The mid-1990s have witnessed the creation of new policies for dealing with the long-term care needs of the dependent elderly in several countries such as In 1994, Germany created a fifth social insurance scheme to deal with dependency. In 1997, France set up a new social assistance benefit for the dependent elderly that was further expanded in 2002. Austria also opted for assistance benefits in 1993, while Luxemburg (1998) and Japan (voted in 1997 but implemented in 2000) followed the social insurance line. The creation of these new policies is somewhat puzzling seeing as the 1990s have generally been described as a period of retrenchment or at least of "permanent austerity" for welfare states (Pierson, 2001). Even more puzzling is the fact that all the above-mentioned countries are Bismarckian, conservative welfare states, generally perceived as the most "frozen" welfare states (Esping-Andersen, 1996). These countries are thought to face considerable difficulties in adapting to the new challenges posed to the welfare state (Scharpf and Schmidt, 2000). These policy developments therefore raise a series of questions. First of all, how can one account for these cases of policy expansion in times of austerity? Can traditional explanations of welfare state growth account for policy expansion in this field? Secondly, how and to what extent were these "frozen" conservative welfare states able to respond to the new challenge of the long-term care needs of the elderly? And why did some of these countries, all of Bismarckian inspiration and based on the social insurance principle, opt for a social insurance scheme while others chose social assistance as a policy response? In dealing with these questions this chapter focuses on France and Germany, each representing one of the two policy responses outlined above. As the chapter shows, the very fact that these two countries did not choose the same policy option for responding to long-term care needs points to the social construction of the problem and to the importance of institutional and political factors in determining the options available. The comparison between these two countries thus allows us to gain a better understanding of the nature and dynamics of this process of expansion.