Two Countries, Two Paths to Long-Term Care
The long-term care ecosystem employs 5.4 million direct care workers—more than any other single occupation—and costs hundreds of billions of dollars annually, largely financed through Medicaid and private pay. As America’s population grows even older in the decades ahead, these numbers will magnify. (Source: Getty Images)
This article excerpted below originally appeared in Generations Now on February 12, 2006, and was co-authored by Robert Espinoza, Founder and CEO of The CareWorks Project and a Leadership & Society Fellow at the University of Chicago, and Prof. Dr. Matthias von Schwanenflügel, lawyer and professor at the University of Bremen, fellow at the Institute for European Health and Social Economy in Berlin, and visiting professor at the College of Public Health, George Mason University, Fairfax (Fall 2025).
How societies organize long-term care reveals what they value: who is cared for, who does the caring, and who pays when systems fall short. The United States and Germany have taken very different paths to building long-term care systems — one rooted in social insurance, the other in a fragmented patchwork of public programs and private pay. Yet both now face the same demographic reckoning: aging populations, shrinking workforces and rising costs that strain families and public budgets alike.
In the United States, long-term care has evolved unevenly across decades of policy change — from the creation of Medicaid and Medicare to the expansion of home- and community-based services — without ever establishing a dedicated national social insurance framework. The result is a vast but fractured landscape employing 5.4 million direct care workers and relying heavily on more than 65 million family caregivers. Germany, by contrast, embedded long-term care insurance into its social insurance system in 1994 and has continued refining it, even as labor shortages and rising demand intensify structural pressures.
Both systems depend on care workers whose labor is essential but undervalued. Both must confront financing gaps that threaten sustainability. And both illustrate a larger truth: long-term care systems are policy choices.
What follows is an excerpt from the article:
“Long-term care in the United States is unaffordable for too many, as healthcare costs continually rise. It is characterized by a patchwork of often siloed programs ranging from Medicaid home- and community-based services to Medicare post-acute care and much more. Instead of relying upon a unified governance structure, long-term care nationwide is resourced and governed by different funding streams and rules, creating wide variance across states, programs and provider types. These governance gaps produce unequal outcomes, from racial disparities in nursing home placement to the exploitation of immigrant care workers. For example, because immigrants represent one in four direct care workers, any political move to jeopardize the presence of immigrants in this country, including deportations, will make it even more difficult to staff these jobs.
German long-term care insurance aims to reduce physical, psychological and financial burdens for beneficiaries, while promoting self-determination and prioritizing outpatient over inpatient care to support aging in place. Federal states hold responsibility for care infrastructure, leading to regional variation, while care insurance funds must ensure service provision within a competitive provider market. However, long-term care insurance covers only part of total care costs.
Germany’s LTC system is universal, delivered through statutory and private insurers that provide identical benefits. Statutory funds operate on a pay-as-you-go basis financed by income-based contributions, which have risen to 3.6% as the population has aged and benefits have expanded.”
As populations age in both countries, the question is no longer whether reform is needed, but whether political will can match demographic reality. Read the full article here.