“Unpacking dysfunction in long-term care insurance,” by Tu-Uyen Tran, Federal Reserve Bank of Minneapolis
“Nursing homes are prohibitively expensive, to the point that many Americans 65 and over end up spending down their assets and becoming impoverished enough to qualify for government insurance. Yet, 90 percent of older adults don’t buy long-term care insurance (LTCI) to avoid this risk. Economist Karen Kopecky and her collaborators sought to explain this puzzle in a recent paper. What they found, she said, was a ‘dysfunctional’ market with high premiums, limited coverage, and mismatched incentives.”
LTC Comment, Stephen A. Moses, President, Center for Long-Term Care Reform:
Scholars who begin with a false premise end up with imaginary puzzles. If many Americans spent down their assets and became impoverished before qualifying for government insurance, they would buy LTC insurance. But they don’t; there is no evidence that they do; no such evidence is ever cited; and so there is no “puzzle.” People don’t worry enough about LTC risk and cost to save, invest or insure for it because Medicaid has paid for most expensive LTC since 1965. Until that changes, scholars dreaming up new ways to spend more government money on LTC will only be digging us deeper into the fiscal hole that threatens to consume our economy. To make sense of what ails LTC, read the Paragon Health Institute’s “Long-Term Care: The Problem” and “Long-Term Care: The Solution” and watch this “virtual LTC event” featuring age wave visionary Ken Dychtwald and leading LTC researchers. To find ample private funds for LTC, check out Medicaid’s $100+ Billion Leak.