Financing Caring Futures - Compendium of Global Care Financing Models & Pathways for India - Part 1
- Leena Chakrabarti
- Aug 21
- 11 min read
Updated: Aug 29
This feature, the third in the Caring Futures Lever, the 6-part edition aiming to reframe care as an economic engine, vital to GDP growth, labour force participation, community resilience & intergenerational equity The Edition is a rolling series based on outputs of the State of Care research project at theZURI.
Starting with this 5 - part feature, we direct our attention to care financing, the architecture that determines whether care remains invisible or becomes a driver of economic growth. The first (this feature) sets the frame and introduces a classification of global care financing models. The second examines public sector approaches across different countries, the third looks at private sector models, followed by blended and innovative care financing mechanisms being experimented with, in different contexts. The fifth distills lessons for India, outlining pathways for a coherent care financing framework.Without systems of care, women leave the workforce, ageing becomes a crisis, poverty passes from one generation to the next. Yet care is still underfunded and overlooked in many countries, including India.
India’s growth story faces a silent risk - the absence of a financing system for care...
Any economy is only as strong as its care system. Countries that finance childcare, eldercare, disability care, and long-term care secure growth and stability. Those that don’t, shift the burden to households, mainly women, deepen inequality, and stall progress.
India has built financing systems and continues to increase ambitious resource allocations for highways, energy, power grids, and digital networks. But for care, the work that allows people to earn, age, and live with dignity, there is no system. Care remains, in all probability the only sector critical to economic growth and resilience, that still runs without a financing blueprint. Unpaid care work in India, mainly performed by women accounts for more than $955 billion a year, more than agriculture, more than manufacturing, yet it is off the books, harbouring the burden of India's economic growth.
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Childcare, eldercare, disability support, and long-term care are expanding needs, yet they are still left to households, informal markets, and fragmented schemes. The result is predictable - unsustainable out of pocket expense burden on households, one of the world's lowest labour force participation of women, and unmet needs in an ageing society.
Financing care is probably one of the largest untapped economic opportunities of our time. Around the world, countries are waking up to this missing architecture, expanding care financing through public spending, insurance, and innovative financing models.
India has not chosen its path yet
Globally, the ILO warns of a care workforce gap of 475 million jobs by 2030. Closing this gap will need not just skilled workers, but steady investment in services, infrastructure, and support. Financing is the missing piece. Traditional tax-funded models are under strain from ageing populations, tight budgets, and social change.
For emerging economies like India, the challenge is even sharper. The demand for childcare and eldercare is rising. Most workers are part of the informal sector. State provision is weak. The private sector is patchy and directed at high income households in larger cities, and philanthropy is still small and fragmented. A new generation of care financing models is needed, ones that combine public responsibility with private innovation, community effort, and impact investment.
India has a rare chance to shape this future differently. With a young population today and rapidly rising eldercare needs of tomorrow, India can design financing systems that's equitable, sustainable, and future-ready. Unlike countries now struggling to integrate fragmented schemes, India can leapfrog, pooling public funds, insurance, employer contributions, and community models into one coherent care financing architecture.
How countries are financing care? Care financing models - diversity of forms and shapes
This feature reviews global models of care financing. While we should ideally group them into four archetypes, public, private, blended, and cooperative/community based models, we will follow a slightly different approach. While useful, these categories are too broad to guide practical design choices. Policymakers and investors need to see not just who pays, but how care is organised, delivered, and sustained. So we propose a more granular classification of care financing models, reflecting how resources actually flow in practice. These include,
Public, tax-funded services & subsidies
Social insurance for long-term care
Community & social health insurance with care access
Income support / transfers related to care
Employer & tax incentives
Blended finance & development finance
Outcome-based / pay-for-results instruments
Philanthropic Capital
The table below presents a snapshot of this proposed classification of care financing models.
