Paying for Long-Term Care

Why care for frail older people is so expensive, how different countries pay for it, and the heavy burden on families.

As people live longer, more of them need long-term care: help with daily activities like bathing, dressing, eating and moving around, often because of frailty, dementia or disability. Paying for this care is one of the biggest challenges of ageing societies.

Types of care

Informal care by family members, usually unpaid and mostly provided by women.
Home care by paid carers who visit or live with the person.
Residential care in care homes or nursing homes.

Why it is expensive

Care is labour-intensive and hard to automate. Costs for residential care in rich countries can reach tens of thousands of dollars a year. Like childcare, it suffers from cost disease: productivity barely rises, while wages elsewhere do.

How countries pay

Japan introduced mandatory long-term care insurance in 2000. Everyone aged 40 and over pays premiums, and people who need care receive services with a co-payment.
Germany introduced long-term care insurance in 1995.
The Nordic countries fund care largely through taxes, providing extensive public services.
The United States has no universal system. Medicare covers little long-term care; Medicaid covers people with low incomes and assets, so many people spend down their savings before qualifying.
The United Kingdom relies on means-tested public support, and reform has been debated for decades.

The family burden

In many countries, including India, families provide most long-term care. Carers often reduce paid work, losing income and pensions, and face stress and health problems. As families become smaller and more women work, fewer family carers are available.

Japan's approach

Before 2000, much elderly care in Japan was provided by daughters and daughters-in-law, or through hospital stays. Japan's long-term care insurance made professional home care and day services widely available, funded by premiums and taxes. It eased the burden on families and created a large care workforce, though rising costs have led to periodic increases in premiums and co-payments.

The workforce challenge

Care work is often low-paid, with high turnover. Many countries rely on migrant care workers. Raising pay and training can improve quality but increases costs.

Thinking health insurance covers long-term care

In many countries, health insurance covers medical treatment but not ongoing help with daily living. Long-term care often requires separate funding, which many families discover only when a relative needs it.

Key takeaways

Long-term care helps people with daily activities, often due to frailty or dementia.
It is labour-intensive and expensive, suffering from cost disease.
Japan and Germany use mandatory long-term care insurance; others rely on taxes or means testing.
Families, mostly women, provide much unpaid care, especially in countries like India.