Long-Term Care Crisis Looms in the US and Asia as Aging Populations Grow
BY: Matt McCann
The United States is experiencing a significant increase in the number of individuals over 65. As the Baby Boomer generation ages, this population will grow rapidly over the coming decades.
In contrast, many Asian nations, such as Taiwan, have experienced an even more dramatic increase in their older adult population. According to the Ministry of the Interior in Taiwan, the proportion of the population aged 65 and older increased from 7.09% in 1993 to 15.51% in 2020 (Ministry of the Interior, Taiwan, 2020).
This rapid increase in the older adult population has prompted policymakers in Taiwan and other Asian nations to invest in aging-related programs and services, such as Long-Term Care Insurance and community-based care programs.
What is Long-Term Health Care?
Long-term care is the support and assistance provided to individuals with chronic illnesses, disabilities, or other conditions that limit their ability to perform daily activities. It includes services such as nursing care, home health aides, and other social support. The need for long-term care is growing rapidly due to an aging population and increased life expectancy. However, long-term care costs are becoming a major burden for families and governments worldwide, including in the United States and Asian nations such as Taiwan.
Long-Term Care Insurance has been available in the United States and Canada for decades as part of a private insurance system for those families who wish to protect personal assets and maintain control of their choice of care services.
Long-term care services are costly in the United States, and those costs will continue to rise in the decades ahead.
LTC NEWS Cost of Care Calculator – Find Your Location
The cost of long-term care services in Taiwan and other Asian nations varies depending on the type of care, and the level of support required. In Taiwan, the government has implemented a Long-Term Care Insurance program that aims to provide affordable and accessible care for older adults and individuals with disabilities. The program is funded by a combination of government contributions, premiums paid by insured individuals, and co-payments by their family members.
According to the Ministry of Health and Welfare in Taiwan, the premiums for Long-Term Care Insurance are based on the age of the insured individual and their income level, with the maximum premium being capped at NT$15,600 (approximately USD $530) per year (Ministry of Health and Welfare, Taiwan, 2021). The insurance covers a range of services, including in-home care, adult day care, respite care, and institutional care.
In the United States, premiums are not funded by any level of government, but some tax advantages do exist. Premiums vary depending on several factors, including age, health, and family history.
How Much Does Long-Term Care Insurance Cost in the United States?
In other Asian nations, the cost of long-term care services can vary depending on the availability of public services and the prevalence of private providers. For example, in Japan, the government provides financial support for long-term care services. However, the cost of care can still be high for individuals and their families, particularly for those who require intensive support (OECD, 2020).
In Singapore, the government provides subsidies for long-term care services through the ElderShield and CareShield Life insurance schemes, but some individuals may still face significant out-of-pocket expenses (Ministry of Health, Singapore, 2021).
Overall, the cost of long-term care services in Asian nations highlights the importance of investing in aging-related programs and policies to ensure that older adults and individuals with disabilities have access to affordable and high-quality care.
The Taiwanese government’s Long-Term Care Insurance program is an example of a successful approach to addressing the needs of the aging population and promoting their well-being, while also recognizing the financial constraints that families may face. As the number of older adults continues to increase in Asia and around the world, it is crucial that policymakers and healthcare providers work together to ensure that adequate support and resources are available to meet their needs.
While the aging population presents challenges for both the United States and Asian nations, there are also unique cultural and societal factors at play in how this demographic shift is experienced. For example, in many Asian cultures, there is a strong tradition of filial piety, or the obligation of adult children to care for their aging parents (Chan, 2011). This cultural norm has influenced the development of aging-related policies and programs in many Asian nations, such as Taiwan’s Long-Term Care Insurance program, which is funded by both the government and the adult children of older adults (Chen et al., 2018).
Global Long-Term Care Costs
The cost of long-term care is increasing worldwide, driven by the aging population and higher demand for services. In 2020, the global expenditure on long-term care was estimated at $1.4 trillion, and this figure is expected to rise to $2.5 trillion by 2030 (KPMG, 2021). These costs are borne by families, governments, and insurers, and they can significantly impact household budgets, public finances, and social welfare systems.
In many countries, families are the primary caregivers for elderly relatives, and they often bear the financial burden of long-term care. In the United States, for example, families pay over $470 billion per year in out-of-pocket expenses for long-term care. This can cause significant financial stress for families, particularly those with lower incomes or limited resources.
Governments also play a role in funding long-term care, either through public insurance programs or the direct provision of services. However, long-term care costs are growing on public finances, particularly in countries with aging populations and limited resources. For example, in Japan, long-term care costs accounted for 3.7% of GDP in 2019, and this figure is projected to rise to 7.5% by 2050 (OECD, 2021). In some countries, such as India and Indonesia, there is limited public support for long-term care, and families bear almost all of the costs.
