When Policy Meets Reality: Municipal Leaders’ Views Amid Rising LTC Expenditure

Abstract

Background:

Long-term care (LTC) expenditure in Norway has increased by a far higher rate than GDP. While aging is still seen as the predominant challenge, younger users (<60 years) are disproportionately represented among the top-5% high-cost users, who accounted for 39% of LTC costs in 2019.

Aim:

This study investigates how municipal leaders perceive the main drivers of LTC expenditure growth and what they consider to be the most pressing challenges.

Methods:

We conducted semi-structured interviews with 13 municipal leaders between November 2023 and February 2024. Using thematic analysis, we explored their perspectives on expenditure growth, causes, and challenges. Municipalities were selected across KOSTRA groups to ensure variation in demographics and finances.

Results:

Three main themes emerged. Municipal leaders identified younger users with complex mental health needs requiring intensive services, workforce shortages forcing reliance on expensive purchased services, and expanding rights creating gaps between expectations and capacity. These pressures are compounded by fiscal asymmetries—national policies expand mandates while implementation costs fall on municipalities with constrained budgets and labor markets.

Conclusions:

Expenditure growth stems from both demographic drivers and governance challenges. While young users and workforce shortages directly increase costs, fiscal asymmetry makes these pressures difficult for municipalities by removing their flexibility to adapt services to available resources.

Implications for health services management:

Managers need tools to manage fiscal asymmetries between national policy and local implementation.

Introduction

In recent years, long-term care (LTC) expenditure growth in Norway has outpaced GDP growth by a wide margin. This study focuses on understanding the drivers of this growth. Neither the COVID-19 pandemic nor an aging population alone can explain this. While this growth could be explained by several factors, a substantial part of this trend appears linked to younger users (<60). There has been a strong rise in the number of younger users requiring LTC services.^1-3 Notably, this demographic is disproportionately represented among high-cost users, who, despite comprising only 5% of the total user base, accounted for approximately 39% of LTC costs in 2019. ³ This challenges the prevailing view that aging is the main driver of LTC expenditure growth. Groups other than the elderly may be important cost drivers, and factors beyond age may contribute to cost concentration.

Norway is not alone in experiencing cost concentration challenges in healthcare systems. International evidence has shown that this phenomenon appears across different contexts. In Canada, Anderson et al ⁴ found that, among adults with mental health and addiction diagnoses, 5% of service users accounted for 35% of the total healthcare costs within this specific population. Analyses of US data have demonstrated cost concentration more broadly, with 1% of the general population accounting for 21.5% of total health expenditure in 2013. ⁵ Young adults with complex disabilities can also experience delays in the discharge process, ⁶ potentially increasing costs. Moreover, young users with complex needs might require particular assistance or services in the transition to adulthood in order to improve their social and economic outcomes. ⁷ A Canadian study further showed that, among high-cost users, those with mental health and addiction diagnoses incur higher costs than those without. ⁸ Adversities in early life, such as prenatal substance exposure, ⁹ can also predict sustained healthcare use later into adulthood. Mental healthcare needs that emerge early in life can translate to LTC needs later in the life course, which can vary between traditional and more predictable age-related needs. Unlike traditional elderly care, mental-health-driven needs are often more episodic, intense, and require staffing and competencies that challenge traditional municipal LTC care.

These trends are supported by international evidence. OECD data show that young people under 30 reported a significantly higher prevalence of mental health problems after the pandemic, with levels remaining above pre-pandemic baselines. ¹⁰ In their 2022 report, ¹⁰ the OECD/EU’s global meta-analysis showed that the prevalence of anxiety and depression symptoms in under-18s doubled compared to pre-pandemic levels, with one in four experiencing symptoms of depression and one in five experiencing symptoms of anxiety. ¹¹

Evidence from other OECD countries has also highlighted workforce shortages as a systemic constraint, projected to worsen in the coming decades. ¹² Most policy reports, including those of the OECD, have focused primarily on the rising share of the elderly, but have tended to overlook other demographic groups and their impact on both the scale and nature of demand, thus risking underestimating the future strain on LTC systems.

