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Life Health > Health Insurance > Your Practice

Researchers Call for Peers to Study LTC

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Academic health policy experts should be paying more attention to the U.S. long-term care (LTC) system.

Jeffrey Brown, a finance professor at the University of Illinois, and Amy Finkelstein, an economist at the Massachusetts of Institute of Technology, make that argument in a general review of the U.S. LTC system published in the Journal of Economic Perspectives, an academic journal published by the American Economics Association, Pittsburgh.

LTC accounted for about $203 billion in spending in the United States in 2008, 8.7% of total U.S. health care spending that year, and 1.4% of gross domestic product (GDP), Brown and Finkelstein write.

Despite the immense size of the U.S. LTC system, “many issues about long-term care insurance [(LTCI)] and related public policy are not well understood,” the researchers say. “Most academic attention devoted to health insurance focuses on hospital, emergency department, and outpatient care, as well as prescription drugs.”

The researchers say they hope their paper will help increase the “academic-papers-written-to-public-expenditures” ratio for the LTC sector.

The researchers note that U.S. LTC system is much more similar to the LTC systems in place in other developed countries than the U.S. acute care system is, and that the U.S. LTC system costs about as much as the LTC systems in place in the other developed countries.

The researchers report federal survey results suggesting at as many as 13% of U.S. residents ages 60 to 69 may now have private LTCI, up from 10% in the late 1990s.

“Many states have introduced tax subsidies for private insurance purchase and, especially within the last five years, have attempted redesigns of their Medicaid programs with a goal of encouraging private insurance,” the researchers say.

But even middle-income people can qualify for nursing home benefits from Medicaid, the health insurance program for the poor, by spending or giving away assets, to make themselves artificially poor, and Medicaid may appear on the surface be a better deal than private LTCI for about two-thirds of U.S. residents, the researchers estimate.

Today, U.S. residents use private insurance to pay about 33% of acute health care costs and but still use private insurance to pay just 4% of LTC costs, the researchers say.

Changes in Medicaid and federal income tax breaks might lead to some increase in private LTCI sales, but, even if those changes were made, other factors, such as consumer ignorance, reliance on reverse mortgages and family care, could keep the changes from having much effect on the overall number of people who lack private LTCI, the researchers say.

“Family interactions represent a potentially important but still poorly understood determinant of demand for products like long-term care insurance,” the researchers say. “For example, bequest motives may motivate the purchase of long-term care insurance in order to protect bequeathable assets, either for altruistic or for strategic reasons.”


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