LONG-TERM CARE AROUND THE GLOBE

The rate of population aging across developed countries varies considerably. For example, in the year 2000, the percentage of the total population age sixty-five and older was higher in Japan (17.1 percent), Germany (16.4 percent), the United Kingdom (16 percent), and France (15.9 percent) than in Canada (12.8 percent), the United States (12.5 percent), Australia (12.1 percent), and New Zealand (11.6 percent). By the year 2020, Canada, the United States, Australia, and New Zealand will catch up to or slightly surpass Japan, Germany, France and the United Kingdom in this regard. Meanwhile, population aging in Germany, France and the United Kingdom is anticipated to progress to the point where, as of 2020, one in five—and, in Japan, one in four—citizens will be in this age group. These and other differences in the extent and pace of population aging across developed countries may explain why the countries with the oldest and/or more rapidly aging populations (including Germany, Japan, and the United Kingdom) have given high political priority to reforming their long-term care financing and service delivery systems.

The central challenge facing policymakers seeking to reform their long-term care systems, is, according to many experts, striking a balance in the provision of long-term care for the elderly between the family, the marketplace, and the state. To understand why this is such a difficult task, it is useful to review the evolution of long-term care systems in developed countries.

History of Long-Term Care

Historically, long-term care for the elderly has been viewed as predominantly an individual and family, rather than a governmental responsibility. The role of government (and/or the church) was residual, insofar as communities felt obliged to offer charitable assistance to destitute elders who did not have a family to take care of them. Until 2001, some European countries (e.g., Germany) continued to require financial contributions from adult children if elderly parents were admitted to institutional care. The United States and the United Kingdom continue to maintain the primacy of personal financial responsibility for long-term care by requiring elderly disabled persons to spend-down their own income and assets paying for care in nursing homes, and by means-testing access to home-delivered social support (as distinct from home-delivered nursing care, which is covered under medical insurance).

Within the family, eldercare has traditionally been defined as "woman's work," along with childrearing and homemaking. Although more affluent households traditionally had domestic servants to help with these tasks, most home care was provided by female family members. The difficulty of assigning a monetary value to such nonmarket labor, especially in the context of shared living arrangements and pooling of household income and assets, had the unfortunate consequence of creating something of a societal blind spot with respect to recognizing the extent to which society has relied upon such informal eldercare. Nor can understanding the economic and political consequences if the availability and adequacy of this resource could no longer be taken quite so much for granted.

Even as economists have become more willing to try to estimate the monetary value of informal eldercare, they have debated how to do so. Should informal be valued at the average hourly wage rate of home care workers (which, in the United States is only slightly above the statutorily mandated minimum wage)? Or—given that a large number of working age women are now employed outside the home—should the value of informal elder care be measured in terms of the "opportunity cost" (i.e., the pay and benefits a particular woman forfeits when she leaves employment or reduces her hours of paid work to provide informal eldercare)? In Europe and Japan, public policy around long-term care is increasingly being evaluated in terms of the potential effect on women's labor force participation. Thus, policies favoring care at home rather than in residential facilities are subject to criticism for reinforcing traditional expectations that women will stay at home to provide informal eldercare.

In pre-industrial societies, the availability, ability, and willingness of family to provide whatever eldercare might be needed is largely taken for granted. Pre-industrial societies include ones that existed in the historical past of the United States, Western European and Japan as well as contemporary societies in developing countries. In these kinds of societies, people often live their entire lives close to where they were born; families tend to be large; whether they live in extended family households or in nuclear families, they live near other family members. Very few elders, disabled or nondisabled, live alone in pre-industrial societies. Among Western countries, the percentage of elderly living alone can serve as a proxy indicator of a country's level of economic development and how long ago the country made the transition from developing to developed. Thus, in Denmark and Sweden 42 and 41 percent, respectively, of older persons live alone as compared to 17 to 19 percent in Spain, Greece, and Portugal.

Cultural values favoring shared living arrangements were powerful enough to sustain the behavioral norm in Japan until well into a highly advanced stage of economic development. Nevertheless, the prevalence of extended family living arrangements in Japan has been declining and the rate of decline has accelerated in recent years. A shift toward nuclear family living arrangements is also occurring in Korea and other Asian countries undergoing rapid economic development.

