Long-Term Care Financing: Models and Issues

As the population of the United States ages, policymakers are devoting more attention to ways of strengthening the financing of long-term care for the elderly and disabled. Demographic changes will place additional pressures on the system in future years, but people in need currently lack uniform access to care that promotes autonomy and maintains quality of life. Many other developed countries are farther along the aging curve than the United States and have already responded with systemic reforms. Innovative programs within the United States are also seeking to promote consumer autonomy, service flexibility, support for informal caregiving, and improved integration of medical and social services.

This paper provides an overview of some of the basic policy choices to be made in designing a long-term care financing system, including the sources of funds, mix of public and private responsibility, eligibility for benefits, and the nature and extent of covered services. It draws examples from both the U.S. and abroad of possible approaches in each issue area and summarizes the equity issues or other concerns raised by the options. The paper was commissioned by the National Academy of Social Insurance’s study panel on long-term care.