The impact of state tax subsidies for private long-term care insurance on coverage and Medicaid expenditures

Gopi Goda

Journal of Public Economics, 2011, vol. 95, issue 7-8, 744-757

Abstract: In spite of the large expected costs of needing long-term care, only 10-12% of the elderly population has private insurance coverage. Medicaid, which provides means-tested public assistance and pays for almost half of long-term care costs, spends more than $100Â billion annually on long-term care. In this paper, I exploit variation in the adoption and generosity of state tax subsidies for private long-term care insurance to determine whether tax subsidies increase private coverage and reduce Medicaid's costs for long-term care. The results indicate that the average tax subsidy raises coverage rates by 2.7 percentage points, or 28%. However, the response is concentrated among high income and asset-rich individuals, populations with low probabilities of relying on Medicaid. Simulations suggest each dollar of state tax expenditure produces approximately $0.84 in Medicaid savings, over half of which funnels to the federal government.

Keywords: Long-term; care; insurance; Tax; incentives; Medicaid; Price; elasticity; Fiscal; impact (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (46)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0047-2727(10)00161-1
Full text for ScienceDirect subscribers only

Related works:
Journal Article: The impact of state tax subsidies for private long-term care insurance on coverage and Medicaid expenditures (2011)
Working Paper: The Impact of State Tax Subsidies for Private Long-Term Care Insurance on Coverage and Medicaid Expenditures (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:95:y:2011:i:7-8:p:744-757

Access Statistics for this article

Journal of Public Economics is currently edited by R. Boadway and J. Poterba

More articles in Journal of Public Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().