The process of economic development everywhere is associated with decreased fertility rates and greater longevity. These demographic changes have significant consequences for elder care. The U.S. Census Bureau suggests that the ratio of people aged eighty and older per one hundred people aged fifty to sixty-four is a useful measure of the potential pressure on middle-aged persons to provide care to a parent generation which has reached the age when need for long-term care becomes increasingly likely. In South America, Eastern Asia, and Western Europe, this parent support ratio doubled between 1950 and 2000. The most pronounced changes occurred in the industrialized countries, twelve of which had parent support ratios of twenty or higher as of 2000 (although two less highly developed countries, Israel and Uruguay, also had similarly high ratios). The parent support ratio is expected to rise in most countries of the world between 2015 and 2030. However, Western Africa experienced little change in the parent support ratio over the past fifty years and the aggregate level is expected to remain low in 2030 despite rapid growth in absolute numbers of elders eighty and older.

Childlessness also becomes more common with economic development. Urbanization and other patterns of mobility or migration (such as immigration from less to more developed countries) may have much the same effect as childlessness if the geographic separation between adult children and elderly parents precludes reliance on informal eldercare.

Unlike most other developed countries, the United States underwent a privatization of residential eldercare beginning in the 1930s. This occurred as an outgrowth of reform efforts to close down county-run homes for the aged, many of which were rather Dickensian. Laws were enacted that shifted the financial burden of providing for the poor elderly away from local governments onto the states and the federal government and prohibited payments from going to public institutions. What American reformers intended was to encourage the placement of disabled elders in foster family settings, but what they actually did was to stimulate the growth of proprietary nursing homes. In most other countries, however, local government authorities and churches continued to build and operate most homes for the aged. Private, for-profit nursing homes did not appear until much later in the United Kingdom, and in most European countries they never developed.

Starting in the 1950s in the United States and somewhat later in other countries, residential eldercare facilities found themselves experiencing a different sort of demand than they were used to. Instead of catering almost exclusively to poor older adults without family caregivers, many of whom were only mildly or moderately disabled, residential facilities began to admit residents who were older (on average), had multiple chronic illnesses, and were more functionally dependent. Moreover, many of these elders and their families also had some (though not always enough) capacity to pay for care. In addition, many elders now sought admission to residential care not because they lacked grown children or other relatives to provide care, but because their families felt unable to give them the level of care required. This was largely because advances in medical science enabled more people to live to age eighty and beyond, when the risk of disabling illness (e.g., Alzheimer's) increases significantly, and because better medical care enabled more elders with chronic illnesses to stay alive longer, even as their functional status continued to deteriorate. During this same period, however, improvements in social welfare protections—especially Social Security, private pensions, and the availability of public assistance payments for the elderly—as well as rising standards of living for all members of society (i.e., better housing stock, transportation services, the rapid spread of electric lighting, running water, indoor plumbing, and telephone service) made it possible for growing numbers of low-income elderly persons to live alone outside of institutions, even with a certain amount of functional disability.

Because of these countervailing trends, it is surprisingly difficult to determine whether, or to what extent institutionalization rates of elderly persons actually increased. One U.S. government study (ASPE, 1981) examined census data from 1890 to 1980 and concluded that the ageadjusted percentage of elderly persons residing in institutions and group quarters had remained remarkably constant throughout most of the century. The only age group in which the use of residential eldercare clearly had increased was among those ages eighty and older, a phenomenon attributed to longer life expectancies among less-healthy elders resulting from improvements in medical care. In the United States, it appears that the percentage of elderly persons residing in institutions and group quarters during the twentieth century has probably never been much under 4 percent or much above 6 percent. Questions of definition (what kinds of facilities should be included in the count) and measurement error make more precise estimates impossible.

What is more certain is that the character of long-term institutional care began to change dramatically around 1950 when the percentage of medically oriented care facilities (nursing homes) rose and the percentage of social welfare facilities (homes for the aged) fell. The medicalization of residential eldercare was swift and dramatic in the United States, perhaps because privatization made facilities more responsive to market forces. Although medicalization was well underway before the passage of Medicare and Medicaid in 1965, the eligibility of nursing homes for this new medical insurance coverage accelerated the trend. In many European countries and in Japan, however, as medical insurance coverage became available, it typically excluded eldercare facilities, which were mostly local public institutions, because these were viewed as part of the social services system. As a result, these welfare facilities were often very slow to adapt to change. Indeed, some barely modernized at all (in France, this eventually emerged as a serious problem that the national government addressed systematically in the early 1980s). Meanwhile, elders with chronic disabling medical conditions were increasingly hospitalized for long stays, which were covered by national health insurance. Over time, national health plan administrators came to see the use of high-cost hospitals to provide institutional long-term care as an unacceptable financial burden, as well as an inefficient use of resources.

