Projecting Public Expenditures for Long-Term Care in Korea

Public expenditures on long-term care are a matter of concern for Korea as in many other countries. The expenditure is expected to accelerate and to put pressure on public budgets, adding to that arising from insufficient retirement schemes and other forms of social spending. This study tried to foresee how much health care spending could increase in the future considering demographic and non-demographic factors as the drivers of expenditure. Previous projections of future long-term expenditure were mainly based on a given relation between spending and age structure. However, although demographic factors will surely put upward pressure on long-term care costs, other non-demographic factors, such as labor cost increase and availability of informal care, should be taken into account as well. Also, the possibility of dynamic link between health status and longevity gains needs to be considered. The model in this study is cell-base and consists of three main parts. The first part estimated the numbers of elderly people with different levels of health status by age group, gender, household type. The second part estimated the levels of long-term care services required, by attaching a probability of receiving long-term care services to each cell using from the sample from current year. The third part of the model estimated long-term care expenditure, along the demographic and non-demographic factors` change in various scenarios. Public spending on long-term care could rise from the current level of 0.2~0.3% of GDP to around 0.44~2.30% by 2040.2