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Long-term care insurance and Medicaid
M A Cohen1, N Kumar, S S Wallack
1Center for Health and Long-Term Care Research, Waltham, MA.
Health Affairs (Project Hope)
|January 1, 1994
Summary
Long-term care insurance significantly reduces Medicaid reliance for nursing home care, lowering costs for individuals and the government. This insurance helps policyholders avoid spending down their assets to qualify for Medicaid.
Area of Science:
- Health Economics
- Public Policy
- Gerontology
Background:
- Medicaid is a primary payer for long-term care services, particularly nursing home care.
- Many individuals without long-term care insurance exhaust their assets and become eligible for Medicaid.
Purpose of the Study:
- To analyze the impact of long-term care insurance on Medicaid eligibility and expenditures.
- To quantify the potential fiscal savings for Medicaid through long-term care insurance adoption.
Main Methods:
- Analysis of nursing home utilization rates among long-term care insurance policyholders.
- Estimation of Medicaid spend-down rates with and without long-term care insurance.
- Calculation of potential Medicaid cost savings.
Main Results:
- Between 29-38% of nursing home users would qualify for Medicaid without long-term care insurance.
- Long-term care insurance reduces policyholder spend-down rates by 39%, decreasing Medicaid reliance to 8-10%.
- Medicaid costs per nursing home entrant are lower with insurance ($6,492-$14,179) compared to without ($14,437-$29,698).
Conclusions:
- Long-term care insurance effectively reduces the number of individuals requiring Medicaid for nursing home care.
- Medicaid could achieve greater fiscal savings if policies offered reduced benefits for voluntary lapses.