Alternative Funding for Long-term Care Provision

The study looks into several options to organise and finance long-term care provision in Austria. An analysis of the economic effects produced by tax- and contribution-based approaches found a preference for a tax-based solution in view of its effects on distribution, growth and employment. If tax-based financing should be inadequate, a mixed system could be considered. From an organisational point of view, it appears necessary to continue efforts to harmonise the systems in the Länder. The administrative expenditure involved in tapping the assets of care receivers could be compensated by property taxes. If the federal and Länder governments are able to agree on simplifying the organisational structure and if several channels are used for financing, a practical solution would be setting up a fund to cover monetary benefits and benefits in kind, which can be optimised in terms of yield, volatility, distribution effects and other economic effects and adjusted to a changing framework.