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

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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.