When It Comes to Long-Term Care, We Do Better Working Together than Individually

PUBLISHED August 7, 2026

The United States makes it difficult for people who want to plan ahead for their long- term care needs. Insurance policies cost dearly.

According to The Wall Street Journal, having to make payments for a long-term care plan is out. Instead, says the Journal, hybrid policies—part life insurance, part long- term care—are in. A 55-year-old male wanting a reasonable amount of protection could purchase a hybrid policy for a one-time lump sum of $100,000. 

But who can afford that?

Japan has a different way of thinking. It begins with the philosophy that we treat others with dignity and that as we age, we should all have the ability to live our lives independently. Japan emphasizes home and community care over nursing home care as the most affordable way to meet that expectation. Moreover, the Japanese people subscribe to the idea that older people, the ones most likely to benefit from long-term care, should help pay for a part of the costs.

Almost There

Financially, we are almost there. In 2024, the U.S. spent approximately $604 billion on long-term care,¹ 2.06 percent of our GDP² —just shy of Japan’s estimated 2.1 percent.

With money in hand, we need to set up a permanent financing scheme. Step 1 is to make the $604 billion the cornerstone of our nation’s new long-term care plan and use it as our initial funding source. Instead of recording that money as health insurance—as it is a part of the $5.3 trillion we spend for health care each year—record it as long-term care and provide a dedicated funding source to cover it.

That should not be difficult. For All-American Care, we already need a 4.42 percent VAT to make up for a series of funding shortfalls (see this blog). As an alternative, designate 3.08 percent of that tax for long-term care and the remaining 1.34 percent for health care.³ Make the VAT permanent to have an annual income coming in.

Funding Sources

To diversify our funding sources further, we should do as Japan does and ask those who are most at risk of needing assistance to pay a monthly premium.

Individuals 40 and above would pay $40 a month for long-term care benefits, approximately what the Japanese people pay now.⁴ Those under 65 would have access to limited benefits if they needed care for diseases such as rheumatoid arthritis or Parkinson’s, or if they are living with an incurable cancer.

Those over 65 would have access to the wider variety of home, community, and institutional care options described in my last blog. Altogether, individual premiums would contribute approximately $80 billion in long-term care funding.⁵

Businesses should also pay. In Germany, companies must match worker contributions to the state-mandated long-term care insurance plan. In the Netherlands, residents pay 9.7 percent of their income up to a salary cap of $43,736.

We can build on these concepts and come up with something uniquely American. Tax all companies with 500 or more employees 9.5 percent of a worker’s wage up to $20,000. That would generate approximately $140 billion a year in tax revenue.⁶

Businesses may complain, but even with that long-term care tax, they would still come out ahead by $160 billion a year in benefit savings by signing up for All-American Care.

Last, copy Japan’s system of co-pays. Those co-payments are 10, 20, and 30 percent, depending on a person’s income. They may not bring in extra income, but they can help stretch out what the government pays out in benefits.

Grand Total

If we added up all of our funding sources, it would look something like this.

• Source                                    Amount (billions)
• VAT                                         $605
• Individual Contributions      $80
• Payroll Tax                             $140
• Total                                       $825

Altogether, we would have another $220 billion each year so that state and local governments could invest mostly in home and community care to help bring dignity and independence to care users.

We can work with that.

Note: This is an ongoing series of blogs to develop an affordable, universal health care plan before the 2028 presidential election.

Author’s Calculations

¹Determining how much the U.S. pays in long-term care is unclear. The NHE tables 13, 14, and 15 do not provide the necessary detail to come up with an annual figure. Instead, I referred to a 2025 Congressional Research Service (CRS) report that showed long-term support services at $563.7 billion in 2023. I then multiplied that number by 7.2 percent, based on the growth in health care expenditures for 2024 according to NHE.  I got $604 billion ($563.7B x 1.072 = $604B). Significantly, CRS points out that even its estimate is on the low side because it does not reflect unpaid care by family members, friends, and other uncompensated caregivers. In essence, Americans are paying more than $604 billion a year in long-term care.

²To get 2.06 percent, I divided $604 billion by our GDP in 2024, which was $29.298 trillion.

³To get a VAT of 3.08 percent, I divided $604 billion by $196 billion, the amount a 1 percent VAT would collect assuming the United States had a VAT similar to New Zealand. You can read how I came up with $196 billion in a previous blog.

⁴To figure out the monthly premium, I converted the premium price in yen to dollars: 6,225 yen/$157.78 = $39.45.

⁵According to the Census, America’s population for people over age 40 is 166,456,458. I multiplied this number by $480 (12 x 40) and got $79,899,099,840 before rounding up.

⁶The number of employees working at companies with 500 or more people is 73.5 million. The amount generated from a payroll tax would be $20,000 x .095 x 73.5m = $139,650,000,000.

Selected References

Board of Governors of the Federal Reserve System. (2026). Financial Accounts of the United States: Distribution of gross domestic product (Table F.2).

https://www.federalreserve.gov/releases/z1/current/html/f2.htm. Accessed August 1, 2026.

CAK. (2025). Country-of-residence factors: Zvw and Wlz contributions. https://www.hetcak.nl/en/health-insurance-abroad/pension-benefit/financial-information/country-residence-factors-zvw-wlz/

Fu, R., Iizuka, T., & Noguchi, H. (2023). Long-term care in Japan (NBER Working Paper No. 31829). National Bureau of Economic Research. https://doi.org/10.3386/w31829

Lankford, K. (2026, March 31). Hybrid life & long-term care insurance: These policies provide money to pay for long-term care or leave a death benefit to your beneficiaries. The Wall Street Journal.

Ministry of Health, Labour and Welfare. (n.d.). Long-term care insurance system: For residents who turned 40. Government of Japan. https://www.mhlw.go.jp/content/12300000/000614772.pdf

Organisation for Economic Co-operation and Development. (2026). Taxing wages 2026: The progressivity of labour taxation in OECD countries. OECD Publishing. https://doi.org/10.1787/3a5169ef-en

Social Insurance Research Institute. (2024, May 30). The 9th term long-term care insurance premium averages 6,225 yen per month. https://media.shaho.co.jp/n/n37b6d9f355c0

The Money Converter. (n.d.). United States dollar (USD) to Japanese yen (JPY) exchange rate. Retrieved August 1, 2026, from https://themoneyconverter.com/USD/JPY

Tikkanen, R., Osborn, R., Mossialos, E., Djordjevic, A., & Wharton, G. A. (2025). Netherlands. In International Health Care System Profiles. The Commonwealth Fund. https://www.commonwealthfund.org/international-health-policy-center/countries/netherlands

U.S. Census Bureau. (2024). Age and sex (Table S0101), American Community Survey: 2024 ACS 1-year estimates subject tables. https://data.census.gov/table/ACSST1Y2024.S0101