In other words, the Danish social service and health-care system is based on free comprehensive medical and social care benefits. These benefits are financed by the government through a relatively high personal tax of 50 to 70% and a tax on goods and services of 25%.

In the last decade, societal developments have made it difficult for families to provide private care for elderly family members. Part of the explanation for this is that at least 80% of the women in Denmark have a job outside the home, and more than 95% of all children are enrolled in some form of day care. Therefore, it is no longer typical for younger family members to take care of the older family members. As a concequence, care taking of the aging population has become a societal responsibility.

It is typical of  Nordic tradition that the federal government assumes responsibility for the welfare of the elderly. This means that the state, regional council districts and the municipalities are responsible for organizing efforts that cover the elderlys' needs.

The federal government establishes a budgetary limit for each district and municipality, while local leaders formulate policies and services within those constraints according to the special needs of the community.

Generally speaking, this effort is organized through an 'institutionalized' setting, whereby care is offered and given in either special institutions or at home.