Across the world, wealthy countries are struggling to finance long-term care for rapidly aging populations. Most outspend the United States through government funding or insurance that individuals are legally required to obtain. Some prevent individuals from exhausting all their income or assets to pay for long-term care. But like the United States, the middle and upper classes in many countries can bear a substantial share of the costs. Here’s how five other countries finance long-term care.
Long-term care insurance is mandatory for Japanese citizens aged 40 and over, while in the United States only a small portion of the population obtains coverage voluntarily. The financing of the Japanese program comes half from tax revenues and half from bonuses. Seniors contribute 10 to 30 percent of the cost of services, depending on their income, and insurance covers the rest. There is a maximum amount people must spend out of their income before insurance covers the rest of the costs. Workers can also take up to 93 days of paid leave to support loved ones with long-term care needs. Japan assigns a care manager to each person using services; each manager supervises approximately 40 seniors. In 2020, Japan spent 2% of its gross domestic product on long-term care, 67% more than the United States that year.
The Dutch have included long-term care in their universal health care system since 1968. One public insurance program funds nursing homes and other institutional settings, and another funds nursing and personal care at home. Registration is required. Dutch taxpayers spend almost 10% of their income on insurance premiums, up to a fixed amount. Out-of-pocket payments represent approximately 7% of the cost of institutional care. General taxes fund a third program in which municipalities provide financial assistance and social support to seniors living at home. There is no private long-term care insurance. The Netherlands spent 4.1% of its gross domestic product on long-term care in 2021, more than any other country tracked by the Organization for Economic Cooperation and Development, and four times the amount spent by states -United.
Provinces and territories fund long-term care services through general tax revenues. The money budgeted is not always enough to cover all services, and some localities prioritize those who need it most. The amount of subsidies people can receive, the costs they must pay out of pocket, and the availability of services vary by province and territory, as is the case in the United States with state Medicaid programs. . The mix of providers also varies by region: For example, nursing home care in Quebec is primarily run by a public system, while nursing homes in Ontario are primarily for-profit. Notably, Canada’s long-term care system is separate from its national health care system, which funds hospitals and doctors without patients having to pay out of pocket. In 2021, Canada spent 1.8% of its GDP on long-term care, 80% more than the United States.
Local authorities fund most long-term care through taxes and grants from central government. Private providers generally provide services. Government contributions are based on financial need, with co-pays usually required. As in the United States, the middle classes and the wealthy bear most, if not all, of the costs themselves. Unlike the United States, the government provides payments directly to low-income people so they can hire workers to care for them in their homes. The UK has also taken steps to prevent people from losing all their wealth to pay for long-term care. It subsidizes care for people with savings and assets of less than about $30,000, whereas in the United States most people are only eligible for Medicaid when they have exhausted all of their assets, unless $2,000 to $3,000. In 2022, the British the government proposed extend subsidies to people with up to $105,000 in wealth and property, with a lifetime cap of about $100,000 on the amount each person spends on long-term medical care, excluding housing and meals in a retirement home. But the plan was delayed until 2025. In 2021, the UK spent 1.8% of its GDP on long-term care, 80% more than the US.
Singapore recently introduced a mandatory long-term care insurance system for people born in 1980 or later. Citizens and permanent residents are automatically enrolled in an insurance plan called CareShield lifespan from 30 years old. They must pay premiums until they retire or until age 67 (whichever is later) or until they are allowed to use the services. The government subsidizes 20% to 30% of premiums for those earning around $2,000 per month or less. Monthly payments start at around $440. Government subsidies for nursing homes and other institutional care can range from 10% to 75%, depending on ability to pay. Those earning more than $2,000 per month receive no subsidies. CareShield is optional for Singaporeans born in 1979 or earlier; they are covered by an older voluntary scheme. Singapore also offers a monthly, means-tested cash grant – about $290 this year – to help cover care-related expenses.