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

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.