Over the upcoming features, in this 5 part feature series, we will bring together a compendium, through brief case studies from different regions, highlighting relevant details on each model, recent innovations, and where possible, the scale of funding and impact. Table 1 - Care Financing Models - A snapshot
Financing Model | Definition | Examples | Benchmark / Top Spenders |
|---|---|---|---|
Public schemes, tax-funded services & subsidies | Direct state spending through universal services, targeted subsidies, or capital grants to providers. | Nordic universal childcare & eldercare; Singapore childcare subsidies; India ICDS & Anganwadi | Nordic childcare & eldercare spend: 1–1.5% GDP; OECD avg: ~0.7% GDP; Singapore covers up to 99% preschool fees. |
Social insurance for long-term care (LTCI) | Mandatory contributory insurance, usually payroll/tax blend, covering eldercare & disability care. | Japan LTCI (1997); Germany LTCI (1995); South Korea LTCI (2008). | Japan ~1.8% GDP; Germany ~1.5% GDP; South Korea ~0.7% GDP. |
Community-based & cooperative care financing | Community pooling, mutual aid, or cooperative schemes that finance eldercare/childcare services. | Japan’s Fureai Kippu (time-bank eldercare); Brazil community childcare cooperatives; India self-help group–run childcare centres; Buurtzorg (Netherlands) - nurse led homecare model | Small-scale but growing; often supplement public schemes. |
Income support / transfers related to care | Direct cash or in-kind transfers to households or caregivers to offset costs of care. | Australia Carer Allowance; Canada Child Benefit (for childcare costs); UK Carer’s Allowance; India maternity entitlements & social pensions. | Australia: ~2% GDP on family benefits; Canada: ~0.8% GDP; India: ~0.4% GDP. |
Employer & tax incentives | Fiscal incentives or mandates for employers to provide childcare/family care benefits. | US Child & Dependent Care Tax Credit; Japan SME childcare subsidy; India crèche mandate under Maternity Benefit Act. | US mobilises ~$4B annually via tax credits; Japan subsidises SME childcare. |
Blended finance & development finance | MDB/DFI tools, PPPs, or catalytic funds mobilising private & public capital for childcare/eldercare. | IFC Invest in Childcare (2022, $200M pipeline); ADB childcare PPP pilots (Philippines, Mongolia); IDB childcare financing in LAC. | IFC: global childcare gap estimated at $1T+; ADB childcare pilots <$50M. |
Outcome-based / pay-for-results instruments | Financing tied to measurable results in care delivery (childcare, eldercare, carer support). | UK Essex Social Impact Bond (children’s social care); Portugal eldercare results-based pilots; Argentina performance-linked childcare centres. | Care-related share still <10% of global impact bonds (~$500M). |
Philanthropy & corporate capital (complements) | Grants, CSR funds, or programme-related investments supporting care provision. | CIFF childcare systems (Africa/Asia); Bernard van Leer childcare & ECD (India, Brazil, Peru); Tata Trusts eldercare pilots (India); La Caixa Foundation eldercare (Spain) | Flows remain fragmented. Capital deployment is much stronger in early childhood care and education (ECCE) than in eldercare or long-term care (CIFF, BvLF: >$1B cumulative); India CSR in childcare/eldercare relatively small (<5% of CSR spend) |
Asking Who pays, is not enough, when it comes to care financing...
Care financing systems differ widely in design, scope, and volume of capital deployed. While who pays might be considered to be the at the core of care financing, equally important questions are, who is covered, what services are included, and how costs are shared between financing stakeholders - the state, the investors, families and individuals. The table below presents a snapshot of a few countries and their models of financing specifically for long-term care (LTC), childcare, and integrated systems.
Table 2. Selected Care Financing Model Snapshot
Country | Instrument | Who Pays | Coverage Rule | What’s Financed | Cost-Sharing | Notable Stat* |
|---|---|---|---|---|---|---|
Netherlands | Wet langdurige zorg (WLZ) — Long-Term Care Act | Taxes + social insurance | Severe, long-term need assessed by Care Needs Indication Centre | Institutional care; intensive home packages | Income-linked co-payments | LTC** spending = 4.4% of GDP (2021) |
Japan | Kaigo Hoken — Long-Term Care Insurance (LTCI) | Mandatory premiums (age 40+) + taxes | Universal at 65+; ages 40–64 with specified conditions; assessed locally | Home, community, institutional care; care management | 10–30% co-pay (income-graded) | >34% of older adults use home/community care |
