# 2026 OECD Source Brief — Long-Term Care Spending and Affordability | Field | Detail | | ------------------ | ------------------------------------------------------------------------------------------------ | | **Type** | OECD source brief — long-term care funding models, spending comparisons, and out-of-pocket costs | | **Status** | Reference | | **Date** | June 2026 | | **Classification** | Neutral business/campaign intelligence | --- ## Why This Matters for NZ New Zealand's long-term care (LTC) funding model is under increasing strain. With the 65+ population projected to reach 1.4 million by 2050 and the 85+ population nearly tripling, the fiscal sustainability of NZ's current model — a mixed system of general taxation and means-tested co-payments — is a central policy concern. NZ spends approximately 0.45% of GDP on publicly-funded LTC for older people, compared to an OECD average of about 1.5%. Understanding how other OECD countries fund LTC is essential for evaluating reform options. This brief compares NZ's LTC funding model with those of Germany (social insurance), Japan (mandatory LTC insurance), and Australia (means-tested, home-care-package model). > **🆕 UPDATE — June 2026 OECD data:** The 2025 edition of _Health at a Glance_ and the _Future Long-Term Care Expenditure Trajectories_ report (April 2026) contain significant new findings. OECD confirms NZ home care was **effectively rationed** post-Pay Equity Settlement. Public LTC spending projected to **almost double to 2.8% of GDP by 2050** across OECD. See findings file at `17_Automated_Research/02_FINDINGS/2026-06-09_2359_Prompt30_OECDReleaseWatch.md` for full details. --- ## Key NZ-Relevant Data and Findings ### Current NZ LTC Funding Model | Component | Detail | | --------------------------------- | ----------------------------------------------------------- | | Funding source | General taxation (no dedicated LTC levy) | | Residential care subsidy | Means-tested (asset threshold: ~$252,000; income-tested) | | Maximum daily contribution (2024) | ~$177/day (varies by region) | | Home care funding | Needs-assessed via NASC; capped hours; not an entitlement | | Informal care support | Carer Support Subsidy (limited); no statutory carer payment | | Public LTC spending (% GDP) | ~0.45% | | Share of 80+ in residential care | ~14.6% (one of the highest in the OECD) | Sources: NZIER, _Assessing the Equity Issues Facing ARC_ (2022); Treasury, _Case Study: Aged Residential Care_ (2024); Sapere, _Aged Care Service Model and Funding Review_ (2024). ### NZ vs OECD Spending Comparison | Country | Public LTC Spending (% GDP) | Model Type | Key Features | | -------------------- | --------------------------- | --------------------------------- | --------------------------------------------------------- | | **New Zealand** | ~0.45% | Tax-funded, means-tested | Low spending, high residential care utilisation | | **OECD average** | ~1.5% | Mixed | Wide variation across countries | | **Germany** | ~1.9% | Social insurance (mandatory) | Population-wide LTC insurance, cash benefits for carers | | **Japan** | ~2.1% | Mandatory LTC insurance (age 40+) | Universal entitlement, strict needs assessment | | **Australia** | ~1.1% | Tax-funded, means-tested | Home Care Packages (HCP) as entitlement; growing spending | | **Netherlands** | ~3.7% | Social insurance | Highest spender; comprehensive coverage | | **Nordic countries** | ~2.5-3.5% | Tax-funded, universal | Extensive home care and residential services | Sources: OECD, _Health at a Glance 2025_; OECD, _Health at a Glance 2023_; OECD, _Long-Term Care and Health Care Insurance in OECD Countries_ (2023). ### New OECD Findings (2025-2026) **Home care rationing confirmed:** > The OECD's _Health at a Glance 2025_ reports: "In New Zealand, the provision of home care was effectively rationed – providers limited supply to manage costs and absorb wage increases from the Pay Equity Settlement (mandated pay rises for care workers)." This is a significant public acknowledgement from an international body that NZ's home care system is not meeting demand — providers deliberately restricting supply to manage costs. **LTC recipient numbers decreasing:** Between 2013 and 2023, the share of 65+ receiving LTC **decreased** in New Zealand (alongside Netherlands, Denmark, Hungary), while most OECD countries saw stable or increasing uptake. This is consistent with the rationing finding. **NZ data gap on LTC workers:** _Health at a Glance 2025_ reports no comparable data for NZ on LTC workers — a significant gap that limits international benchmarking of NZ's care workforce. **Future LTC expenditure projections (OECD, April 2026):** | Metric | Current | 2050 Projection | |--------|---------|-----------------| | Public LTC spending (OECD avg) | ~1.5% GDP | **2.8% GDP** | | Public pension spending (OECD avg) | 8.8% GDP | 10% GDP | | Public health spending (OECD avg) | 5.5% GDP | 8.8% GDP | | NZ ageing cost increase (from OECD Economic Survey 2026) | — | ~5% GDP by 2060 | NZ's already-low spending (0.45% GDP) compared to the projected OECD average of 2.8% GDP by 2050 highlights the scale of underfunding. **Care affordability (OECD, Oct 2024):** - OOP costs = 70% of older person's median income across OECD - Almost half of older people with LTC needs at risk of poverty after public benefits - NZ mentioned as having reablement programs (alongside Australia, Japan, Denmark) - LTC demand to increase >one-third by 2050 - Current expenditures expected to multiply by 2.5× --- ## International Comparison: Three Alternative Models ### Germany — Social Long-Term Care Insurance (Pflegeversicherung) | Feature | Germany | NZ Contrast | | -------------------- | --------------------------------------------------------------------------- | ------------------------------------ | | **Funding** | Mandatory payroll contributions (~3.05% of wages, shared employer/employee) | General taxation (no dedicated levy) | | **Coverage** | Universal, all ages | Means-tested eligibility for subsidy | | **Benefits** | Cash benefits, in-kind care, residential care | In-kind residential/home care only | | **Carer support** | Cash payments, pension credits, training | Carer Support Subsidy only | | **Out-of-pocket** | Capped (~€2,400/year max) | Uncapped for above-threshold assets | | **Spending (% GDP)** | ~1.9% | ~0.45% | **Key features for NZ consideration:** - Germany's social insurance model **spreads risk across the working-age population**, unlike NZ's PAYG from general revenue - **Cash benefits** allow older people to pay family carers — a model some NZ advocacy groups support - Germany has a **statutory right to care**, which NZ lacks - However, German contributions are rising as the population ages — the same demographic pressure NZ would face Sources: OECD (2023), _Health at a Glance 2023_; Federal Ministry of Health (Germany), _Long-Term Care Insurance Statistics_. ### Japan — Mandatory Long-Term Care Insurance (Kaigo Hoken) | Feature | Japan | NZ Contrast | | -------------------- | ------------------------------------------------- | ---------------------------------- | | **Funding** | 50% tax (national/local), 50% premiums (age 40+) | 100% general taxation | | **Coverage** | Universal, age 40+ | Means-tested for subsidy | | **Assessment** | Standardised national needs assessment (7 levels) | NASC assessment (varies by region) | | **Benefits** | Home care, day services, residential care | Home support, residential care | | **Waiting lists** | Minimal (entitlement-based system) | Significant home care waitlists | | **Consumer choice** | Care manager + provider choice | Limited choice; NASC assigned | | **Spending (% GDP)** | ~2.1% | ~0.45% | **Key features for NZ consideration:** - Japan introduced LTC insurance in **2000** in response to rapid population ageing — the same demographic wave NZ now faces - The system is **entitlement-based** — once assessed, you have a legal right to services - **Care managers** coordinate services — a model NZ has discussed but not implemented - The **7-level needs assessment** is more granular than NZ's current NASC system - Japan has **price controls** on LTC services to contain costs - Japan's spending (~2.1% GDP) is projected to rise to ~3.5% GDP by 2040 — demonstrating that even dedicated LTC insurance is not immune to ageing pressure Sources: OECD (2023), _Health at a Glance 2023_; Ministry of Health, Labour and Welfare (Japan), _Long-Term Care Insurance System_; OECD/WHO (2023), _Japan Country Health Profile_. ### Australia — Means-Tested, Home Care Package Model | Feature | Australia | NZ Contrast | | ---------------------- | ----------------------------------------------------- | ------------------------------------------------ | | **Funding** | General taxation + means-tested co-payments | General taxation + means-tested co-payments | | **Home Care Packages** | 4 levels, entitlement-based for assessed need | Capped hours, not entitlement-based | | **Residential care** | Means-tested accommodation costs + care subsidy | Means-tested daily fee | | **Assessment** | My Aged Care (single national gateway) | NASC (fragmented, regional) | | **Quality regulation** | Star ratings, Aged Care Quality and Safety Commission | HealthCERT audits, no public ratings | | **Spending (% GDP)** | ~1.1% (growing rapidly) | ~0.45% | | **Aged Care Act** | **Aged Care Act 2024** (new rights-based framework) | Health and Disability Services (Safety) Act 2001 | **Key features for NZ consideration:** - Australia's **Home Care Packages** provide