Health and Long-Term Care Expenditure in Finland When Living Alone Increases

The share of singles has been increasing. Studies show that singles on average use more health and long-term care services than couples. How large a burden is the change in household structures likely to create for public finances in a welfare state? We decompose per capita health and long-term care costs into costs per person living alone and per person not living alone. This decomposition is done also separately for age-related costs and proximity-to-death costs. Using these two decompositions we evaluate the effects of the changing share of singles with respect to both past and projected health and long-term expenditure, and compare them to pressures coming from population ageing. We find that the increase in the share of singles has only had a modest effect on public health and long-term care expenditure during 1987 – 2006. Using household projections jointly with population forecasts we find that future increases in the share of people living alone will increase projected public expenditure on health and long-term care, but the effects are small compared to the likely effects of population ageing. This is because the share of singles is expected to diminish in the oldest age groups, where the use of public services is most frequent. It appears that changes in household structures are more important for the design of welfare systems, so that people living alone have a reasonable safety net, than they are for fiscal projections and sustainability evaluations.