Norway’s decentralized healthcare system poses particular challenges in meeting these evolving LTC demands. The 357 municipalities are responsible for providing LTC and primary-care services, while specialist care is a central state responsibility. This division makes municipalities the central actors in handling LTC expenditure pressures related to both elderly and younger users. Norwegian register data show distinct life-span and gender patterns in LTC service use and costs, and point to the importance of including LTC when focusing on health expenditure in the younger population. ¹³ Municipalities receive block grants from the state based on the expected need for LTC services, but also face increasing demands for the expansion of rights and individualization, as highlighted by the 2015 establishment of user-directed-personal assistance (UPA) as a legal right. Such rights expansions introduce further expenditure pressure. Understanding how local leaders adapt and manage this pressure is crucial to understanding current challenges and guiding future LTC policy decisions.

The challenges facing Norwegian municipalities reflect a broader theme of fiscal asymmetry in decentralized healthcare systems. Fiscal asymmetry refers to placing policy-making authority and fiscal responsibility at different governmental levels. This can create incentive problems because the implementation costs of the decision made by one are borne by the other. López-Santana and Rocco argued that pandemic handling in the US “revealed another moral hazard: federal officials can push off unsavory policy dilemmas—such as the choice between protecting revenues and defending public health—onto subnational governments.” ¹⁴ In Norway, this translates into municipalities having to face the implementation costs and challenges of state mandates and policy expansions without receiving the necessary resources and funding. Essentially, municipalities are left with the operational responsibility of balancing different policy goals. This fiscal asymmetry is a governance factor that both drives expenditure growth and generates managerial challenges at municipal level.

Municipal Leaders as Street-Level Managers

Municipal leaders in decentralized LTC systems represent a distinct type of street-level manager. Unlike frontline workers, who exercise discretion in individual cases, municipal leaders must manage systemic pressures affecting entire service portfolios. They face an effective hierarchy of street-level tensions: pressure from national policy above, constrained resources and workforce shortages below.

Crucially, while individual frontline workers can develop coping mechanisms for specific cases, ¹⁵ municipal leaders are unable to refuse mandated services or ignore regulatory requirements. While nurses and staff operating with patients witness how young users with mental health difficulties need more services, leaders see the sum of these young users more directly and, more importantly, can aggregate the consequences for the municipality more clearly. They experience fiscal asymmetry more directly because they bear organizational responsibility for costs they cannot fully control. This means that these leaders, as street-level leaders operating at the interface between strategy and operations, perceive how LTC expenditure growth is driven by the interaction of policy mandates, unpredictable demand, and resource constraints.

Accordingly, the street-level bureaucracy framework, extended to the municipal management level and combined with fiscal asymmetry theory, provides the analytical frame for this study. We examine how municipal leaders—as street-level managers operating at the governance level—perceive LTC expenditure growth driven by the interaction of policy mandates, unpredictable demand, and resource constraints.

Therefore, the research question this article seeks to answer is: How do municipal leaders view the drivers of LTC expenditure growth, and what challenges do they face in this regard?

Figure 1 illustrates the growth in LTC expenditure over the past two decades. LTC expenditure includes institutional care and home-based services, such as home nursing, physiotherapy, occupational therapy, practical assistance, and user-controlled personal assistance, the latter having increased significantly since 2015. ¹⁶

Figure 1.

Accumulated growth 2003 to 2022.

From Figure 1, we can see that LTC expenditure has outgrown real GDP per capita by a wide margin, and that expenditure for home-care services has risen by more than institutional care expenditures. This aggregate picture shows the situation faced by municipalities and municipal leaders.

Municipal leaders observe these changes most clearly and must adapt local services accordingly. By using semi-structured interviews and thematic analysis, we sought to capture leaders’ views of this growth—insights that cannot be obtained by register data alone—and translate these findings into actionable insights for both local leaders and policymakers.

Materials and Methods

Sample

The first author conducted interviews via Zoom or Teams with representatives from Norwegian municipalities between November 2023 and February 2024. Participants included one municipal CEO (kommunedirektør), several executives for health and welfare (kommunalsjefer), and senior finance managers (økonomisjef). The interviews were initiated through official municipal emails or direct contacts. Considering the variation in the size and demographics of Norwegian municipalities, we specifically targeted municipalities across different KOSTRA groups, which categorize municipalities based on size, disposable income, and fixed costs, reflecting their statutory expenses. Of the total 357 municipalities, 50 were approached, culminating in interviews with 9 municipalities. Two of the interviews were conducted as group sessions, leading to 13 respondents over 9 interviews. To assure participant anonymity, municipal names have been omitted. The interviews lasted for approximately 50 minutes.

