No single approach to long-term care financing is ideal, but “approaches from within the United States and abroad offer insights into how healthcare systems and payment models can be leveraged or expanded to cover long-term care needs,” write the authors of a new report from Commonwealth Fund researchers.

“In the US, the lack of a unified funding mechanism places the heavy financial burden of care on individuals and their caregivers — a burden that weighs especially heavy on people of color and low-income adults,” the authors wrote. “While approaches to long-term care vary markedly from country to country, they generally work in conjunction with centralized health systems.”

The authors compared the United States with 12 other countries, including those that take part in the Commonwealth Fund’s annual International Health Policy Survey — Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland and the United Kingdom — along with Japan and South Korea.

The US government provides less support than other high-income countries, but some states have taken it upon themselves to make long-term care affordable, the analysis found. For example, Washington state enacted the WA Cares Fund, requiring employees to pay a premium of 0.58% of their total paycheck. Funds are meant to be used to help pay for nursing care and other long-term care services and supports for those who need them.

California, Michigan, Illinois, New York, Minnesota and Rhode Island have funded studies to assess the feasibility of implementing long-term care financing policies, but none has enacted new policies, the authors noted.

Internationally, according to the report, long-term care financing is handled differently, albeit imperfectly, using social insurance; universal, comprehensive coverage through a single-payer program administered by a government entity; residual, or means-tested, systems, which do not provide universal benefits but serve as a social safety net for those who cannot afford health care or long-term care; or a hybrid approach

In 2020, estimated US spending for long-term care totaled $361.6 billion, according to the report. LTSS is financed through a mix of public and private funding, including out-of-pocket spending. Individuals and their families often bear the cost of long-term care when they are able, with nursing home care often costing more than $100,000 a year. Medicare, which the authors noted does not cover long-term care needs, is the main source of insurance for people aged 65 and older. Medicare programs pick up a large chunk of the country’s long-term care expenses for those who are unable to pay out-of-pocket. 

This report isn’t the first effort to examine the issue of long-term care financing and propose possible solutions. Recent years have seen calls for reform by groups such as Milken Institute and Genworth, the Long-Term Care Financing Collaborative, the Bipartisan Policy Center, LeadingAge and the LeadingAge LTSS Center @UMass Boston and Community Catalyst’s Center for Consumer Engagement in Health Innovation.