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Brief analytical summaries or syntheses #7

Financing long-term care in Scandinavian countries


This paper by two researchers from the Department of Health Management and Health Economics at Oslo University compares and analyzes the systems for financing long-term care for older people in Scandinavian countries (Denmark, Norway and Sweden). The institutional setup is almost identical in the three countries: local government carries the main responsibility for the funding and provision of long-term care, and national government defines general goals and principles for the locally provided services. The study shows that individuals are highly dependent on their savings to pay for long-term care services, which does not correspond to aspirations of accessibility. As well, there is significant regional variation in the level of services provided, which is in direct contrast with the political goals of universality in these countries.


Policy objectives

The three Scandinavian countries share common political traditions of local autonomy and universalism, and both are very apparent in the financing of long-term care. Nevertheless, the Scandinavian systems for long-term care (LTC) exhibit some important deviations from the ‘universal welfare state’ to which these countries are normally ascribed.  The three countries have very similar systems for social care, including a division of roles and responsibilities between different public bodies, and similar national policy objectives. All three countries pursue the general goal of providing local care services free of charge to everyone in need, without regard for their financial circumstances.

History of long-term care

Up until the first half of the last century, long-term care was provided almost exclusively by families in all three Scandinavian countries. The destitute were offered care in public poorhouses. In the late 1940s, more general approaches to long-term care for the elderly were adopted in these countries. Public provision of long-term care really expanded in the 1960s and 1970s. Sweden introduced a system of subsidies for home care services in 1964. In the 1980s and 1990s, improvements in the health status and living conditions of the elderly led to a retreat from public involvement in long-term care. The end of the 1990s saw the arrival of private sector offerings in long-term care.

Analysis and results

Description of long-term care systems

In the three Scandinavian countries, municipalities are responsible for financing and providing long-term care, while the national government is responsible for overall control and for establishing the broad legislative and financial framework. Municipalities must meet the needs of the population on their territory. All three countries have the explicit objective to make it possible for older people to stay at home and live independently as long as possible. In Sweden, long-term care includes nursing homes, residential care facilities, home care and group homes for people with dementia. In Norway, it includes nursing homes and supported housing. Along with these facilities, Denmark is unique in providing 24-hour health and social care to the elderly, as well as biannual preventive visits by district nurses for everyone over 75. A considerable amount of informal care is provided in all three countries and each has financial assistance programs in place, provided by municipalities and national governments, for informal caregivers.

Private sector involvement

In the early 1990s, Sweden allowed private entrepreneurs into the market for long-term care. In Denmark, reforms in 2002 gave people free choice of nursing home or home care provider. Some municipalities in Norway have a tradition of contracting with non-profit nursing homes run by religious or humanitarian organizations. There is very little private sector activity, except in a few municipalities.

Taxes and risk adjustment

Swedish long-term care is financed mainly by local income taxes. In Norway and Denmark, the local tax base also includes wealth and property taxes. In addition to local taxes and out-of-pocket payments, the central governments contribute through general grants to equalize financing between municipalities.

Financial contributions of users

Only a small share of expenditures on long-term care is financed through out-of-pocket payments in the three countries (less than 5%), though the cost to the individual can be substantial (up to 80% of personal income). Laws have been passed to ensure that this user contribution leaves the individual with a certain amount of money for personal expenses.


The Scandinavian systems for financing long-term care are remarkably similar. In each country local government carries the main responsibility for funding and provision of long-term care, while the national government defines general goals and principles, which are similar in the three countries. However, it is difficult to reconcile the universalism of the Scandinavian welfare state with the political tradition of strong local autonomy. The financing models for long-term care in these countries appear as a compromise between these two principles.

Implications and recommendations

In recent years, there has been a tendency to favour universalism at the expense of local autonomy, for example with national government in Sweden providing funds for local authorities to introduce new governance models.

It is difficult to assess the economic efficiency of the Scandinavian model. The fact that national government is the main source of funding appears to favour economic efficiency. As well, national government oversight balances competition between municipalities. However, because municipalities are not responsible for health care, there is a risk that local authorities try to dump costly long-term care cases on the national health system.

The non-existence of private long-term care insurance may be interpreted as an indication of inefficiency, especially as the financial burden on individuals can be heavy.

The significant regional variation in coverage levels, quality of services, eligibility criteria and consumer choice clearly seems to be inequitable. Demographic changes in the years to come (the population over age 80 will double between now and 2040) may bring important changes to long-term care services.


Scandinavian long-term care financing. Fichier PDF.