How societies organize their long-term care systems reveals what they value: who is cared for, who does the caring, and who pays the price when systems fail. The United States and Germany have taken very different paths to long-term care, but they now confront the shared challenge of sustaining care supports as populations age and workforces shrink. What follows is a concise look at how they each approach this sector.
The Policy Path That Led Us Here
Long-term care in the United States has been largely shaped by three major eras: the creation of Social Security, Medicare, Medicaid and the Older Americans Act; a gradual shift from institutions toward home- and community-based services; and recent state innovations that have expanded access but left major funding gaps intact. Efforts to create a dedicated national long-term care social insurance program—most notably the CLASS Act—were ultimately abandoned before implementation. Despite these developments, the U.S. system remains fragmented and chronically under-resourced.
Germany’s approach is rooted in its long-standing social insurance system, originally established in the 19th century. After decades of debate, long-term care insurance was enacted in 1994 as the fifth pillar of this system. Since then, reforms have prioritized home- and community-based care, improved support for people with dementia, and introduced a new assessment framework based on degrees of independence rather than dependency. In light of demographic change, future financing reforms are currently under political discussion, with implementation planned for 2026.
A Vast but Fractured Long-Term Care Landscape
The U.S. long-term care system is best described by its growing size, costly and fragmented nature, and disparate levels of access. Across homes, communities and congregate care settings such as assisted living environments, millions of older adults and people with disabilities receive critical support with daily living. The system 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.
PHI estimates that between 2024 and 2034, long-term-care providers will need to fill 9.7 million total direct care jobs in the United States.
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.
Long-Term Care Insurance: Support with limitations
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.
Those Who Make Care Possible
In the United States, direct care workers form the backbone of care in this system, along with family caregivers. Across home and congregate care settings, these workers provide daily living support to millions of older adults and people with disabilities.
Egregiously, low wages, limited training and career paths, and a general lack of recognition stifle these workers, forcing many into other sectors. PHI estimates that between 2024 and 2034, long-term-care providers will need to fill 9.7 million total direct care jobs, an unimaginable undertaking given the current state of job quality in this workforce. Alongside these workers are more than 65 million family caregivers, who provide essential care while juggling work and family responsibilities, often with little financial support, respite, or training—despite the system’s heavy reliance upon them.
Labor shortages are already pronounced in Germany: for every 100 vacancies in nursing care, only 46 unemployed candidates are available.
Rising life expectancy and the aging of the Baby Boomer generation are substantially increasing demand for long-term care in Germany. Both the absolute number and the population share of people requiring care are growing, while the supply of professional caregivers is declining due to low birth rates and an aging workforce.
These opposing demographic trends are intensifying longstanding structural challenges within the care sector. Currently, approximately 6 million people in Germany require long-term care, and projections indicate an increase of at least 10% over the next decade. Labor shortages are already pronounced: for every 100 vacancies in nursing care, only 46 unemployed candidates are available, leaving a majority of positions unfilled and constraining access to formal care services.
As a result, family members increasingly compensate for gaps in professional care provision. However, research shows that many family caregivers derive satisfaction from caregiving and do not do it because of economic pressure. More than half of individuals in need of care live at home and are supported exclusively by relatives, while an additional quarter receive mixed forms of family and professional care. Around two-thirds of family caregivers are women. Although the Family Caregiver Leave Act enables temporary work leave for caregiving, the absence of financial compensation underscores the need for stronger and more comprehensive policy support for family caregivers.
A Better Way Forward
To strengthen the long-term care sectors in both the United States and Germany, policymakers and industry leaders should:
- Align financing with quality and affordability, including establishing federal long-term care social insurance in the United States. Payment rates and benefits should be predictable and sufficient, and the United States should adopt national social insurance strategies to help families cover long-term care costs.
- Invest in compensation, skills, career pathways and public recognition for direct care workers. Expand accessible, paid training and advancement pathways for this workforce, as well as their compensation levels, while elevating the public status of direct care to improve how this job sector is resourced and structured.
- Family caregivers are indispensable to both countries’ care systems and deserve far greater support and financial recognition. The U.S. HCBS self-direction model offers a compelling approach to Germany for giving families more choice and better resources.
- Create protected immigration pathways for direct care. Establish targeted visas and support programs for direct care work with strong labor standards, job portability and a clear pathway to permanent residency or citizenship. Given the current political climate on immigration, these types of approaches would be extremely difficult to enact, despite their potential for this job sector.
- Improve coherence in financing and governance. Better coordinate funding streams, data and planning to reduce fragmentation and regional inequities in access and quality—for direct care workers, care recipients and families.
These are two different systems wrestling with the same choice: whether to build long-term care that is fair, sustainable, and worthy of the people it serves and employs.
Robert Espinoza is a Distinguished Fellow and senior advisor at the National Academy of Social Insurance and chairs the board of directors for the American Society on Aging.
Prof. Dr. Matthias von Schwanenflügel is a lawyer and professor at the University of Bremen, a fellow at the Institute for European Health and Social Economy in Berlin, and a visiting professor at the College of Public Health, George Mason University, Fairfax during the fall semester 2025.
Photo credit: Shutterstock/Master Hands
