Abstract
Ikegami reviews the implementation of mandatory long-term care insurance systems in Germany and Japan, which are organized as pay-as-you-go systems. I propose to go one step further and implement a multi-pillar, mandatory and voluntary long-term care financing system, which combines pay-as-you-go with capital-funded elements. The proposal is based on the observation that Switzerland has implemented a three-pillar system for financing retirement provisions that can be adapted to finance long-term care in a fair and sustainable way.
Highlights
Some countries such as Germany have introduced capital-funded elements, while other countries purely rely on tax-based means-tested financing of long-term care costs
My proposal is to use the experiences from the three-pillar system for the retirement provisions and implement a pay-asyou-go system to cover a minimum standard for long-term care, a capital accumulation to cover a decent standard for long-term care protection and voluntary private insurance solutions for those who want more coverage
A discussion of alternative financing models for long-term care costs must be done based on the criteria of equity and efficiency
Summary
Some countries such as Germany have introduced capital-funded elements, while other countries purely rely on tax-based means-tested financing of long-term care costs. The Situation in Switzerland In the 1980s, Switzerland complemented its social security system with capital-funded elements, resulting in a threepillar system for retirement provisions.
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