The role of young users in determining long-term care expenditure in Norway

Abstract

In Norway, it is the responsibility of the country's 429 municipalities to provide long term care (LTC) services to their residents. Recent years have seen a sharp rise in the number of LTC users under the age of 65. This article aims to explore the effect of this rise on LTC expenditure. Panel data models are used on data from municipalities from 1986 to 2011. An instrumental variable approach is also utilized to account for possible endogeneity related to the number of young users. The number of young users appears to have a strong effect on LTC expenditure. There is also evidence of municipalities exercising discretion in defining eligibility criteria for young users in order to limit expenditure. The rise in the number of young LTC users presents a long-term challenge to the sustainability of LTC financing. The current budgeting system appears to compensate municipalities for expenditure on young LTC users.