Future costs for long-term care: Cost projections for long-term care for older people in the United Kingdom

The purpose of this paper is to analyse the future sustainability of the UK system for provision of long-term care (LTC) due to changes in demography and health status among the older people. It considers how demand for LTC will evolve and to what extent there will be sufficient supply to meet demand. For formal care, this requires an estimate of how much the public purses, and hence taxpayers, will be burdened with LTC costs. For informal care, it involves estimating whether there will be enough carers if current patterns of provision were to continue. The results show that demand for long-term care will start to take off 10 years from now, and reach a peak somewhere after 2040. The research finds that the most significant increase will be in demand for informal care, where the number of recipients are projected to increase from 2.2 million today to 3.0 million in 2050. Relative increases will be similar in all care settings, amounting to between 30 and 50% compared with the levels today; however, the most noticeable increase will be in demand for formal home care, which is projected to be 60% above current levels by 2040. Total expenditure on formal long-term care will increase from £ 11 billion per year today to approximately £ 15 billion per year by 2040 (in 2001 prices). Expressed in taxation terms the effective contribution rate will increase from around 1.0% of total wages today to 1.3% in 2050. Availability of informal carers is potentially a big problem, but the extent of the problem is very sensitive to the assumptions made concerning health improvements and care-giving patterns. © 2005 Elsevier Ireland Ltd. All rights reserved.