As populations age over the next several decades, the demand for long-term care (LTC) services (assisting individuals with their activities of daily life) will increase dramatically and is likely to reach crisis levels in many countries. Societies will have to confront this emerging need because historical methods for providing and financing LTC may not be adequate to address future LTC needs. 

The primary objective of this paper is to provide information concerning some of the key issues associated with LTC, including: (1) the future use of LTC services, (2) alternative benefit designs and their resulting incentives, (3) a range of approaches used around the world to provide LTC services and (4) methods of financing LTC services and mitigating costs by the individual, community, private sector and governments. This presentation is particularly important, as there are significant differences throughout the world in how LTC is treated. 

The overall message of this paper is that it is very important for individuals, societies and policy makers to address LTC issues in a timely manner before they become more severe. It delves into the issues associated with LTC on a worldwide basis and discusses many of the key factors in and potential strategic solutions for developing sustainable and coordinated national and local LTC programs and services. 

It is hoped that this paper will encourage further discussion of LTC-related issues by national actuarial associations, individual actuaries and policy makers that can help lead to the development of effective solutions for the provision, delivery and financing of LTC. 

There are several factors that need to be recognized to successfully develop or refine a program that can effectively satisfy LTC needs: 

  • Increasing very old age dependency ratios, longer lifetimes, smaller size and less financially secure families, increased population mobility and other demographic and cultural changes strongly suggest that the total amount of financial and human resources spent providing LTC will increase substantially, while sources of support and financing may be difficult to obtain for many population segments. 
  • A combination of public and private cooperation will be necessary to successfully provide and finance LTC services for all population segments. 
  • LTC programs that are subject to voluntary participation can experience anti-selection. Understanding differing needs by income/wealth levels, as well as country and community-specific cultural history and values, may help reduce anti-selection associated with many approaches, and lead to better outcomes for both the programs involved and those covered. 
  • The situs (location) where and manner in which care is provided, changes in the infrastructure, program designs and public policies should focus on promoting healthier lifestyles, catering to the needs of the elderly and encouraging more social interaction among individuals to enhance their quality of life and reduce costs.
  • Informal caregivers (family, friends and community) often experience substantial financial and non-financial stresses. This traditional source of providing care will continue to be important, both to provide a more comfortable environment and to help control costs. The economic cost of providing informal care is enormous and likely to increase further. 
  • Because of such factors as lower fertility rates and increased population mobility, the supply of informal LTC caregivers (family and friends) may reduce over the coming decades. The financial, mental and physical stresses on informal caregivers are heavy burdens. These may result in larger economic costs to society because of loss of productivity and increased mental and physical stress that in turn lead to greater healthcare cost related to informal caregivers. Overall, there is a global shortage of formally trained LTC workers, which should be addressed though appropriate recruitment, training, and retention policies. 
  • Education addressing the increasing impact of LTC issues and risks, including effective means of addressing them, is important for all stakeholders, including future and current users of LTC services, as well as policy makers. This need emerges not only when LTC needs arise, but to a large extent beforehand so that proper preparations can be made. 
  • Continued emphasis on home and community care can not only optimize personal and family-centered care, but also can be used to mitigate costs.
  • Mitigation of the likely increase in costs includes the injury and disease prevention and other reductions in the need for care.  
  • To effectively achieve optimal LTC coverage for all of society so that no one is left behind, there is a need for a minimum set of mandatory social benefits that can be supplemented by private savings and insurance and public, charity and other community programs. In most cases a comprehensive and coordinated system of benefits and services will be better than several silo-structured approaches to specific circumstances and population segments.  
  • Better coordination and cooperation between retirement, healthcare and LTC programs need to be considered by individuals and both the public and private sectors. 

Active actuarial involvement in the design and management of these programs will prove beneficial as a result of the experience and expertise of actuaries in modeling related longterm contingencies and in assessing the behaviour of the stakeholders involved. 

Because of the time frames and costs involved, as well as the existence of competing demands on public and private resources, it may be optimistic to expect that comprehensive approaches to address LTC will be adopted in many countries in the foreseeable future. Nevertheless, it is important to address and design program elements to provide for these emerging needs as soon as practical, so that individuals can plan for their future and policy makers are enabled to take appropriate actions to mitigate as many LTC related issues as possible. 

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