Germany | Soziale Pflegeversicherung — Social LTC Insurance | Payroll contributions (reduced rate for parents) | Needs-based assessment | Cash allowance or in-kind benefits; home, day, institutional | Co-payments, esp. in facilities | Contribution rates ~3.4% (with children) and ~4.0% (childless) |
United Kingdom | Local Authority Social Care | Local + national tax; user fees above thresholds | Needs-based + means/asset-tested | Domiciliary (home) care; residential/nursing care | Charges above asset/income limits | Lifetime care cap planned (policy delayed) |
Taiwan | LTC 2.0 under National Health Insurance | Insured population + government subsidy | NHI universal, LTC eligibility based on needs assessment | Home, community, respite, transport services | Mix of insurance + out-of-pocket | 800K+ LTC users |
Mexico | Conditional Cash Transfers (Prospera) | Government budget | Income-linked, conditional on health/education participation | Cash to households to support childcare and health | Fully tax-financed | Reached 6M families at peak |
Rwanda | Community-Based Health Insurance (CBHI) with care access | Household premiums + subsidies | Mandatory enrolment with subsidy for poor | Some maternal/childcare services | Subsidy for low-income households | ~90% population covered |
South Korea | Long-Term Care Insurance | Workers (payroll), employers, government | Universal for 65+, conditional for younger with disabilities | Home- and facility-based eldercare | Payroll contributions with tax subsidy | >1M beneficiaries in 10+ years |
Singapore | CareShield Life | Individual premiums (mandatory) + subsidies for low-income | Severe disability (inability to do ≥3 of 6 ADLs) | Lifetime cash payouts; optional private riders | Cash benefit (no co-pay); premiums subsidized | Example payout ≈ S$612/month per claim |
Uruguay | Sistema Nacional Integrado de Cuidados (SNIC) | General government revenues | Children, older persons, persons with disabilities | Home/day care, training, tele-assistance | Limited; service-specific | SNIC launched nationally in 2015, spending reached 0.8% of GDP by 2019; >100,000 direct beneficiaries |
Chile | Chile Crece Contigo (ChCC) | General government revenues | Universal package + targeted guarantees | Early-years care; childcare; parental support | No fees for core guaranteed services | ChCC reached >60% of children under age 4; 1.2M children and families served in first decade |
Thailand | Public ECE & care | Government (tax-funded) | Universal pre-K | Preschool and childcare | Fully tax-financed | Near-universal pre-K |
*Source for information presented in the Notable Stat column of Table 2 above: OECD Health Statistics (2021); Japan Health Policy NOW (2022); Eurohealth Observatory (2023); GOV.UK Social Care Reform Papers (2022); Kaiser Family Foundation (KFF) Medicaid LTSS Data (2021); Singapore Ministry of Health – CareShield Life (2022); UN Women The Care Economy in Latin America (2021); Crece Contigo Official Reports (2020)
**Abbreviations used in the Table 2 - LTCI-Long Term Care Insurance; ECE-Early Childhood Education; CBHI-Community-Based Health Insurance; CSR-Corporate Social Responsibility; IFC = International Finance Corporation; LMICs-Low- and Middle-Income Countries; CIFF-Children’s Investment Fund Foundation; BvLF-Bernard van Leer Foundation
Countries are also opening up to new innovative financing models...
Public sector funding through traditional routes, is falling short in meeting care needs of the population. Nuclear families, increased life expectancy, rising demands of childcare and eldercare. To fill the gap, countries are trying new ways to finance care.
These models draw on more than government funds. They bring in development banks, private investors, employers, and philanthropy. Some tie payments to results, others blend public and private money, and some create special funds for childcare or community care.
The table below presents a snapshot of a selection of such innovative financing models, each designed not just to deliver care, but to fund it in ways that are efficient, accountable, and resilient. It highlights how countries are experimenting with blended finance, outcome-based payments, pooled funds, and earmarked levies to ensure that care systems are financially sustainable and responsive to evolving social needs. It shows who pays, what is covered, how costs are shared and why we are tagging this as innovative.
Some features of these models that have been qualified as innovative include the following -
Mobilises new capital sources (private, philanthropic, MDB)
Uses risk-sharing instruments (SIBs, bundled payments, earmarked levies)
Creates pooled, flexible, or outcome-based funds, rather than rigid line-item budgets.
