Does informal care reduce public care expenditure on elderly care? Estimates based on Finland’s Age Study

To formulate sustainable long-term care policies, it is critical first to understand the relationship between informal care and formal care expenditure. The aim of this paper is to examine to what extent informal care reduces public expenditure on elderly care.

Data from a geriatric rehabilitation program conducted in Finland (Age Study, n = 732) were used to estimate the annual public care expenditure on elderly care. We first constructed hierarchical multilevel regression models to determine the factors associated with elderly care expenditure. Second, we calculated the adjusted mean costs of care in four care patterns: 1) informal care only for elderly living alone; 2) informal care only from a co-resident family member; 3) a combination of formal and informal care; and 4) formal care only. We included functional independence and health-related quality of life (15D score) measures into our models. This method standardizes the care needs of a heterogeneous subject group and enabled us to compare expenditure among various care categories even when differences were observed in the subjects’ physical health.

Elder care that consisted of formal care only had the highest expenditure at 25,300 Euros annually. The combination of formal and informal care had an annual expenditure of 22,300 Euros. If a person received mainly informal care from a co-resident family member, then the annual expenditure was only 4,900 Euros and just 6,000 Euros for a person living alone and receiving informal care.

Our analysis of a frail elderly Finnish population shows that the availability of informal care considerably reduces public care expenditure. Therefore, informal care should be taken into account when formulating policies for long-term care. The process whereby families choose to provide care for their elderly relatives has a significant impact on long-term care expenditure.