How Much will Long-Term Aged Care Cost Us in the Future?

Media release

Issued with Long-Term Aged Care: Expenditure Trends and Projections on 31/10/2000.

A Staff Research Paper, Long-Term Aged Care: Expenditure Trends and Projections, discusses the factors that influence long-term aged care demand and provides projections of future expenditure. Long-term aged care in this context comprises mainly residential care (nursing homes and hostels) and community care services for the infirm aged.

Among the study's findings are the following:

  • Underlying demand for long-term aged care services will increase because of the increasing numbers of the aged in our population. For example, the population of people aged 80 or more years will increase by over 200 per cent over the next three decades, compared to around 30 per cent for the population as a whole.
  • Usage of care services may not increase by as much as the raw population numbers suggest, because of offsetting factors such as the possibility of declining disability rates and supply-side influences.
  • There is likely to be upwards pressure on the unit costs of providing long-term aged care, which will add to the demographic pressure on long,term aged care expenditure.
  • Long term aged care expenditures are projected to increase in real terms by about $8.5 billion (or 145 per cent) between 1997 and 203 1. However, Australia's capacity to meet these rising costs will also increase. Thus, the share of long,term aged care expenditure to GDP is projected to rise from about 1.1 per cent to 1.38 per cent from 1997 to 2031 - an increase of only about 25 per cent.

These projections are based on relatively conservative GDP projections. Australia's capacity to deal with increased demand for long,term care services by the aged will be considerably enhanced if GDP growth - and its underlying determinant, productivity growth - are of a similar magnitude to recent years.


Background Information
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Ralph Lattimore, Assistant Commissioner
Daniella Hanek, Media and Publications