Can Long-Term Care Insurance Partnership Programs Increase Coverage and Reduce Medicaid Costs?

Boston College Center for Retirement Research Working Paper No. 2013-8

25 Pages Posted: 9 Mar 2013 Last revised: 26 Apr 2013

See all articles by Wei Sun

Wei Sun

Renmin University of China - Hanqing Advanced Institute of Economics and Finance and School of Finance

Anthony Webb

Boston College - Center for Retirement Research

Multiple version iconThere are 2 versions of this paper

Date Written: March 1, 2013

Abstract

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.

Suggested Citation

Sun, Wei and Webb, Anthony, Can Long-Term Care Insurance Partnership Programs Increase Coverage and Reduce Medicaid Costs? (March 1, 2013). Boston College Center for Retirement Research Working Paper No. 2013-8. Available at SSRN: https://ssrn.com/abstract=2230097 or http://dx.doi.org/10.2139/ssrn.2230097

Wei Sun (Contact Author)

Renmin University of China - Hanqing Advanced Institute of Economics and Finance and School of Finance ( email )

59 Zhongguancun Street
Beijing, Beijing 100872
China

Anthony Webb

Boston College - Center for Retirement Research ( email )

Fulton Hall 550
Chestnut Hill, MA 02467
United States

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