Who Will Pay for Long-Term Care in the UK? Projections Linking Macro- and Micro-Simulation Models

The long-term care funding system continues to attract much debate in the UK. We produce projections of state and private long-term care expenditure and analyse the distributional impact of state-financed care, through innovative linking of macro- and micro-simulation models. Variant assumptions about life expectancy, dependency and care costs are examined and the impact of universal state-financed (‘free’) personal care, based on need but not ability to pay, is investigated. We find that future long-term care expenditure is subject to considerable uncertainty and is particularly sensitive to assumed future trends in real input costs. On a central set of assumptions, free personal care would, by 2051, increase public spending on long-term care from 1.1 per cent of GDP to 1.3 per cent, or more if it generated an increase in demand. Among the care-home population aged 85 or over, the immediate beneficiaries of free personal care would be those with relatively high incomes.