The main participants held senior leadership roles with direct responsibility for budgets, strategy, and/or health and care services, giving them first-hand experience of municipal challenges. Their perspectives are, therefore, highly valuable for understanding expenditure growth mechanisms, although they may be susceptible to certain biases, such as the overemphasis of external policy pressures. In two group interviews, additional staff also contributed perspectives alongside the senior leaders.

The data were collected between November 2023 and February 2024. Thematic saturation was reached with this sample, and further data collection was unlikely to yield substantially new insights.

Inclusion and Exclusion Criteria

Municipal CEOs across municipalities in different KOSTRA groups were contacted and asked to participate themselves or nominate others with relevant insights. No further inclusion or exclusion criteria were used.

Sample Size Justification

The sample size was determined based on thematic saturation rather than statistical power calculations. Data collection continued until no new themes emerged. ¹⁷ We considered the sample adequate, as variation across different KOSTRA groups provided contextual variation, while thematic saturation was achieved after 8 to 9 interviews.

Questions

The interviews focused on uncovering the drivers of LTC expenditure growth from both supply and demand perspectives. Initially, respondents were prompted to discuss specific mechanisms driving growth within their municipality, identify the fastest-growing services, and assess any post-COVID-19 changes. Subsequent questions targeted municipal approaches to managing expenditure growth. The semi-structured interview format encouraged natural discussions in that initial questions often covered later topics organically. At the end, respondents speculated on prospective developments and policy shifts, thereby facilitating thorough dialogues and ensuring relevant topics were addressed. The interview guide is available as Supplementary Material. The guide was not validated or tested before the interviews. The semi-structured format and the non-sensitive nature of the topic made formal validation less critical than in studies addressing sensitive and/or personal topics. The participants were all professionals with high expertise in the subject matter, thereby reducing concerns about comprehension or misinterpretation.

Recordings were auto-transcribed using an AI transcription service from the University of Oslo, followed by thorough reviews and corrections by the first author. Quotes were translated from Norwegian to English by the same researcher.

Research Paradigm, Reflexivity, and Data Saturation

The study operated within an interpretivist paradigm, aimed at grasping leaders’ subjective interpretations of LTC cost drivers. The interviews and coding were conducted by the first author. The co-authors reviewed the thematic framework and contributed to the interpretation of the findings during manuscript development. Saturation in codes and themes was attained, aside from the emergence of a new theme (immigration) in the eighth interview. Acknowledging its sensitivity, it was explicitly tackled in the ninth interview. The municipalities engaged were large by Norwegian standards, similar in centrality but differing in elderly resident percentages and free income levels. In the ninth interview, immigration was not viewed as a primary concern.

Trustworthiness Procedures

Credibility was bolstered through iterative code development and the co-authors’ examination during manuscript preparation. While all coding and theme development were managed by the first author, member checking was not undertaken due to the non-sensitive nature of the topic and the participants’ leadership expertise. Alternatively, credibility was supported by iterative coding and triangulation across interviews. Given the uncomplicated subject matter and time constraints, this approach was deemed both reasonable and effective.

The data analysis was conducted by the first author using NVivo, following principles of thematic analysis. ¹⁸ Initial coding identified 20 codes, which were iteratively consolidated and organized into an analytical structure, resulting in three main themes with subthemes (Table 1). The second and third authors reviewed the thematic structure and quotes during manuscript preparation. This manuscript adheres to the Standards for Reporting Qualitative Research guidelines to ensure the transparent and comprehensive reporting of our qualitative methodology and findings. ¹⁹

Table 1.

Main Themes and Subthemes from Interviews.

Theme	Subthemes
Young users	Mental developmental disorders; mental health (light problems, serious problems, coercion); 24-hour staffing; downsizing of specialist care; medical and technological developments
Personnel management	Recruitment and staffing; welfare technology
Expectations	From users (UPA); from the state (specialist care, expansion of rights)

Results

While the municipalities differed in terms of income levels, share of elderly population, and expenditure growth, no clear effect emerged between these contextual factors and the primary themes in the interviews. The key challenges highlighted appeared common across municipalities, suggesting that these issues are widespread and not confined to specific local contexts.

The results of the interview analysis are organized into themes and subthemes (Table 1).

Three main themes emerged from the interviews, appearing consistently across municipalities.

