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Long-term care financing: lessons for low- and middle-income settings: brief 3: how countries finance long-term care - P4H Network

Long-term care financing: lessons for low- and middle-income settings: brief 3: how countries finance long-term care

Low- and middle-income countries rely on informal caregivers and private funds for LTC, leading to access disparities. High-income countries invest in public LTC, mainly funded by taxation and insurance, but challenges remain in countries with large informal workforces: WHO Centre for Health Development 


Key messages

  • In low- and middle-income countries where no formal, public long-term care (LTC) system exists, the costs of care are covered by private individuals, families and the health sector. This can result in inequities in access to needed services and pressure on informal caregivers to reduce their participation in the labour market, which affects the broader economy.
  • Some middle- and high-income countries have invested public funds in LTC to provide financial protection and coverage for older people, and reduce pressure on the health sector to provide mostly non-medical care.
  • Spending on LTC in countries reporting to the Organisation for Economic Co-operation and Development is projected to increase to 2.3% of gross domestic product by 2040, in comparison with 1.8% in 2021. The major source of LTC financing in high-income settings are general taxation and compulsory insurance.
  • General taxation provides a broad funding base and flexibility in covering benefits; it can ensure coverage for those who are unemployed and those in the informal workforce.
  • Mandatory insurance, usually funded by payroll contributions, is a stable source of LTC funding in high-income settings where most adults are in the formal workforce. In low- and middle-income countries with a large informal workforce, such insurance mechanisms are less feasible for extending LTC coverage and generating revenues.
  • Revenues to fund LTC can be collected nationally or subnationally. Under decentralized funding or management, local purchasing and administration may create inequities in the availability of and access to LTC services within a given country if central guidance and support are absent.
  • Countries with a mix of universal and selective approaches to LTC can have multiple payers and financing sources that may result in cost-shifting, in which people are shifted from one programme to another to reduce costs.