Working Paper
Reforming the US Long-Term Care Insurance Market
Abstract: Nursing home risk is significant and costly. Yet, most Americans pay for long-term care (LTC) expenses out-of-pocket. This chapter examines reforms to both public and private LTCI provision using a structural model of the US LTCI market. Three policies are considered: universal public LTCI, no public LTCI coverage, and a policy that exempts asset holdings from the public insurance asset test on a dollar-for-dollar basis with private LTCI coverage. We find that this third reform enhances social welfare and creates a vibrant private LTCI market while preserving the safety net provided by public insurance to low-income individuals.
Keywords: Long-term care insurance; Medicaid; adverse selection; partnership program;
JEL Classification: D82; D91; E62; G22; H30; I13;
https://doi.org/10.26509/frbc-wp-202417
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Provider: Federal Reserve Bank of Cleveland
Part of Series: Working Papers
Publication Date: 2024-08-14
Number: 24-17