Long-Term Care Around the Globe

Many advanced industrial nations enacted significant and comprehensive long-term care financing and service delivery reforms during the 1990s. Through the first half of the 1990s, the dominant trend in the organization of systems of publicly funded long-term care was decentralization and consolidation of responsibility for all, or most, long-term care services at the local or state/provincial government level. National government involvement was generally limited to providing broad framework laws establishing the bases for entitlement to care (though not necessarily guaranteeing access to specific service types or amounts) and providing funds to other levels of government, most often in the form of block grants. Local, state, and provincial governments were usually expected to bear at least some of the financial cost of providing long-term care services.

More recent reforms have taken the form of social insurance coverage. This model of long-term care financing (i.e., nationally uniform eligibility and coverage—funded exclusively or predominantly from national revenues—most often via a dedicated payroll tax) was previously quite rare (existing only in the Netherlands, in Israel for home care only, and in the United States for skilled home health services). In 1994 Germany introduced comprehensive social insurance for both nursing home and home and community-based services. Japan's new social insurance coverage for long-term care, patterned on the German model, went into effect in 2000.

Several countries (i.e., Austria, France) have also introduced long-term care allowances, which, when they are financed out of national revenues, establish a universal, disability-related entitlement to benefits, based on standardized eligibility and coverage criteria. This is also a social insurance model. In Germany and the Netherlands, cash payments, or individual service budgets, are an available option within a long-term care insurance system that also arranges for formal services to be provided by authorized service providers. One purpose of conceptualizing benefits in terms of monetary allowances is to provide for greater flexibility in service options so that care plans may be more individualized. Another goal, when individuals and families have control over how the allowances are spent, is to offer more freedom of choice and give more autonomy to elders and their families. Ideally, public financing should make it possible for formal services to substitute for the traditional reliance on family care when family care is not available, as well as make it possible for formal caregivers to supplement family care when the amount of care required is too much for family caregivers alone. However, government also has an interest in rewarding and supporting those families that are willing and able to provide all or most of the care a disabled elder requires.

Canada and the United States are among the few advanced industrial countries that have not had significant reforms of their long-term care financing and service delivery systems for many years. Canadian leaders appear not to want to change the basic organizational structure of their system, which is a federal/provincial partnership approach to financing and administering coverage for health care, including long-term care services, with primary administrative responsibility in the hands of the provinces and federal cost subsidization via block grants. Throughout the 1990s, a high national deficit forced the federal government to cut back on its financial support. As a result, there was little movement to expand access to home care, even though Canadian officials recognized that some cost-containment measures with respect to acute-care services (e.g., policies that drove down the average length of hospital stays) increased the need for in-home services.

In the United States, President Clinton proposed a major expansion of federal support for home and community-based supportive services in his 1993 plan for comprehensive health care financing reform. The Clinton proposals followed the then dominant international trend toward decentralization of responsibility for publicly funded long-term care services, but with increased cost sharing by the federal government. However, the Clinton health reforms were not enacted and, in any case, contentious debate over the proposals for acute-care financing reforms limited the extent of attention given to the long-term care aspects of the president's plan. Since 1993 the attention of U.S. policymakers has been kept focused on other health care financing and service delivery concerns, specifically the sizable minority of Americans without any health insurance coverage; the desire to provide at least basic coverage for children; the need to address the solvency of Medicare with respect to existing benefits; and extending Medicare coverage to prescription drugs.

Policymakers have not, however, ignored the long-term care needs of the elderly. Experimentation has been taking place in Medicaid at the state level with, on the one hand, various consumer-directed models of home and community-based service delivery, including giving beneficiaries the right to decide how to spend cash allowances, and, on the other hand, attempts to finance integrated packages of acute and long-term care services, via risk contracting, under which all services are provided by managed care organizations and beneficiaries give up freedom of choice in favor of more comprehensive coverage for themselves and lower costs to the government.

Canada offers extensive tax subsidies to persons with disabilities and their family caregivers. President Bush's 2002 budget proposed a tax subsidy somewhat different from President Clinton's previous proposal, limited to adult children or grandchildren who provide care in their homes to their older relatives. President Bush's budget also proposed giving individual taxpayers a tax incentive to purchase private long-term care insurance. For a time, it appeared that Democrats in Congress might vote for tax incentives for private long-term care insurance as long as they were packaged together with supports for caregivers. These initiatives are still under active consideration by the Administration and the Congress; however, the effects of economic recession and the September 11, 2001 terrorist attacks have at least deferred their possible enactment into law.

Since the 1980s, the private long-term care insurance market in the United States has grown rapidly, but it remains small. Small markets for private long-term care insurance have also developed in the United Kingdom and Germany (high-income Germans are permitted to opt out of the public insurance system in favor of private coverage). In the United States, experts on long-term care remain divided, and even the industry itself professes uncertainty about the extent of growth in the private long-term care insurance market that might reasonably be expected to occur as a result of tax subsidies intended to promote the purchase of lower-cost, employer-sponsored group policies at younger ages.

In sum, the U.S. population is aging even though the extent and pace of population aging in the United States puts less pressure on American policymakers than on those in other advanced industrial countries that are aging even more rapidly. In such countries there is a more urgent need to address the health and social services needs of growing numbers of elderly citizens. While the immediate future of long-term care policy reform in the United States is very difficult to predict, it appears unlikely that U.S. policymakers can continue to postpone the challenge of seeking a new balance in reliance on the family, marketplace, and state to meet the long-term care needs of the elderly population.