These findings suggest that any estimate of the social cost of long-term care must account for the implicit costs of informal care.