Can Incentives for Long-Term Care Insurance Reduce Medicaid Spending?

Source: Wei Sun and Anthony Webb, Center for Retirement Research at Boston College, Issue Brief, IB#13-6, April 2013

The brief’s key findings are:
– In an effort to curb Medicaid costs, many states encourage people to buy long-term care insurance by offering enhanced policies through private insurers.
– Under these policies, if individuals exhaust their private insurance benefits, the state allows them to qualify for Medicaid while keeping more of their assets.
– This study finds that, for single men and women, the enhanced policies will likely increase Medicaid costs rather than reduce them.
– The reason is that most of the likely buyers of the enhanced policies would have otherwise bought a traditional policy, which has no subsidy from Medicaid.