The first theme centers on young users with complex needs. Municipal leaders described a shift from predictable elderly care to unpredictable demand from younger users with mental health issues, often requiring intensive 24-hour staffing. Factors such as downsizing of specialist care also lead to more complex users at the municipal level. Unlike elderly care, where needs can be forecasted based on demographics, these younger users create demand that municipalities struggle to anticipate.

The second theme concerns expectation gaps. Leaders pointed to a mismatch between what they are legally required to provide—particularly user-directed personal assistance (UPA)—and what they can realistically deliver with available resources. National policies expand rights while municipalities bear the implementation costs.

The third theme addresses workforce shortages. Municipalities struggle to recruit qualified staff, especially nurses who cannot easily be replaced by other personnel. This forces them to purchase expensive private services while demand for qualified staff continues to grow. While welfare technology is being used it does not solve the fundamental problem related to personnel management and shortages.

These themes reinforce each other. Complex younger users increase demand for specialized personnel. Legal rights reduce flexibility while workforce shortages drive up costs. Together, they create what leaders experience as a governance problem: national policies set expectations that municipalities lack the resources to meet.

The Role of Young Users with Complex Needs in Shaping LTC Demand

Studies on Norwegian register data have identified young users as crucial for understanding the growth in LTC costs.^1-3 This growth has been explained by reforms in the 1990s that placed the bulk of the responsibility for users with intellectual disabilities at the municipal level. As these individuals age, their need for a broader spectrum of services increases. Somewhat surprisingly, this was not a main theme among our respondents, although aspects of these services were mentioned by some as an important cost driver. Advancements in medical science that heighten the life expectancies of individuals with disabilities and the increased survival of premature infants were mentioned as possible contributors to this demand. Yet, respondents seemed to view services to the disabled as predictable.

Rather, the main challenge was considered to be a “new” group of users: younger persons struggling with mental health problems. These issues include such problems as autism, as well as a large increase in people who require intensive and expensive care from municipalities. This intensity can differ significantly from traditional elderly care demands, as reflected by Respondent B:

There are also more behavior-related issues. There are changes in the rules for use of coercion, which is a good thing, but it requires high staffing levels. We have several users, where we need 1–2 people present at all times. They require a lot of resources.

In more traditional care (eg, institutional care for the elderly), the staff can manage far more users simultaneously. This does not create the same pressure on expenditure growth. Municipalities are also used to providing care to those with intellectual disabilities, with a fairly predictable demand. The large increase in people with substance abuse problems and mental health issues is more challenging. There has been an increase in cases with societal protection (ie, where the municipality must ensure public safety). This is both costly and has a less predictable demand. Indeed:

What we are seeing very clearly is that we are shutting down places in elderly care. Our expenditure on services to people with mental disabilities, autism, and physical disabilities has increased. We experience massive pressure and an increase in substance abuse and mental health issues. (Respondent H)

This shift from elderly users to younger users with more complex needs is challenging for the municipalities. While changes in service demand due to changes in the share of the elderly population are predictable, those relating to younger users are more unpredictable and uncertain. They can be more episodic and resistant to traditional forecasting methods. The rising number of young users, many of whom have a diverse and complex range of needs, is further exacerbated by the significant issue of mental health. This has emerged as a major challenge and a key driver of LTC expenditure. Addressing the needs of individuals with mental health conditions often necessitates specialized services, and in certain cases, 24-hour staffing, placing additional strain on resources.

Regulatory requirements can increase costs by creating mandates that reduce flexibility. This regulatory mechanism is particularly evident in UPA services, where recruitment and competency challenges compound cost pressures. While UPA positions are typically compensated at assistant-level wages, professional responsibility requirements often mandate that health-related tasks be performed by nurses or healthcare workers rather than assistants. This regulatory requirement effectively forces municipalities to replace lower-cost assistant positions with higher-cost qualified personnel, significantly increasing costs.

Regulatory changes regarding the use of compulsory treatment have also compounded challenges related to managing individuals with behavioral issues. Several respondents mentioned this as an important change and a driver of costs. The use of coercion has been highlighted and regulated in recent years, and this has led to a more complex situation for LTC personnel. ²⁰ The problems related to the use of coercion were also highlighted by our respondents. Changes in capacity and/or discharge routines in specialist care were also mentioned as an explanation for the increased demand.

Users with mental health or addiction issues can have a large impact on costs, but the “mental health” category contains a wide spectrum of needs, ranging from those who need intensive, around-the-clock support to milder mental health challenges. Some of these younger users can require 1:1 or even 2:1 staffing ratios 24 hours a day. Naturally, this drives up costs and, combined with more demand unpredictability, the cost increases also create large fluctuations from year to year that can be particularly challenging for small municipalities.

