ABSTRACT

This paper aims to classify long-term care (LTC) financing indeveloped countries and examine policy options and challenges forKorea. Financing for elderly LTC has been influenced by historyand path dependence associated with welfare state development,relationship with existing health care financing and public assistance,culture, political ideology, etc. Social insurance for LTC can beseparate from health insurance (Japan & Germany) or an extensionof health insurance to LTC (France & Netherlands). Tax-basedfinancing for LTC have developed by extending the public assistanceprogram in its population and benefit coverage, which takes intoaccount not only the physical functions but also economic status ofthe beneficiary. Tax-based system varies in terms of universalcoverage (Scandinavian countries), near-universal coverage (UK),and program based on means test and residualism (US). In thedesign of LTC insurance, Korea needs to consider the role of cashbenefits for informal care, level of benefits, diversification of fundingsources, and whether to cover all types of disability rather thanage-related LTC.