Trends in Long-Term Care

The nature of residential eldercare has once again begun to change. A newer model emphasizing the availability of personal-assistance services, rather than nursing, was promoted and the balance between these types of facilities and medically oriented nursing homes shifted. In Europe and Australia, these residential care settings are being developed primarily under public auspices (both with respect to financing and service delivery). The terminology varies; in Europe, they were often described as supportive housing arrangements and often consist of specially designed (handicapped accessible) complexes of private rooms and apartments, along with congregate dining facilities, multiple communal areas for socialization, and locations where nurses and other care personnel are permanently stationed. In the United States, the growth of what are called assisted-living facilities developed primarily in the private-pay marketplace when for-profit and not-for-profit developers identified and responded to an emerging consumer demand for this service from affluent elders and their families.

As governmental authorities above the local level (i.e., national, state, and provincial governments) have assumed a greater share of the costs associated with eldercare provided in inpatient facilities (especially long-stay hospital or nursing-home care), the societal visibility of residential care increased. The complex and changing roles of poverty, family relationships, chronic illness, and functional disability in explaining the use of residential eldercare has resulted in a great deal of confusion in the minds of policymakers, professional experts, and the public about when, if ever, care in such settings is truly necessary or appropriate. In opinion surveys, most respondents readily agree that disabled elders prefer to, and should be able to, obtain the long-term care they need at home.

There is also a private-pay market developing for the newer social models of residential eldercare in some countries (e.g., assisted living in the United States, hostels in Australia). These facilities appeal to elders and families when it is clear that it is no longer possible for an elder to live alone safely, even with substantial amounts of formal and informal help. Governments in many countries are responding to this phenomenon by differentiating between payments for care and payments for accommodation. Increasingly, the care component is publicly funded, without means-testing, but residents are expected to pay room and board costs out of their own income and savings. However, low-income elders who cannot afford to pay all of the accommodation fees can apply for means-tested public assistance to cover the shortfall. This pattern now prevails in Germany and France for all forms of residential long-term care and in Australia for social model facilities (hostels, as distinct from nursing homes). Another common pattern is to require residents of care facilities to contribute most of their Social Security pension income toward the cost of care (in Canada, this is referred to as the user fee) with the remainder of the cost being borne by public programs (although residents may also have to pay supplemental charges from private income and savings for private rooms and other amenities and services). In the United States, there is growing interest in states to cover the care component of assisted-living facilities for low-income individuals under Medicaid, but not the room and board component, which federal Medicaid law prohibits.

Nevertheless, most disabled elders who need long-term care continue to receive it at home, and most functional assistance is still being provided by family caregivers. Institutionalization rates for older adults in eight developed countries (United States, United Kingdom, Australia, Canada, New Zealand, France, Germany, and Japan) are estimated to range between 5 and 7 percent of the total elderly adult population. Since the 1960s, the use of formal home care (primarily as a supplement to family care) has increased. Use rates of formal home care among the population age sixty-five and older in these same eight countries are estimated to range from a low of 5 to 5.5 percent in Japan and the United Kingdom to a high of 16 to 17 percent in Canada and the United States. In the United States, data from the 1982, 1989, and 1994 National Long-Term Care Surveys on use of formal home care by older Americans with chronic functional disabilities residing in the community show an increase from 25 to 35 percent. Virtually all of the increase was in use of paid care to supplement informal care; the percentage of disabled elders who relied exclusively on paid home care remained at about 5 percent.

Funding Concerns

It is a matter of intense interest to policy-makers, and much debated among experts, as to whether or not increases in public funding for formal home care result in a decreased use of residential eldercare, especially nursing home and long-stay hospital care. Certainly, there is clear historical evidence from the United States that hospital stays can be shortened by investing in home-delivered nursing and home health-aide services. According to Jacobzone (2000), institutionalization rates for the elderly in five countries for which data are available suggest that rates decreased during the 1990s. The United States is one of the countries cited as having experienced reductions in nursing home use.

According to the most recent (1995–1997) National Nursing Home Survey (NNHS), the total rate of nursing home residence among the U.S. population age sixty-five and older declined from the previous 1985 NNHS. The ageadjusted nursing home residence rate was forty-five persons per one thousand age sixty-five and older in 1997, as compared to forty-five per one thousand in 1985. Among older Americans age sixty-five to seventy-four, and those age eighty-five and older, the nursing home residence rates declined 14 and 13 percent, respectively. The greatest decline in nursing home residence (21 percent) occurred among older Americans age seventy-five to eighty-four.

