© Royalty-free/Corbis

Over the next several decades, the population of U.S. seniors--people aged 65 and older--is expected to grow rapidly, more than doubling by 2040 while the population as a whole grows by about one-third. That surge will probably produce a similar increase in the demand for long-term care (LTC) services--the personal assistance that enables people who are impaired to perform daily routines such as eating, bathing, and dressing. Today, seniors finance such services from a variety of sources, including personal savings, care donated by friends and family, private insurance, and public programs such as Medicaid and Medicare. This Congressional Budget Office (CBO) paper--prepared at the request of the House Budget Committee--summarizes the current state of financing for long-term care, identifies some of the issues affecting it both now and in the future, and considers policy alternatives that address the mix of private and governmental sources of financing for LTC costs. In keeping with CBO's mandate to provide objective, impartial analysis, this report contains no recommendations.

Stuart Hagen of CBO's Health and Human Resources Division prepared the paper under the supervision of Steve Lieberman and James Baumgardner. The paper benefited from comments by Brenda Spillman and Joshua M. Wiener of the Urban Institute, Harriet Komisar of Georgetown University, and Jeffrey R. Brown of the University of Illinois at Urbana-Champaign.

Leah Mazade edited the paper, and Christine Bogusz proofread it. Maureen Costantino prepared the paper for publication and designed the cover, and Annette Kalicki produced the electronic versions for CBO's Web site.

Douglas Holtz-Eakin
Director
April 2004