Population ageing and the reduction in the availability of traditional family caregivers are fundamentally exposing the population worldwide to either face unmet needs, or the financial risk of needing long-term care (LTC). Unlike acute medical care, LTC needs were not part of early welfare state designs in most high-income countries. However, those countries are now facing increasing care needs that have been ignored for decades. The costs of such care needs are uncertain in both onset and duration and depend not only on ageing and labour market opportunities of traditional caregivers, but also on trajectories of dementia and disability that are, in turn, influenced by lifestyles and preventative actions. Furthermore, compounding this uncertainty, its worth noting that severe care needs are highly concentrated among a relatively small share of individuals. Although this scenario calls for some widespread insurance mechanism, in most economies, the funding of LTC remains fragmented [1]. For instance, in the United States of America (USA), public funding falls mainly on means-tested Medicaid although it was not originally designed to fund LTC. Such public funding is complemented with a shrinking private insurance market, leaving most households exposed to substantial out-of-pocket risk in the event of needing LTC [2–5].

The increasing demand for LTC [1] points to the systemic nature of the problem. Absent major policy interventions expanding LTC insurance, a growing demand for care can create substantial financial strain for both households and public systems alike. One potential mitigating pathway lies in shifting policy attention toward the prevention or delay of LTC needs through investments in healthy ageing. This can take place in the form of early interventions, and the management of chronic disease. However the scope for such strategies to offset the scale of future care demand remains uncertain.

From an economic perspective, LTC financing represents a canonical case of an incomplete insurance market [1,5]. The magnitude of care needs and its uncertainty complicates planning and undermines the value of public and private insurance for individuals. Cognitive biases and misperceptions further dampen the demand for prevention and insurance, as individuals systematically underestimate both the likelihood and financial consequences of needing care in old age, and wrongly assume LTC is part of their health insurance coverage, hence, placing disproportionate weight on present consumption [2,5]. At the same time, insurers face considerable difficulties in pricing LTC coverage accurately which contributes to the limited availability and restrictive insurance coverage [4,5]. As a result, the private insurance market remains underdeveloped and unable to provide effective risk pooling against LTC costs [6].

Comparative evidence shows that, although institutional arrangements differ and some countries have developed dedicated schemes to finance LTC separately from health care, all systems rely on broad-based public funding across different levels of government [7]. In almost all cases, LTC and health systems are not integrated, except for Japan and South Korea, which have created a continuum of care that spans prevention, community services, and institutional care within a unified framework [6]. In Europe, the few countries that expanded their insurance entitlements still rely on mandatory contribution-based systems that have evolved over time but are not integrated, such as those in Germany and the Netherlands [7]. Other comparable systems in tax-funded models, such as Spain’s SAAD, Scotland’s free personal care, and the Slovenian system do not integrate LTC in the health system either. Although, these systems tend to provide universal access, they are typically combined with significant co-payments, or out-of-pocket payments to cover for food and accommodation [1]. Other high-income countries such as Australia, dont have a LTC insurance scheme, but have rolled out a tax-funded program which exhibits institutional integration in service delivery but not in financing [8].

In Europe, it is possible to identify some hybrid models that combine elements of partial universalism. France and Italy rely on a universal but fragmented cash allowances paid directly to individuals based on assessed care needs, which can then be used flexibly depending on circumstances, and can vary by income and region [9]. Several countries rely on more explicitly means-tested or residual systems. England and Wales, for example, have long operated a residual means-tested care system managed by local authorities, similar to the USA [10,11], only the funding in the latter is in the hands of Medicaid rather than at the local level. However, in both countries public coverage is restricted to where individuals have exhausted most of their own resources, which differ by state in the US [1]. Unlike the UK, the USA also has a private LTC insurance market, which has increasingly relied on partnership arrangements with Medicaid to extend coverage and manage risk [3]. However, all the systems described, even the more generous ones, are either incomplete [8,12], or in financial crisis and, hence, in need of redefinition to adapt to new circumstances. So what are the options for redesigning the system?

Europe and the USA are dominated by two reform pathways: (i) integrating LTC into existing health insurance systems (notably Medicare in the US or the National Health System in the UK with a future “National Care System”), or (ii) the launching an expansion of standalone LTC programs funding some types of care (primarily, “home care”). However, while both imply an expansion of insurance to address the same underlying market failure, only the former (e.g., an expansion of Medicare or the NHS to cover LTC) ensures the integration of LTC in the health system.

Such integration could accommodate other key trends, including the increasing shift toward home- and community-based services, driven by both individual preferences and cost-containment considerations. In an integrated model, the costs associated with accommodation and daily living would still be borne by individuals, and residential nursing home care is reserved primarily for those with the most severe care needs [8]. However, the advantage of integrated health and long-term care systems lies the resulting care coordination and efficiency gains to health systems [10–12].

Nonetheless, there is a long way to go for systems to integrate, as adult care on most western countries continues to rely on separate funding streams and administrative structures from healthcare, resulting in fragmented service delivery [8]. That is, the challenge is not only to expand LTC coverage—still an unattained goal in countries such as the UK and the USA—but also to integrate LTC effectively with existing healthcare programs. Integrated systems allow the savings generated through reduced hospital admissions and delayed institutionalisations to be reinvested in the care sector rather than absorbed elsewhere. Given these constraints, it is necessary, and I would argue, inevitable, that LTC will be integrated into the health system, as a core component of it rather than a fragmented service operating at the margins.