an entitlement model for home care — NZ has no equivalent - The **2024 Aged Care Act** creates a new Statement of Rights — NZ's aged care rights framework is less explicit - **My Aged Care** is a single national assessment and referral system — NZ's NASC system is fragmented across 20+ regions - Australia is **increasing spending** (~$5.6B additional over 4 years in 2023 reforms) — NZ's spending is relatively static - Australia's **Super Guarantee** (11.5% mandatory employer contribution) means retirees have higher private incomes to fund co-payments Sources: Australian Government, _Aged Care Act 2024_; Australian Government, _Intergenerational Report 2023_; Productivity Commission (Australia), _Report on Government Services 2024_; My Aged Care (https://www.myagedcare.gov.au). --- ## Out-of-Pocket Costs Comparison | Country | Residential Care (typical monthly OOP) | Home Care (typical monthly OOP) | Protection for Catastrophic Costs | | ------------- | -------------------------------------------------------------- | ------------------------------------------------------- | ------------------------------------------------------------------------- | | **NZ** | $2,000-$5,300 (means-tested; up to ~$177/day max contribution) | $0-$500 (limited hours; some services free) | Limited — asset test thresholds; high costs for above-threshold residents | | **Germany** | €1,000-€2,500 (after insurance; capped) | €0-€500 (after insurance) | Strong — statutory cap on OOP | | **Japan** | ¥50,000-¥150,000 (~$550-$1,650) (10-30% co-pay, capped) | ¥10,000-¥50,000 (~$110-$550) (10-30% co-pay) | Moderate — monthly caps by income | | **Australia** | $20,000-$40,000/year (means-tested accommodation + care fees) | $0-$10,000/year (depending on package level and income) | Moderate — annual and lifetime caps on care fees | Sources: OECD, _Health at a Glance 2023_; Australian Government Department of Health and Aged Care; German Federal Ministry of Health; Japanese Ministry of Health, Labour and Welfare. --- ## Political Relevance ### NZ Reform Context (2026) - **The Sapere Review (2024)** recommended fundamental reform of the aged care funding model, including case-mix funding and a review of the maximum contribution. - **Health NZ** is developing a new funding framework. OECD comparisons are regularly cited by provider groups and unions to argue for increased spending. - **The aged care funding gap** (~0.45% vs OECD 1.5% GDP) is a recurring theme in select committee inquiries, stakeholder submissions, and media coverage. - **Home care waiting lists** have grown, with some DHB/Health NZ regions reporting waits of 6-12 months for home support assessments. - **Carers NZ and informal carer groups** are advocating for a statutory carer payment — similar to Germany's Pflegegeld (care allowance). - **The 2026 election** is likely to see aged care funding as a significant issue, with parties differentiating on spending commitments. ### Lessons from Comparator Countries | Country | Reform Lesson for NZ | | ------------- | ---------------------------------------------------------------------------------------------------------------------------------- | | **Germany** | A dedicated social insurance contribution creates sustainable, ring-fenced funding — but adds to labour costs | | **Japan** | Universal entitlement-based LTC insurance can be introduced even in a rapidly ageing society — but costs still rise | | **Australia** | Home Care Packages as an entitlement model keeps people at home longer — the single-entry My Aged Care gateway improves navigation | | **All three** | No country has fully solved the fiscal challenge of population ageing — all are making ongoing adjustments | --- ## Business Implications ### For Aged Care Providers - **Low public spending** means providers depend on resident contributions and cross-subsidies. International comparisons support claims of chronic underfunding. - **Germany and Japan** demonstrate that private providers can operate within social insurance frameworks — this is not necessarily a threat to business models. - **Australia's Home Care Package model** has created thriving community care businesses. NZ's limited home care funding constrains this market segment. - **If NZ moved towards an Australia-style model**, the demand for home care services would expand significantly, creating new business opportunities. ### For Investors - **NZ's 0.45% GDP spending** is the lowest among comparable OECD countries, suggesting significant headroom for growth in government-funded aged care. - **A move towards LTC insurance** (Germany/Japan model) would create more predictable revenue flows for providers. - **Home care is underdeveloped** in NZ relative to OECD peers — the growth opportunity is substantial