The following is a reformatted version of an article originally published in National Underwriter Life & Health Magazine Oct. 14, 2002.
The 4.5 million private U.S. long-term care insurance policies already in place could save Medicaid and Medicare about $30 billion, according to a new study by LifePlans Inc., Waltham.
The researchers who compiled the study, which was sponsored by the Health Insurance Association of America, Washington, used data from the U.S. Department of Health and Human Services and the Robert Wood Johnson Foundation, Princeton, N.J., to measure the effects of private LTC policies on private and public LTC expenditures.
The researchers found that private LTC coverage saved an average of $1,668 in out-of-pocket expenditures per month for insureds who used home care and $2,458 per month for insureds who needed nursing home care.
Private LTC coverage also reduced the probability that an insured would become poor enough to qualify for Medicaid nursing home assistance to 3%, from 9%.
Private LTC coverage could save Medicaid $23 billion, or $5,032 per insured, for all forms of long-term care and Medicare $7 billion, or $1,609 per insured, for home care, the researchers estimate.
The forecast did not include factors such as defaults by private long-term care insurers or major changes in Medicaid program rules.
But the LifePlans research team, led by Marc Cohen, says public officials ought to consider private LTC coverage in their plans for the future.