Establishes sustainable revenue streams for care systems that can scale
Table 3: Innovative Financing models under deployment for care financing - a snapshot
Country / Instrument / Who Pays | Coverage Rule | What’s Financed | Cost-Sharing | Why Innovative | Notable Stat |
|---|---|---|---|---|---|
United Kingdom – Life Chances Fund – Childcare/Family Social Impact Bonds – Government + private investors | Targeted disadvantaged families | Early childhood + family support services | Govt repays investors if outcomes met | First pooled outcome fund for care-linked services; private capital bears risk, government pays only on verified results | >£48m committed across 30+ SIBs |
Portugal – Social Impact Bonds for Childcare – Philanthropy + private investors + govt repayment | Families in disadvantaged municipalities | Childcare & early childhood inclusion | Govt repayment conditional on outcomes | Repayment linked to results; private/philanthropic capital mobilized upfront, reducing fiscal pressure | €3.7m mobilized since 2017 |
Netherlands – Buurtzorg Bundled Payments – Insurers + municipalities | Home-based elderly care | Integrated neighborhood-based care | Flat rate per client | Bundled client-based payments pool funds across care types; shifts financial risk to providers and incentivizes efficiency | Admin costs reduced ~30% |
Japan – Community-based Integrated Care Fund Pilots – Local taxes + insurance + co-pay | Older adults in municipalities | Community eldercare + preventive services | 10–30% co-pay | Blends local taxes, insurance, and co-pays into a pooled fund with flexible allocation; enables local risk-pooling and adaptive spending | 34%+ older adults use home/community care |
Uruguay – National Care Fund (Fondo Nacional de Cuidados) – General revenues | Children, elderly, PWD | Subsidized home/day care, caregiver training | Sliding fees | Dedicated pooled fund solely for care, separate from health or education; long-term sustainable financing with cross-subsidization | 1.1% GDP spent on care services (2019) |
Chile – Crece Contigo – Public–Private Trust Fund – General revenues + private donations (trust) | Universal (children) + targeted services | Childcare, parental support | None for core guarantees | Hybrid trust structure pools public and private resources; stabilizes long-term funding and reduces fiscal risk | Nationwide since 2009 |
South Korea – Employer Payroll Levy for Long-Term Care – Employers + employees | Universal LTC insurance (40+; elderly) | Institutional and home care | Co-pay for services | Earmarked payroll contributions create a dedicated, predictable revenue stream; spreads cost across employers and employees | Covers 10%+ of 65+ population |
Kenya – IFC-supported Childcare PPPs – MDB loans + private operators | Urban working parents | Childcare centres linked to firms | Fee-for-service + subsidies | Uses MDB loans/guarantees to leverage private capital for care infrastructure; reduces risk for private operators | IFC launched $50m childcare infra window (2021) |
Australia – NDIS – Social Insurance with Choice – General revenues + premiums | Disability, incl. family carers | Individualised care packages | Co-contributions above income thresholds | Social-insurance model funding individual entitlements; allows choice of provider and mobilizes predictable, pooled revenue | AUD 29.2b budget (2020–21) |
Canada – Women’s Economic Recovery Childcare Agreements – Federal transfers + provincial top-ups | Children under 6 | Universal $10-a-day childcare | Subsidised fees | Federal-provincial pooled transfer agreements link long-term federal funding to provincial childcare outcomes; creates aligned incentives and sustainable financing | $30b commitment (2021) |
Legend and Sources: PwD-Persons with Disabilities; SIB-Social Impact Bond; MDB-Multilateral Development Bank.
All examples are post-2010 unless noted.
The “Why Innovative” column describes the financing mechanism, not the care service itself.
Sources for information presented in the Notable Stat column of Table 3 above: Social Finance UK, Life Chances Fund Annual Report (2022); Gulbenkian Foundation, “Social Impact Bonds in Portugal” (2018); OECD, “Innovative Long-Term Care Practices” (2021); Japan Health Policy NOW, LTCI & Community Care Reports (2020); UN Women, National Integrated Care System (SNIC) Report (2019); Crece Contigo Official Reports and Law 20.379 (2009, updated 2021); Ministry of Health & Welfare, South Korea LTCI Annual Report (2021); IFC, “Childcare Infrastructure Program” (2021); National Disability Insurance Agency, Australia Budget & Annual Reports (2020–21); Government of Canada, Federal-Provincial Funding Agreements (2021).
Part 1 - Setting the Frame
This opening feature in the Financing Caring Futures 5 part series, reviewed global models of care financing. Instead of using broad groups like public, private, blended, or cooperative, we set out a more detailed list of how care is financed in practice, from tax-funded services, social insurance, community and health insurance schemes to cash transfers, employer incentives, blended and development finance, outcome-based tools, and philanthropy. Part 1 (this feature) provided a snapshot of how these models are working in different countries.
The next step is to study these care financing models further and draw lessons that India can use.
Next Up on this special series on Care Financing! Public sector models
Public money is still the foundation of most care systems. Tax spending, insurance funds, and direct subsidies decide who gets care, how much, and at what cost. Part 2 will focus on public care financing models. It will look at how countries design them, the resources they mobilise, and the results they deliver. We go deeper into tax systems, subsidies, and insurance funds that anchor care worldwide—assessing how they work and the lessons they offer for India as we start charting the care financing pathways - options and opportunities for India.
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