Center for Retirement Research (CRR) Report Analyzes Impact of Long-Term Care Insurance Partnerships on Medicaid Costs

Although long-term care is a substantial financial risk for
retired households, only about 10 percent purchase insurance, with many of the
remainder relying on Medicaid. Faced with rising Medicaid expenditures on
long-term care, states have attempted to encourage the purchase of private
long-term care insurance through partnership programs that exempt purchasers of
qualifying policies from the Medicaid asset test. Using numerical optimization
techniques, and assuming plausible preference parameters, we show that the
programs will only increase insurance coverage among single males by 5 percent
and single females by 4 percent. Most of the program benefits will go to those
who would have purchased non-partnership long-term care insurance anyway. Thus,
the cost of the subsidy will exceed the savings in Medicaid costs.

Source/more: Center for Retirement Research