Public expenditure for long-term care in Austria increased by 50 percent to roughly € 3.3 billion between 1994 and 2006. However, financing long-term care is becoming increasingly difficult due to demographic developments and societal changes. Estimates of future expenditure for long-term care show that there will be significant increases until 2030, ranging from a low of 66 percent to a high of 207 percent (medium level estimates: +160 percent). Expressed as a share of the Austrian GDP, expenditure for long-term care will rise from 1.13 percent in 2006 to 1.96 percent in 2030. To finance these rising costs, WIFO recommends funding long-term care from general taxes while supplementing the financial gap from social security contributions. Establishing a long-term care fund would be suitable as an organisational umbrella to bring together the different financial streams. Such a fund would be flexible enough to cope with problems of financial volatility and to fine-tune distributional effects. Finally, the problem of circumventing public access to the personal property of individuals receiving care in kind calls for new political solutions. Thus, WIFO proposes that the personal property of such individuals should not be accessed, but instead wealth-related taxes should be introduced to finance long-term care in Austria.
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