if policy settings change. - **Retirement village ORAs** partially compensate for low public funding, but this model faces structural pressure if home ownership rates decline. --- ## Campaign Relevance ### Key Messages 1. **"NZ spends less than one-third the OECD average on long-term care for older people"** — the headline gap 2. **"Germany has mandatory LTC insurance. Japan has universal LTC insurance. Australia has Home Care Packages. NZ has a fragmented, underfunded system"** — contrast with comparable countries 3. **"Older New Zealanders face some of the highest out-of-pocket costs in the OECD"** — affordability framing 4. **"Home care in NZ is not an entitlement — it's a capped, rationed service"** — access framing (confirmed by OECD Health at a Glance 2025) 5. **"The 12,000-bed shortfall projected by 2032 won't be solved without spending closer to OECD norms"** — supply framing 6. **🆕 "The OECD says NZ home care was 'effectively rationed' — that's not an accident, it's policy"** — OECD acknowledgement of rationing is a powerful third-party validation ### Target Campaign Moments - **Select Committee Inquiry into Aged Care** (2025-26) — submission and hearing dates - **Budget 2027** — pre-Budget submissions and post-Budget analysis - **General Election 2026** — party policy platforms on aged care - **Treasury Long-Term Fiscal Statement** — fiscal sustainability narrative - **Health NZ Aged Care Funding Review** — policy development process --- ## Source List ### Official OECD Publications 1. OECD (2025), _Health at a Glance 2025: OECD Indicators_ — https://doi.org/10.1787/8f9e3f98-en (Published 13 November 2025) 2. OECD (2026), _Future Long-Term Care Expenditure Trajectories Across OECD Countries_ — https://www.oecd.org/en/publications/future-long-term-care-expenditure-trajectories-across-oecd-countries_800aba3e-en.html (Published 10 April 2026) 3. OECD (2024), _Is Care Affordable for Older People?_ — https://doi.org/10.1787/450ea778-en (Published 29 October 2024) 4. OECD (2023), _Health at a Glance 2023: OECD Indicators_ — https://www.oecd.org/publications/health-at-a-glance-2023-7a7afb35-en.htm 5. OECD (2023), _Beyond Applause? Improving Working Conditions in Long-Term Care_ — https://doi.org/10.1787/27d33ab3-en 6. OECD (2020), _Who Cares? Attracting and Retaining Care Workers for the Elderly_ — https://www.oecd.org/publications/who-cares-attracting-and-retaining-elderly-care-workers-200c3c69-en.htm 7. OECD (2023), _Long-Term Care and Health Care Insurance in OECD Countries_ — https://www.oecd.org/health/long-term-care.htm 8. OECD/EU (2022), _Health at a Glance: Europe 2022 — State of Health in the EU Cycle_ — https://www.oecd.org/publications/health-at-a-glance-europe-2022-c2a5b62d-en.htm ### German Government Sources 5. Federal Ministry of Health (Germany), _Long-Term Care Insurance: Facts and Figures_ — https://www.bundesgesundheitsministerium.de 6. German Social Insurance (2024), _Pflegeversicherung Report_ — https://www.gkv-spitzenverband.de ### Japanese Government Sources 7. Ministry of Health, Labour and Welfare (Japan), _Long-Term Care Insurance System_ — https://www.mhlw.go.jp/english/policy/care-welfare/index.html 8. OECD/WHO (2023), _Japan Country Health Profile_ — https://www.oecd.org/health ### Australian Government Sources 9. Australian Government, _Aged Care Act 2024_ — https://www.legislation.gov.au 10. Australian Government Department of Health and Aged Care, _Home Care Packages_ — https://www.health.gov.au/topics/aged-care 11. Australian Government, _Intergenerational Report 2023_ — https://treasury.gov.au/publication/2023-intergenerational-report 12. My Aged Care — https://www.myagedcare.gov.au 13. Productivity Commission (Australia), _Report on Government Services 2024_ — https://www.pc.gov.au/ongoing/report-on-government-services ### NZ Government and Official Sources 14. NZIER (2022), _Assessing the Equity Issues Facing Aged Residential Care Over the Coming Decade_ — https://img.scoop.co.nz/media/pdfs/2208/NZIER_Report_for_Aged_Care_Matters.pdf 15. Treasury NZ (2024), _Case Study: Aged Residential Care_ — https://www.treasury.govt.nz 16. Sapere Research Group / Health NZ (2024), _Aged Care Service Model and Funding Review_ — https://www.healthnz.govt.nz 17. Health NZ (2024), _The Health of Older People and Aged Care in New Zealand_ — https://www.health.govt.nz 18. MSD (2025), _Residential Care Subsidy Policy_ — https://www.workandincome.govt.nz 19. Office for Seniors, _Better Later Life Strategy_ — https://www.officeforseniors.govt.nz 20. MSD (2025), _Meeting the Future Needs of Older New Zealanders_ — https://www.msd.govt.nz --- _Part of the NZ Seniors Knowledge Base — Statistics & Demographics layer_ _Location: `12_Statistics_and_Demographics/`_ _Last updated: June 2026_