Ageing and Long-Term Care: Key Challenges in Long-Term Care Coverage for Public and Private Systems

Abstract

Ageing populations in developed countries are being driven by strong social and structural demographic movements leading to a significant growth in the over 65 population. In the light of this, long-term care costs will be a major threat to individual assets and public finances over the next 40 years. Existing public schemes covering long-term care exhibit some significant issues, driven by pay-as-you-go designs combined with weak risk definitions. These difficulties will accelerate the need for new financing sources to cover the risk and call for early preparation by both public and private sectors. A new and advantageous public–private partnership has to be invented to meet the ambition of a sustainable and universal coverage. Against this background, key challenges facing the insurers include increasing public awareness of long-term care costs and challenges, risk monitoring and designing innovative and robust solutions for both wealth accumulation and protection products.