Can government ease the LTC crisis?

An aging population combined with a caregiving force that is stretched to the limit means a growing need for long-term care services and support from government. But how government can provide that support and how it will be funded are questions that plague policymakers.

During the 2025 Harkin Institute Retirement Security Symposium, policymakers looked at ways the federal government could increase support for those who need assistance and those who care for them. They also looked at ways some states are addressing the issue of paying for future care.

On the federal level: Lots of ideas, not much else

There are plenty of ideas on how to meet the nation’s need for long-term services and supports but a lack of will on how to pay for them, panelists who spoke at the symposium said.

The “original sin” of federal LTSS policy was that when Medicare was created to serve the health needs of older adults, policymakers and lawmakers did not consider the future care needs of that age segment, said Alison Barkoff of the George Washington University Milken Institute School of Public Health.

As a result, she said, “We do not have a system at all” to provide for LTSS. 

Medicaid pays for LTSS care for those who have exhausted their resources, but is mainly focused on paying for nursing home care. Little support is available for family caregivers, who Barkoff said are 63 million strong and “are the backbone of our LTSS system not because they necessarily want to but because they have to.”

The economic impact of these millions of family caregivers is substantial, she said.

“We have trillions of dollars in wages that are being lost every year, as well as a loss of health benefits for those who must leave the workforce to become caregivers.”

Some states are paying family caregivers through Medicaid, she said, and some states are training family caregivers in the basics of what they are required to do to help their loved ones.

The paid caregiving workforce is in crisis right now, as fewer workers are available to help an increasing number of people who need care. The workforce crisis is exacerbated by immigration issues, Barkoff said. Providing training and support for family caregivers is one way to alleviate the workforce shortage.

“We not only need to fix the formal care system, but we need to think across the systems with multisector plans that address the needs of everyone who needs and provides care,” she said. 

Paid family leave would improve LTSS

The U.S. is one of the few nations that doesn’t mandate paid family leave, and that also impacts caregiving, said Dawn Huckelbridge, founding director of Paid Leave for All. 

“This is creating a crisis in care,” she said. “Many people are retiring earlier than planned to become caregivers without support.”

However, she noted that 13 states and the District of Columbia have passed paid family leave legislation and provide job-protected paid time off to care for a family member.

The Family and Medical Leave Act provides unpaid leave “and is wildly insufficient,” she said. “It only covers about half of the workforce. Businesses with under 50 employees are not covered, and it is restricted to caring for spouses, parents and children.

“It’s making a system of haves and have-nots in this country.”

States lead the effort to ease the crisis

States are stepping up to respond to the need for LTSS in innovative ways.

“What we are witnessing is the effects of an underfunded system,” said Marc Cohen, professor of gerontology at the LeadingAge LTSS Center, University of Massachusetts Boston.

“The challenges we have with our caregiving workforce, our family caregivers and so on all derive from the issue that we do not have a stable source of funding going into the LTSS system.”

Cohen said that as the population ages, more people are living long enough to reach the point at which they need LTSS. But he pointed out that about 40% of people who have LTSS are under age 65.

The caregiving workforce is stretched thin while there is little support available for family caregivers, who perform the bulk of long-term care. “At the center of it all is the financing issue, which is fragmented,” he said. “It’s Medicaid heavy and leaves middle-income people stuck in the middle.”

“Because of the way the LTSS system is financed, the states are often left holding the bag,” Cohen said.

“They must deal with Medicaid budgets that are crowding out other policy priorities. Many of them passed legislation to support the private insurance market, which has underperformed. There is gridlock at the federal level. The states have come to understand that the cost of doing nothing will now exceed the cost of trying to do something.”

Cohen said states are testing solutions for funding LTSS in four major areas.

1. Strengthening the workforce. At least 41 states are taking a series of actions to support the LTSS workforce. States are raising wages, tying Medicaid rates to direct care pay, and standardizing training, recruitment bonuses and tuition help. “States know we can’t fix this problem without addressing the workforce issues,” he said.

2. Supporting family caregivers. “They are the backbone of the system,” Cohen said. He said eight states have established caregiver tax credits, 13 states and the District of Columbia have enacted paid family leave and a number of states are extending respite services for caregivers. “I think there’s an understanding at the state level that if the family support system collapses, the whole system collapses,” he said.

3. Expanding affordability and access. States are using waivers and state plan amendments to expand home- and community-based services. States are raising provider rates to expand capacity and improve wages. 

4. Supporting the private insurance market. Cohen said he is seeing some activity on the state level to support private long-term care insurance.

“The need is growing, the workforce is strained and stretched, but there’s a lot going on at the state level, and our challenge is to connect those dots, take the lessons learned and think seriously about how they might be applied to federal policy,” he said.

WA Cares

Washington Cares is a state-run LTCi program for working Washingtonians. Funded by a 0.58% payroll deduction, the program will offer benefits starting July 1, 2026, to cover a portion of the costs associated with long-term care, such as assistance with daily living, home modifications and caregiving support. To access benefits, individuals must meet contribution requirements and have a care need, which means needing help with at least three activities of daily living.

Ben Veghte, director of the WA Cares Fund, said the program addresses three problems in the existing system:

 1. Inequity in access to care

2. Inequity among family caregivers

 3. Inequity in the care workforce

“WA Cares is not designed to fully solve the long-term care problem,” he said.  “But we want everyone to have more dignity and independence in old age. That’s how we pitched this to voters. We don’t pitch this as, we need more money for long-term care, give us money. We say every family faces this problem. It’s not rich versus poor, it’s not an income redistribution program; it’s a family support program.”

California looks at LTSS

With one-fifth of California’s population expected to be age 65 or older by 2030, the state’s leaders realized the issue of LTSS in that state must be addressed, said Brandi Wolf, policy and research director of Service Employees International Union Local 2015.

In 2021, California developed an LTCi task force to look at the feasibility of developing an LTCi model in that state. Wolf said that while the task force made a series of recommendations, “The question is how do you fund a program? Is it a tax on employers? Is it a payroll tax on employees? Is it through state contributions?”

She said changes to the task force had to address what is most politically feasible and can cover the most people. The task force has recommended several options for establishing a statewide LTCi program, although no further action has been taken.

“Aging is not the big, sexy issue of the day,” she said. “So it’s our responsibility to raise this issue to our elected leaders at the state and national levels.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].