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The Impact of the Partnership Long-term Care Insurance Program on Private Coverage and Medicaid Expenditures

Haizhen Lin () and Jeffrey Prince

No 2012-01, Working Papers from Indiana University, Kelley School of Business, Department of Business Economics and Public Policy

Abstract: We examine the impact of U.S. states’ adoption of the partnership long-term care (LTC) insurance program on households’ purchases of private coverage. This program increases benefits of privately insuring via a higher asset threshold for Medicaid eligibility for LTC coverage, and targets middle-class households. We find the program generates few new purchases of LTC insurance, and those it generates are almost entirely by wealthy individuals, as predicted by Medicaid crowd-out. Further analysis suggests that awareness levels of the program, along with bequest intentions, also effectively predict response rates, but Medicaid crowd-out persists. We provide an estimate of expected Medicaid savings/costs.

JEL-codes: I1 I13 (search for similar items in EconPapers)
Date: 2012-04
New Economics Papers: this item is included in nep-age, nep-hea and nep-ias
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