Assessing the implications of long-term care policies in Italy: a microsimulation approach

This paper estimates the future characteristics of the long-term disabled in Italy and the evolution of total public expenditure for long-term care. The future dynamics of ltc expenditure in Italy is of particular relevance for two reasons: the limited and insufficientlevel of public expenditure currently targeted to the disabled, and the perspective in the next few decades of one of the most rapid ageing processes in the world.The analysis is carried out using a dynamic microsimulation model that estimates the evolution for the next five decades of the social and economic structure of the Italian population. After an analysis of the future structure of the pool of the disabled population, we consider two alternative hypotheses for the dynamics of public expenditure in ltc: the simple continuation of the current rules, and a significant increase in the generosity ofpublic schemes, in order to satisfy the mounting pressure coming from households. We also compute the implicit tax rates needed to raise the required resources.