Over the last decade, LTC spending has been outpacing overall health spending in most OECD countries (see section on “Health expenditure by type of service” in Chapter 7). Population ageing will lead to more people needing ongoing health and social care, rising incomes increase expectations of quality of life in old age, the supply of informal care is likely to shrink, and productivity gains are difficult to achieve in such a labour-intensive sector. Amid these cost pressures, LTC spending is projected to increase annually by 2.6% until 2050 across OECD countries (OECD, 2024[1]).
In 2023, 1.8% of gross domestic product (GDP) was allocated to LTC (including both the health and social component) across OECD countries (Figure 10.23). At 4.1% of GDP, the highest spender was the Netherlands, followed by the Nordic countries of Sweden (3.7%), Finland (3.2%) and Denmark (3.2%), as well as Belgium (3.1%). In contrast, Greece, Chile and Costa Rica, as well as accession/partner countries Bulgaria, Romania, Brazil, Croatia and Peru spent less than 0.5% of GDP on provision of LTC services. 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. Some level of underestimation may exist for those countries unable to record spending on social LTC. 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 2023 occurred in nursing homes (Figure 10.24). In most OECD countries, these providers account for the majority of LTC spending. On average, around one‑sixth 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 10% of total LTC spending across OECD countries. The importance of these modes of provision varies widely across countries, reflecting differences in the organisation of LTC and policy priorities.
On a more micro level, the cost of LTC can be prohibitive for older people – especially for those who have more severe needs and/or have lower income and wealth – and thus unaffordable and inaccessible without public benefits and services (OECD, 2024[1]). The cost of home care for an older individual with severe needs is estimated at 292% of the median income of older people on average across 22 OECD countries and subnational areas, whereas the estimated cost of institutional care stands at 211% (Figure 10.25). Home care costs exceed four times an older individual’s median income in Finland (754%), Czechia (668%), Sweden (576%), Japan (425%), Tallin (Estonia) (496%) and Vienna (Austria) (400%). While institutional care is less expensive than home care in 12 out of 22 OECD countries and subnational areas, its cost is higher than the median income of those aged 65 and over in every OECD Member country and accession/partner country with available data.
Public social protection systems are therefore critical in ensuring that older people have access to adequate care without falling into poverty or financially burdening family members. For example, the estimated cost of home care is high in Finland, but its LTC social protection scheme is estimated to cover 97% of the cost of home care for people with severe needs, leaving an out-of-pocket expense equivalent to 22% of median income among those aged 65 and over. In other words, the cost of home care falls drastically from 754% to 22% of median income, ensuring affordability and accessibility for older people in need of LTC.
