Opinion Column

How Does U.S. Long-Term Care Stack Up Against the Rest of the World?

The Washington Post recently ran a column arguing that the U.S. model for caring for the frail elderly and younger people with disabilities falls far short of the long-term care systems in France and the United Kingdom. There is no doubt the U.S. scheme is deeply flawed. But even as Congress struggles to reform long-term services and supports here, France is wrestling with its own system. And in Britain, long-term care is rapidly becoming a major political embarrassment for Labor Prime Minister Gordon Brown.

A bit of history: Two decades ago, most of the developed world relied on the same sort of welfare-based, Medicaid-type system that the U.S. still uses. That is, if you were poor enough and sick enough, the state would provide some modest personal assistance. If you were middle class, you were on your own-that is, until you spent so much on care that you became poor enough to qualify for government aid.

Most developed countries recognized this system was both needlessly cruel and fiscally unsustainable. The U.S. tried to keep people off Medicaid by encouraging them to buy private long-term care insurance. It tried tax subsidies, a government marketing campaign, and an effort to better coordinate private insurance with public benefits. For the most part, it failed, and today, only about seven million Americans own private insurance.

At the same time, most of Europe and Japan went a different route. Building on their national health systems, they turned long-term care from welfare to social insurance. Germany, for example, adopted a universal, national long-term care insurance system that aims to pay about half the cost of long-term care.

Japan took a similar, but slightly different, tack. In the face of massive pressure from women who were trying to hold down jobs while caring for their mothers and mothers-in-law, Japan also created a national long-term care insurance program. Funded by both taxes and income-based premiums, Japanese insurance covers about 90 percent of the cost of care, though principally for those 65 and older.

France put its own spin on the social insurance model. It also provides universal tax-funded long-term care insurance, but benefits are closely tied to income. As a result, a very poor person might get the equivalent of $1,400-a-month for home care, while someone earning about $50,000-a-year might receive only a few hundred dollars. As a result, in France, one-quarter of those 65 and older have purchased private long-term care insurance to supplement their government benefit.

While these changes are a big improvement over past practices, they have created their own problems. For instance, France and Japan, along with countries such as The Netherlands, have struggled with rapidly increasing costs and have had to reduce benefits. Germany has addressed its cost problem by raising the payroll tax that funds its insurance program.

Oddly, England, which The Post held out as a model of long-term care, may face the biggest mess of all. Unlike the rest of Europe, it has failed to reform its financing system in any significant way, and remains stuck in its failing welfare model. While the elderly (and everyone else) get universal medical care through its National Health System, only the poor get government long-term care benefits. And, because this assistance varies dramatically from one local jurisdiction to another, the system is widely disparaged as the “postcode lottery.”

The U.K. has struggled to fix this system for well over a decade. High-powered commissions have recommended major reforms, but little has been done. One scathing 2006 report by the Joseph Rowntree Foundation concluded “the public finds the present system incomprehensible and considers its outcomes unjust.” Not exactly a ringing endorsement.

Yet, reform efforts have gone nowhere. In July, Prime Minister Brown proposed a fundamental shift to an insurance-type model. But in November, he appeared to switch gears and call for expanding free care, but only for the most needy. For his troubles, Brown, who faces reelection this spring, is being roundly criticized by both conservatives and members of his own Labor Party.

There are two important lessons from the European experience. First, while an insurance-based system is vastly better than one that requires people to impoverish themselves before they can get help, it is not easy to implement. Second, the U.K is no model for reform.

Howard Gleckman, a resident fellow at the Urban Institute, is author of “Caring For Our Parents” and a frequent writer and speaker on long-term care issues.