The nursing home component of the 1996 Medical Expenditures Panel Survey found that the supply of nursing home beds per one thousand elders age seventy-five and older decreased by 19 percent between 1987 and 1996. Moreover, the average nursing home occupancy rate declined from 92.3 percent to 88.8 percent. Both surveys also found that nursing home residents were, on average, older and more severely disabled.

On the face of it, these statistics might appear to confirm that the significant increases in spending (primarily by government programs) for home and community-based services which also occurred over the 1980s through the mid 1990s, had the desired effect of reducing institutionalization. However, this conclusion would be simplistic.

What accounts for the discrepancy between the 1985–1995/97 National Nursing Home Survey finding of a small decline in prevalence of nursing home use among Ameiican elders and the National Long-Term Care Survey measures which show no change in institutional use? The NNHS is a provider survey, which focuses only on use of a particular type of eldercare facility (i.e., federally certified and/or state licensed nursing homes. In contrast, the NLTCS is person-based; it characterizes living arrangements of individual sample members, who are classified as living either in the community or in institutional settings, which are not limited to nursing homes.

It is noteworthy that in 1987, Congress enacted legislation that changed the definition of a nursing home. Since 1972 nursing homes could be certified for Medicaid reimbursement either as skilled nursing facilities (SNFs) or intermediate care facilities (ICFs). The principal difference in these two levels of care was in nurse staffing requirements. By about 1990, nursing homes had to meet the skilled care standard to qualify for Medicaid as well as Medicare coverage. Just about the time this change went into effect, a new form of residential eldercare called "assisted living" began to proliferate. The 1997 National Survey of Assisted Living Facilities (Hawes et al., 1999) found 11,472 assisted living facilities (ALFs), accommodating 558,400 residents. Fifty-eight percent of ALFs had been in existence for ten or fewer years.

In 1997, there were approximately 1.5 million nursing home residents. Thus, if the residents of nursing homes and assisted living facilities were added together, ALF residents represented about one fourth of the total. Clearly, whether the percentage of the U.S. elderly population residing in eldercare institutions is perceived to have declined, stayed the same, or actually increased from the mid-1980s through the mid-1990s is a matter of defining what kinds of living arrangements or care settings should be classified as institutions. Are all congregate facilities that purposefully serve disabled elders institutions or are some better characterized as community housing with supportive services?

Various criteria for differentiating institutions from supportive housing—size, amount of medical or nursing care provided, and privacy of accommodations—have been suggested. None of these clearly resolve the status of ALFs.

An alternative to trying to classify individual ALFs as institutions or community living based on characteristics such as larger or smaller size, availability of nurses on staff, or prevalence of private rooms or apartments is to refrain from using the term "institution" because it is not clearly defined and has such pejorative connotations. If both nursing homes and ALFs are viewed more neutrally as forms of specialized residential care for disabled elders, it seems clear that the growth of ALFs has more than offset the decreased use of nursing homes. In any event, patterns in residential eldercare in the United States are different than they were in the last decades of the twentieth century. Facilities licensed and certified as nursing homes now provide more short term, post-hospital convalescent and rehabilitative care and also serve a more severely disabled long-stay population. Nursing homes also cater more to public pay (Medicare, Medicaid) residents, whereas assisted living facilities serve predominantly private payers.

As previously mentioned, a comparable movement away from nursing homes (or their equivalent) toward alternative forms of residential eldercare is underway in other developed countries. Experts in other countries also struggle with how to characterize these newer residential settings. Up to the late 1980s, there was agreement that most eldercare facilities in Europe, Canada, Australia, and New Zealand were, like facilities in the United States, institution in character. Generally speaking, the ratio of nonmedical to medical institutions was higher in Europe than elsewhere. The movement to deinstitutionalize eldercare facilities began and is most advanced in Scandinavia., especially Denmark, which in 1987 passed a law prohibiting construction of any new nursing homes. New types of sheltered housing have developed, which offer independent living, but combined with services and care to an extent, which makes it hard to distinguish them from modern, non-custodial institutions. This type of accommodation is, to an increasing extent, being substituted for traditional residential homes. Perhaps the key difference affecting development of alternative forms of residential eldercare in the United States as compared to other developed countries, is that in other countries the new forms are being developed exclusively or primarily in the public sector (usually at the municipal or local government level), whereas, in the United States the newer forms of residential care have been developed by private, for-profit firms and nonprofit organizations for a private-pay market.

