This paper examines the effect of public long-term care on the macro-economy under a closed two-period overlapping generations economy. We show that the effect of state of health on the steady-state level of capital stock depends on the degree that elderly desires household-produced care service by the young. We also examine the optimal elderly care policy. We show that the government should control both the rate of payroll tax and the rate of self-burden to reach the optimal solution. We also show that the government should set a high rate of self-burden in an economy where the degree of altruism is sufficiently high and the elderly are in good health.