By Ricardo Rodrigues (Lisbon School of Economics and Management), Jonathan Cylus (Euro Observatory for Health Systems and Policy), Megumi Rosenberg (WHO Geneva) and Sarah L. Barber (independent consultant)
Population ageing and rapidly increasing long-term care needs are placing increasing pressure on health and social care systems. This raises policy questions about how to balance access and affordability with financial sustainability. Governments have increasingly relied on home-based care as a means of supporting independent living and ageing in place. However, the financial burden of such care often falls on individuals and their families.
Unlike healthcare, where in many countries there are mechanisms in place to protect people from financial hardship associated with using health services, public coverage of long-term care remains fragmented and varies considerably across European countries, leaving many older people exposed to significant out-of-pocket payments. These costs can absorb a substantial share of household resources, potentially resulting in catastrophic expenditures, impoverishment or unmet care needs, particularly among people with low incomes and limited financial assets.
Despite the growing recognition of the importance of financial protection in long-term care, comparative evidence about the extent to which home care out-of-pocket payments contribute to financial hardship is lacking. We also lack evidence about the effectiveness of different policy arrangements in mitigating these risks. In order to design equitable systems and protect older people from poverty, policymakers need to understand better how the costs of home care are distributed across socioeconomic groups.
Catastrophic expenditure and home-based care: entrenching inequalities?
Out-of-pocket (OOP) payments for long-term care (LTC) can result in financial hardship among older people. To understand the extent of this problem, we estimated the prevalence of catastrophic expenditure and impoverishment among people 60 and older that use home-based LTC (home care) in 14 countries in Europe. The sample of home-care users was taken from waves 5 and 6 of the Survey of Health, Ageing and Retirement in Europe (SHARE). We also examined the individual- and system-level characteristics that are associated with lower risks of financial hardship.
The study includes data from Austria, Belgium, Czechia, Denmark, Estonia, France, Germany, Greece, Italy, Luxembourg, the Netherlands, Spain, Sweden and Switzerland. We used a capacity-to-pay approach to estimate catastrophic expenditure and impoverishment. Catastrophic expenditure captures when OOP payments account for a substantial share of the ability to pay after meeting basic needs. Impoverishment captures when OOP payments push individuals below the poverty threshold.
The findings suggest countries in Southern Europe have the highest prevalence of both catastrophic expenditure and impoverishment associated with OOP payments for home care. Moreover, the poor face the greatest financial hardships. Those with the least resources even before needing care experienced catastrophic expenditures for needed home care. These OOP payments could reduce resources available for other necessities and, for some users, push them into poverty.
It is recognized that older people may have other resources and accumulated wealth that could be used to smooth consumption while paying for home-care costs. Accounting for net liquid assets reduces the estimated risk of catastrophic expenditure but had a limited impact on impoverishment. This could be explained because people who are already poor have lower levels of accumulated wealth. Therefore, while private assets can provide some protection against high OOP payments, they cannot substitute for formal mechanisms of financial protection, particularly for people with few accumulated assets.
How can LTC systems protect against financial hardsip?
Several characteristics of LTC systems are associated with lower financial hardship. Caps on OOP payments, higher levels of public expenditure on LTC, and means-testing are all associated with a lower risk of catastrophic expenditures.
Higher public expenditures and caps on OOP payments are also associated with a lower risk of impoverishment. Means tests do not appear to reduce the probability of impoverishment. Instead, they are associated with lower levels of poverty among those who become or remain poor after paying for home care.
Financial protection is a critical dimension of LTC access. Policy-makers have emphasized expanding service access to home care. However, the financial consequences of obtaining available home care is a critical dimension of LTC access. Older people may risk catastrophic expenditure or impoverishment where OOP payments are substantial and may even forgo needed care to avoid such risk.
Our findings suggest that greater public financing and limits on individual OOP payments strengthen financial protection and enable access. Means-testing can also reduce exposure to catastrophic expenditure and poverty.
European countries continue to develop home-based LTC. A key component of the design and implementation of these policies includes an assessment of who bears the costs of care. Ensuring access to home care implies protecting users from the financial hardship of utilising needed care.
About the study
Rodrigues, R., Cylus, J., Rosenberg, M., Barber, S. (2026). Paying into poverty? Out-of-pocket payments for home care and risk of catastrophic expenditures and poverty in Europe. The Journal of the Economics of Ageing, 34, 100647. 10.1016/j.jeoa.2026.100647
Suggested citation:
Rodrigues, R., Cylus, J., Rosenberg, M., Barber, S. (2026). Home care out-of-pocket payments and risk of catastrophic expenditures and poverty in Europe: paying into poverty? GOLTC Blog, Global Observatory of Long-Term Care, Care Policy and Evaluation Centre, London School of Economics and Political Science. DOI: 10.5281/zenodo.24105013. https://goltc.org/publications/home-care-out-of-pocket-payments-and-risk-of-catastrophic-expenditures-and-poverty-in-europe-paying-into-poverty/