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Who Will Pay for Long-Term Care in the UK? Projections Linking Macro- and Micro-Simulation Models

Listed author(s):
  • Ruth Hancock
  • Adelina Comas-Herrera
  • Raphael Wittenberg
  • Linda Pickard

The long-term care funding system continues to attract much debate in the UK. We produce projections of state and private long-term care expenditure and analyse the distributional impact of state-financed care, through innovative linking of macro- and micro-simulation models. Variant assumptions about life expectancy, dependency and care costs are examined and the impact of universal state-financed (‘free’) personal care, based on need but not ability to pay, is investigated. We find that future long-term care expenditure is subject to considerable uncertainty and is particularly sensitive to assumed future trends in real input costs. On a central set of assumptions, free personal care would, by 2051, increase public spending on long-term care from 1.1 per cent of GDP to 1.3 per cent, or more if it generated an increase in demand. Among the care-home population aged 85 or over, the immediate beneficiaries of free personal care would be those with relatively high incomes.

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Article provided by Institute for Fiscal Studies in its journal Fiscal Studies.

Volume (Year): 24 (2003)
Issue (Month): 4 (December)
Pages: 387-426

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Handle: RePEc:ifs:fistud:v:24:y:2003:i:4:p:387-426
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