12 countries: Who in the world can afford nursing home care?

Solid numbers showing just what the Great Recession has done to the finances of retirees around the world are just starting to flow into economists’ computers.

But Swiss Re analysts have crunched the latest numbers and found that typical older people in the United States have a harder time paying for nursing home care than older people in many other developed countries. Older people in those countries sometimes have higher incomes and often have more assets, and the cost of nursing home care is lower.

The Swiss Re analysts included an international comparison of nursing home care affordability in a report on the need to find sustainable solutions for meeting the long-term care (LTC) needs of aging people in the developed world.

Swiss Re sells reinsurance, consulting services and support services to the kinds of private companies that write private long-term care insurance (LTCI) and other types of LTC funding vehicles, such as annuities, annuity-LTC hybrids and life insurance-LTC hybrids.

Today, “where public provisions are not comprehensive (many advanced markets), or are unavailable (most emerging markets), care is mostly financed out-of-pocket,” the analysts write.

Private insurers account for less than 2 percent of LTC spending in most developed countries, and writing traditional LTCI products involves underwriting risk, financial forecasting risk, market and social policy forecasting risk, and skeptical consumers, the analysts say. They say insurers are trying to come up with more sustainable ways to protect older people against LTC risk, and they suggest that insurers can also help meet society’s LTC needs by taking steps such as investing in LTC infrastructure and getting employers involved in educating workers about LTC risk.

In the section on the affordability of care, the analysts consider income, wealth and nursing home cost data for Australia, Canada, China, France, Germany, Italy, Japan, Mexico, Spain, Switzerland, the United Kingdom and the United States. The analysts acknowledge that even estimating how likely people are to need any LTC services is difficult, and that predicting how many will need full-blown nursing home care is even trickier.

Other complications include major differences in countries’ LTC systems, and major differences in statistical collection schedules. The Swiss Re analysts used some data collected as long ago as 2008 — before the Great Recession hit — and as recently as 2013.

Some of the numbers in the report include the median level of wealth, or net worth, held by residents. The analysts tried to get a rough measure of how affordable care was in each country by determining how many months of nursing home care the median income could pay for. In some cases, the Great Recession might have dramatically changed the picture by, for example, reducing the typical retiree’s level of housing related wealth and securities-related wealth. In other cases, local peculiarities may mean, for example, that typical nursing home residents in some countries are getting a different type of care than typical nursing home residents in other countries.

But to get an idea of what the Swiss Re analysts found when they processed the numbers they could get, read on.