A 2000 Israeli study for the World Heath Organization reviewed the findings from an evaluation of Israel's social insurance coverage for home care, as well as other international evidence about whether increased public funding (especially non–means-tested funding) decreased admissions to nursing homes. The study concluded that, in the short term, insurance coverage for home care may cause increased nursing-home admissions because more elders who actually do need this level of care are identified when they apply to receive services at home. In the longer term, use of residential care facilities by elders with mild to moderate functional disabilities has decreased, but the admission rate for severely disabled elders has not decreased.

While New Zealand's spending for community-based care grew fourfold during the 1990s, the percentage of elderly New Zealanders residing in residential eldercare remained constant. Other countries which formerly had higher rates of institutional eldercare compared to others, have succeeded in reducing those rates in large part by refusing to build new nursing home beds, even to keep pace with growth in the oldest-old or as replacements for beds in aging facilities that closed. Denmark appears to be the only country in which an actual (and impressively sizable) shift of resources out of the institutional sector into home care can be documented. Between 1982 and 1996, the percentage of Danes age eighty and older in institutions dropped from 20 to 12 percent and the institutional use rate among the Danish population age sixty-seven and older went from 6.6 percent to 4.6 percent. Over the same period, provision of home care was expanded to nearly one quarter of Danish elderly. Yet the percentage of GDP spent on long-term care in Denmark decreased from 2.6 percent in 1982 to 2.3 percent in 1994.

The United States, United Kingdom, and Germany have long had lower prevalence rates for institutional eldercare than most other developed countries. It is still not known whether the community care reforms implemented in the United Kingdom or the introduction of social-insurance financing for long-term care in Germany, both of which occurred in the early 1990s, will eventually yield significant reductions in residential eldercare. In the United States, a number of individual states have claimed reductions in nursing home use as a result of expanded Medicaid funding of home and community-based care. The state of Oregon is the best known example; however, a closer look reveals that most of the decline in nursing home use in Oregon is attributable to substituting other forms of residential eldercare (assisted living and adult foster care) rather than to the major expansion of Medicaid-funded home care that took place. Kane and colleagues (1998) concluded that Oregon's experience was that 2.6 people needed to be served in home and community-based settings (including alternative forms of residential care) in order to eliminate a single nursing home bed.

Policymakers in countries that have moved toward a social insurance model of funding both institutional and noninstitutional long-term care (e.g., Germany, Japan) have been less narrowly focused on reducing nursing home use and achieving net savings through public investments in home care. They also value outcomes not associated with cost savings, such as reducing the stress on informal caregivers and improving the quality of care and quality of life for disabled elders and their families. These goals are often best accomplished by providing services or larger amounts of services to address elders' unmet or undermet needs for assistance regardless of whether or not the care recipients might have been able to remain at home without or with less publicly funded home care.

Policymakers in most developed countries describe the purpose of increasing investment in home care as that of achieving a more appropriate balance between government spending on institutional and noninstitutional services. Nevertheless, policymakers everywhere are concerned with overall cost containment and cost efficiency in service provision. Thus, even the countries with the most generous funding for long-term care across the continuum of service types have moved toward greater selectivity, or targeting. In Denmark, success in reducing nursing home use is often credited to the development of 24-hour, rapid-response, emergency services.

Residential Eldercare versus Home Care

Most advanced industrial countries have chosen to provide more generous public funding for home care than for nursing homes and other forms of residential eldercare. The United States is unusual, however, in taking a more dichotomous approach toward financing home care services that are perceived to be skilled nursing, rehabilitation therapy, and home health-aide services, as opposed to home and community-based services delivered by unskilled personnel. The former are covered generously, whereas coverage for the latter is strictly means-tested and is often limited to individuals considered to be at imminent risk of permanent placement in nursing homes if the services are not provided. Analyses of data from the 1994 National Long-Term Care Survey found that Medicare home health services are used disproportionately by the chronically disabled elderly.

An international opinion poll across five English-speaking countries (Donelan et al., 2000) found that significantly greater percentages of U.S. and New Zealand elders who used home care reported that the government paid for it. Numerous other surveys of older Americans conducted during the 1990s indicate that Americans are greatly confused about the extent to which Medicare's home health and skilled nursing facility benefits provide them with coverage for long-term care.

Long-Term Care Reform

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.

Pamela Doty

See also Assisted Living; Filial Obligations; Nursing Homes.

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