Some respondents also saw an increase in lighter mental health issues among the young, indicating that the increase is not only from those with the highest need. As Respondent B stated:

But in terms of mental health, perhaps there is an increase in expectations . . . What does it mean to have mental health difficulties? Going through a hard time in life may not mean that you are having mental health problems.

Public expectations emerged as a broad topic, extending beyond the issues related to young users with mental health problems. Instead, these expectations, particularly regarding the level of services municipalities could realistically offer in the future, were perceived as high. This heightened demand was seen as a contributing factor to the expansion of services, which, in turn, drives up expenditure and challenges the future sustainability of LTC services.

Mismatch Between Public Expectations and Municipal Current and Future Capacity

Respondents consistently drew attention to the gap between what the public expects of municipal services and what they are realistically able to provide. The sharp rise in inflation was noticeable, but governmental policies and regulations can also affect expectations, further driving up costs. A significant development in the Norwegian LTC sector was the establishment of UPA as a legal right in 2015.

Our experience is that the expectation gap between what the public expects us to provide and what we can deliver is pretty large . . . Take [UPA], for instance, which I think is a very challenging thing. The expectation gap is huge . . . Our expenses here are increasing every year. (Respondent A)

The establishment of UPA as a legal right means that, once a user is eligible for it, the municipalities are obliged to organize services as UPA. This reduces municipalities’ ability to “say no.” The recruitment challenges are also important here, as UPA requires dedicated assistants for individual users. In rural areas, this can mean long travelling distances and a more challenging staffing arrangement than for more usual solutions.

Further reforms that focus on enablement and that can increase the number of users may be coming. In 2023, a Norwegian Official Report ²¹ focusing on the rights of disabled people was published. The report proposes that disabilities should be approached from a rights-based perspective, and not through the traditional healthcare lens. Responding to this proposal, the Norwegian Association of Local and Regional Authorities ²² focused on the need for shifting the responsibility of UPA from municipalities to the state, since the latter can ensure that expanded UPA services become an “instrument for equity” throughout the country. The discussion reflects a broader debate on the best governance and funding models for inclusive and enabling support, as well as the financial constraints to which policies must adapt. The gap between expanding legal rights and local capacity illustrates how state-level policymakers and local implementers face different incentive structures and challenges. While the former are incentivized to expand rights, the costs of doing so are felt locally. Indeed, as mentioned by Respondent H:

We are very curious about this focus on CRPD and what will happen with it . . . There is a strong focus both from user organizations and others on this. I think there is an expectation that it provides many new rights. I am very curious about what will come out of it.

The legal establishment of UPA in 2015, which requires municipalities to provide services for eligible users, has led to a dramatic surge in UPA usage. Should more services be classified as legal rights, LTC services will face added strain, reducing their flexibility and autonomy while driving up costs. Additionally, in areas requiring long travel distances, delivering an increasing proportion of services as at-home UPA can be both costly and logistically complex. Furthermore, the recruitment of personnel for UPA services poses a major challenge. As more people receive UPA at home, the demand for personnel grows, and as the threshold for receiving home-based care lowers, the need for highly skilled staff becomes more critical.

Personnel shortages represent a significant constraint for municipalities, both at present and in the future. This staffing shortfall is a major obstacle, directly contributing to the gap between public expectations and what municipalities can realistically provide. Additionally, it is an important driver of rising costs, as the lack of personnel makes it increasingly difficult to meet the escalating demand for services.

Recruitment and Cost Increases

Municipalities are grappling with the difficulty of attracting and retaining qualified staff, compelling them to increasingly rely on purchasing services from private companies. The recruitment challenges vary depending on professional category and geography. Nurses are a particularly important category, residing at the “top” in the service hierarchy. While nurses can assist with all tasks, some roles can only be performed by nurses.

This inability to substitute nurses easily with other staff categories can create bottlenecks. These are essentially caused by regulations and distinguish LTC services from other municipal services that might have more flexible staffing options. Regulation, although well-intentioned, can create high local costs and challenges that state regulators neither bear nor can easily predict.

Personnel costs increase through market dynamics and two distinct demand pressures. Workforce shortages drive up salaries and force reliance on expensive purchased services, while growing numbers of users requiring 24-hour staffing substantially increase demand for qualified personnel.

