Public Policy and the Demand for Long-Term Care Insurance

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DESCRIPTION (provided by applicant): The financing of long-term care is an increasingly important issue for the elderly and our population as a whole. We propose to use two novel databases to study the demand for long-term care insurance (LTCi) and to consider the potential role of governmental policy moving forward. These data include multiple waves of detailed survey information on buyers and non-buyers of LTCi policies and longitudinal enrollment and utilization data from the state Long-Term Care Partnership Program, a public-private partnership between states and insurance companies designed to reduce Medicaid spending by delaying or eliminating the need for some people to rely on Medicaid for long-term care services. Relative to previous research, we will have much more detailed information on individuals' attitudes and opinions about long-term care, family caregiving, and related government policies; the primary reasons for purchase/non-purchase of LTCi; and demographics factors relevant to purchase decisions, including asset and income levels. For LTCi buyers, these detailed survey data are linked to information on level of policies that were purchased. Thus, our first two research aims are to analyze the effect of individual factors, such as demographic traits and attitudes about the intertwined roles of family caregiving, Medicaid, and private insurance, and state-level factors, such as Medicaid eligibility policies, tax incentives, and the presence of a Partnership Program, on 1) the purchase of LTCi and 2) the level of LTCi policy that was purchased. Both of these analyses will use person-level survey data merged with state-level policy factors to model the effect of individual and state traits on LTCi purchase. The analyses will exploit the longitudinal nature of the survey data (surveys were conducted in 1990, 1995, 2000, 2005, and 2010) to account for unobserved, time invariant state characteristics that may be correlated with both LTCi purchase and state policy features (e.g., tax incentives for LTCi). Understanding the key determinants of individuals' decision to purchase LTCi can help shape relevant government policies and marketing campaigns, including product targeting for the Community Living Assistance and Supportive Services (CLASS) program. The third aim of our project is i) to describe the early experience of state Long- Term Care Partnership Programs in terms of the number and type of policies sold and the claims experience of enrollees and ii) to simulate the potential effect of these programs on future Medicaid long-term care spending. To accomplish these aims, we will use detailed information on policies, policyholders, and claimants available from all state LTC Partnership Programs merged with information from the 2010 LTCi buyers survey (e.g., the asset/income levels of purchasers of Partnership policies) and long-term care utilization data from similar individuals in the Health and Retirement Survey. Evaluating the early experience of state Partnership programs can help shape expectations for the program going forward, particularly around its ability to impact Medicaid spending. PUBLIC HEALTH RELEVANCE: To date, private long-term care insurance has played a minimal role in financing long-term care in the United States; instead, out of pocket payments and public financing through state Medicaid programs have played primary roles, leaving individuals, families, and state governments vulnerable to the potentially catastrophic costs of long-term services and supports. We propose to use two key databases to study the factors influencing the demand for long-term care insurance and the role of government policy moving forward, including multiple waves of survey data from buyers and non-buyers of LTCi policies and longitudinal enrollment and utilization data from the Long-Term Care Partnership Program, a public-private partnership between states and insurance companies designed to reduce Medicaid spending by delaying or eliminating the need for some people to rely on Medicaid for long-term care services. By shedding light on key factors that influence the demand for insurance and the early experience of the LTC Partnership program, our analyses will offer key insights for policymakers as they implement and refine the government's approach to financing long- term care in the future.