Demographic Change and the Future of Austria's Long-Term-Care Allowance: A Dynamic Microsimulation Study

Area of Science:

• Gerontology
• Health Economics
• Social Policy

Background:

• Europe faces demographic shifts straining long-term care (LTC) systems and financing.
• Austria's universal long-term-care allowance (LTCA) is analyzed for expenditure projections.
• Concerns exist regarding the financial sustainability of LTC systems.

Purpose of the Study:

• To project Austria's LTCA expenditure up to 2080 under various future scenarios.
• To analyze the impact of demographic changes, health improvements, and educational attainment on LTCA costs.
• To assess public spending and individual lifetime costs associated with LTC.

Main Methods:

• Dynamic microsimulation model utilized for expenditure projections.
• Data from LTCA statistics and the Survey of Health, Ageing and Retirement in Europe (SHARE) were combined.
• Care needs and prevalence rates were estimated across seven allowance levels, disaggregated by sex and education.

Main Results:

• Total LTCA expenditure is projected to increase due to population aging.
• Compositional shifts, like higher education and improved healthy life expectancy, can mitigate cost growth.
• Expenditure increases range from 29% (neglecting life expectancy gains) to 185% (accounting for life expectancy but no health gains).

Conclusions:

• Dynamic microsimulation effectively captures individual heterogeneity in LTC cost projections.
• Policy implications for LTC planning are significant, highlighting the impact of education and longevity.
• This approach offers advantages over traditional macrosimulation methods for analyzing LTC systems.