Two factors amplify these pressures. First, quality service delivery inherently exceeds regulatory minimums. Staff serving people with severe mental health or substance abuse disorders need “extra efforts that exceed legal minimum requirements” ²⁰ —that is, adequate care costs more than baseline compliance.

Second, regulatory changes around coercion mandate higher staff qualifications—typically nurses rather than assistants. Yet workforce scarcity undermines compliance: 80% of municipal coercion decisions occur under exemptions from educational requirements, ²³ while the use of coercion has increased. ²⁴ Stricter regulations aim to protect user rights, but personnel shortages force municipalities to operate under exemptions or pay premium wages for recruitment.

Municipalities face compounding pressures: complex-needs users require resource-intensive services beyond minimum standards, while regulations require qualifications that cannot be met by the workforce supply. Both drive expenditure growth—through service intensity and qualification requirements—and interact when recruitment failures force expensive purchased services. As explained by Respondent C:

Of the largest groups (nurses and healthcare workers), nurses are the hardest to find. But keep in mind that when we are short of a nurse, we cannot replace the nurse with anyone else. But if we are short of a healthcare worker, but have a nurse on duty, we can go far with an assistant . . . I think that, in rural areas, it is a question of recruitment in general. There aren’t that many healthcare workers or assistants to find either . . . The labor market has run dry. We see this in the entire municipality, not only in healthcare. It is hard to find people.

The challenge of recruiting and retaining personnel, especially in specialized and educated roles, is a widely recognized issue in Norway. Particularly in rural areas, it is hard to attract qualified staff. Despite the acknowledged shortage in supply, regulatory shifts continue to amplify the demand for these professionals. The regulation around coercion is one example of an area where regulation changes intensify the demand for qualified personnel.

More at-home care can further hinder recruitment, and social services aimed at enabling users may have recruitment challenges that traditional healthcare does not have. For municipalities in rural areas, this might be particularly challenging because of low population densities. This can increase costs because of traveling. The higher the demand for at-home care, the more challenging problems with recruitment and traveling time probably become.

Welfare technology can help by optimizing traveling schedules and monitoring users, but less so for social care and services aimed at enabling users. These services are highly labor-intensive. An increase in the number of young users who need and/or are entitled to receive some sort of enablement assistance will thus lead to cost increases, regardless of innovations in welfare technology.

While the themes presented here are different, they are mutually reinforcing. The rise of complex younger users increases the need for specialized staff and personnel in general (Themes 1 and 3). Increasing legal rights, such as UPA, reduces municipal flexibility, while workforce shortages increase costs (linking Themes 2 and 3). Lastly, a more unpredictable demand for services makes planning and recruitment more difficult (linking Themes 1 and 3).

Our findings indicate that the growth in LTC costs is driven not only by demographic change but also by the increasing number of younger users with complex needs, the escalating demand for specialized mental health services, high public expectations, and recruitment challenges. These factors can help us understand the financial burden on municipalities and may explain the significant rise in LTC expenditures. They also reveal the challenging situation faced by local LTC leaders.

Discussion

Our article adds a qualitative understanding that register studies cannot provide. We show what municipal leaders see as the most important current challenges: mental health needs, changes in regulations from the central state, and capacity mismatches lead to both expenditure increase and management challenges. While the demand for elderly care is predictable, regulatory changes and complex needs among younger users challenge traditional forecasting, planning, and management of the services.

Our findings highlight workforce shortages as a major concern for municipal leaders. The OECD has highlighted and documented similar challenges. ¹⁰ While such shortages are not unique to LTC, the labor-intensive nature of care services means that municipalities are especially vulnerable to staffing constraints. This scarcity is linked to expenditure growth, as municipalities are forced to purchase (often more expensive) private services. Our results, therefore, indicate that demographic projections alone are insufficient to explain expenditure growth; governance and workforce capacity are already central drivers. This creates a challenging situation for municipal leaders: they carry the financial and staffing burden of implementing national policies, while central authorities can expand rights without direct (and significant) fiscal consequences.

Municipal leaders face a classic dilemma at the organizational level; they must implement national policy goals and ambitions with limited discretion to refuse services (UPA) and capacity to meet expectations both from the local population and the state. While frontline workers can develop coping mechanisms, municipal leaders have far less flexibility, especially when services become legal rights. This transforms fiscal asymmetry from an abstract governance concept to a very real management constraint.