Impact on Families
The high cost of long-term care can have a significant impact on families, both financially and emotionally. Many families struggle to afford the cost of care, particularly if they have limited incomes or savings. This can lead to difficult choices, such as reducing other expenses or taking on debt. In some cases, families may need to provide care themselves, which can be time-consuming and stressful.
In addition to financial stress, long-term care can also have an emotional toll on families. Caregiving can be a demanding and exhausting task, and it can strain relationships between family members. Caregivers may also face isolation and loneliness, as they often need to prioritize the care of their loved ones over their own social activities and relationships.
Impact on Governments
The rising cost of long-term care also places a growing burden on governments worldwide. In many countries, public insurance programs are the primary funding source for long-term health care, but these programs are often underfunded and struggle to keep up with the growing demand for services. This can lead to long waiting lists for care, and some individuals may not receive the care they need.
Governments also face challenges in managing the quality of care provided. Long-term care is a complex and often highly regulated sector, and ensuring that care providers meet high-quality standards can be difficult. In addition, some governments struggle to attract and retain qualified care providers, particularly in rural or remote areas.
Comparison of the United States and Taiwan
The United States and Taiwan are two countries that have very different approaches to long-term care. The United States has a predominantly private long-term care system, with individuals and families responsible for financing their own care. In contrast, Taiwan has a nationalized long-term care system, with the government providing comprehensive coverage for long-term care services.
The United States
In the United States, long-term care is primarily funded through private insurance or out-of-pocket expenses. Medicare, the federal health insurance program for people over 65, does not cover long-term care services, except in limited circumstances. Medicaid, the joint federal-state program for low-income individuals, does cover long-term care, but only for those who meet strict eligibility criteria based on income and assets.
As a result, many families in the United States struggle to afford the cost of long-term care. According to the LTC NEWS Cost of Care Calculator, the average cost of a private room in a nursing home was $108,199 per year, while the average cost of a home health aide was $57,087 per year. These costs can quickly deplete savings and retirement accounts, leaving families with limited resources unless they own Long-Term Care Insurance.
The high cost of long-term care in the United States has also led to disparities in access to care. Wealthier families are more likely to be able to afford high-quality care, while lower-income families may need to rely on Medicaid, which often provides lower-quality care and has limited provider options.
Taiwan
The Taiwanese system of long-term care is designed to be accessible and affordable for all citizens. All Taiwanese citizens over the age of 65 are eligible for long-term care services, regardless of their income or health status. Services are provided in a range of settings, including nursing homes, community-based care centers, and home-based care.
The Taiwanese long-term care system has successfully improved access to care and reduced the financial burden on families. A 2019 study found that the system had significantly increased the use of long-term care services, particularly among low-income and rural populations. The system has also been successful in reducing the financial burden on families, with out-of-pocket expenses for long-term care services accounting for less than 20% of total long-term care spending in Taiwan.
Other Asian Nations
Taiwan is not the only Asian nation that has implemented a nationalized system of long-term care. Other countries in the region, including Japan, South Korea, and Singapore, have also implemented comprehensive systems of long-term care coverage.
Japan has a long history of providing long-term care services, and has implemented a national insurance program for long-term care. The program provides coverage for a range of services, including nursing care, home-based care, and institutional care. However, the program is facing challenges due to an aging population and increasing demand for services.
South Korea has also implemented a national insurance program for long-term care, which provides coverage for a range of services, including home-based care, day care, and institutional care. The program is funded through a combination of government revenue and social insurance premiums.
Singapore has a hybrid system of long-term care, with the government providing subsidies and support for long-term care services, but also encouraging individuals to save for their own long-term care needs. The government has also implemented a range of policies to support family caregivers, including providing caregiver training and support.
Conclusion
The rising cost of long-term care is a global challenge, with families and governments around the world struggling to cope with the growing demand for services. The United States and Taiwan represent two very different approaches to long-term care, with the United States relying primarily on private insurance and out-of-pocket expenses, while Taiwan has implemented a nationalized system that combines government funding and insurance.
Despite how a nation decides to plan for long-term health care, one thing remains in common globally. Aging is a reality and impacts families, finances, and government, and the problem will grow in the decades ahead.
About Matt McCann, CLTC®
Matt McCann is a well specialist on long-term care planning and is well known speaker on long-term health care issues and is sought after by the media for his expertise. He also holds the Certified in Long-Term Care® designation.
With over 20 years of experience helping thousands of clients throughout the United States, he has witnessed firsthand how Long-Term Care Insurance gets used at the time of claim. Matt recognizes the value of affordable LTC Insurance and its positive impact on American families.