This paper develops a multiple state model to project the number of people with disabilities in the United Kingdom over the next 35 years, thereby identifying implications for demand for long-term care for the elderly in the future.

The model requires three types of data: prevalence rate data, transition rate data and trends data. Recent trends in healthy life expectancy data are used to frame the assumptions made regarding changes in the disability rates of the U.K. population in the future.

Although there will be a large increase in the number of elderly people in the U.K. over the next 35 years, the projections suggest that the implications for the number of elderly people requiring long-term care could be ameliorated by a reduction in the proportion of older people who are severely disabled.

The aim of this work is to present a method to compute the expected amount of annual claims in the health insurance. (A more detailed analysis of the method can be found in Kovářová (1998).) We will be especially concerned with the permanent health insurance and compare our numerical results with those computed and published for the permanent health insurance in C.M.I.R. (1991). At the same time we will give a general methodology applicable not only to the permanent health insurance but for other types of health insurance as well.

The methods used today can be divided into three groups: the method of the decrement tables, the Manchester Unity method and the multiple state model. We would like to describe a simple method to compute from the data of the multiple state model the bases for the Manchester United and for the decrement tables methods.