National policies can expand rights (eg, UPA) and change regulations without any significant cost to the state, while the implementation costs fall on municipalities that are already constrained by budgetary and personnel shortages. This is a problem of fiscal asymmetry, a lack of “skin in the game”; the state can show that it is taking action at little or no cost, all while costs and management problems accrue locally. These incentives intensify when national budgets are constrained, and local users’ demand grows. There are little to no economic marginal costs associated with changing rights or regulations for central politicians or the centralized state, but the political marginal benefits can be high.

While Norway’s demographic pattern mirrors that of several other countries in terms of the importance of younger users, the institutional set-up might also provide a more challenging situation. The Norwegian LTC sector is decentralized, which both intensifies local pressure and creates fiscal asymmetry. In more centralized LTC systems, variations in demand are easier to absorb. The key feature is the degree of fiscal asymmetry; decentralization in itself is not a problem if both the financing and production decisions are made at the same level. Size, however, is a challenge in and of itself. The small median size of Norwegian municipalities means that a high number of local managers and municipalities will face challenges precisely because they are too small to handle unpredictable demand fluctuations. The Norwegian LTC sector is better equipped to handle predictable changes in demand concerning elderly users, but less able to cope with the demand we have described here.

How society chooses to handle these challenges is a matter for political deliberation and decision-making. However, managers and leaders at the municipal level do need to adapt and manage these challenges. Based on our findings, we believe that there are some concrete steps municipal leaders can take to better manage the challenges identified in this study, as reported in Table 2.

Table 2.

Practical Advice for Municipal Leaders in LTC.

Category	Action	Description
Budget and planning	Revise budget models	Consider including “unpredictability buffers” for complex-needs users. Think beyond traditional elderly-focused demographic projections.
	Implement cost tracking and use local data	Monitor expenditure patterns by user demographics to identify surges early and build evidence for policy discussions, potentially using AI tools for pattern analysis.
Service delivery	Pursue intermunicipal collaboration	Share costs and expertise for specialized mental health services across municipal boundaries. Intermunicipal cooperation can also reduce effects of year-to-year fluctuations in demand for services from non-elderly users.
	Manage expectations proactively	Communicate realistic service limitations to prevent expectation-capacity gaps, both to local population and national policymakers.
Governance strategy	Advocate for risk-sharing	Use local cost data to push for municipal financing that better reflects unpredictable complex-needs costs.
	Prepare for policy expansion	Develop contingency plans for potential new legal rights affecting service demand.

Limitations

This study has several limitations. The sample size was relatively small (13 leaders from 9 municipalities), and the findings may not be generalizable to countries with different healthcare systems and governance structures. Municipal leaders may have had organizational bias, emphasizing external policy challenges while potentially underplaying internal management factors. However, these leaders were uniquely positioned as decision-makers who directly experienced and responded to expenditure pressures, making their perspectives essential for understanding the mechanisms behind LTC cost growth.

Conclusion

This study has shown that municipal leaders see expenditure growth as shaped by more than an increased share of the elderly population; governance challenges, the growing role of younger users (often with complex needs), and workforce challenges are seen as important drivers of expenditure. While elderly users clearly represent the majority, the service demands from this group are often more predictable and stable. In contrast, younger users with complex needs, regulatory changes, and recruitment difficulties create different challenges and contribute to a sense of a growing mismatch between municipalities’ LTC capacities and the expectations of the population.

Our findings resonate with international evidence. The OECD has documented challenges in recruiting and retaining LTC personnel, ¹⁰ and prior research has also found a strong increase in mental health needs among younger populations. ¹²

This suggests that understanding LTC expenditure requires an understanding not limited to the projected share of the elderly population, but also to governance mechanisms, workforce capacity, and the changing profile and demands of service users. While our data are limited to Norway, the underlying mechanisms—governance regimes, the changing nature of users, and workforce recruitment and retention—are likely to be relevant for most other healthcare systems and countries that face similar pressures.

Supplemental Material

sj-docx-1-his-10.1177_11786329251410041 – Supplemental material for When Policy Meets Reality: Municipal Leaders’ Views Amid Rising LTC Expenditure

Supplemental material, sj-docx-1-his-10.1177_11786329251410041 for When Policy Meets Reality: Municipal Leaders’ Views Amid Rising LTC Expenditure by Trond Tjerbo, Terje P. Hagen and Jon Helgheim Holte in Health Services Insights