Long-Term Care Insurance

The feasibility of private long-term care insurance is central to the public policy debate over financing long-term care. The failure of the private market, even with public subsidies, to insure a substantial portion of the population has a bearing on the public sector's role in financing long-term care. The larger the share of the population with adequate private insurance, the less likely that public resources will be needed to provide long-term care to those in need. But very little about any private market is purely private. Public resources are often used to support or improve the private market, regulate the market, and ultimately help consumers. This is true for private long-term care insurance as well. The market for private long-term care insurance has been expanding at a rapid rate, but not as fast as the population is aging, and hence a growing proportion of the population is getting older without pooling their financial risks of needing long-term care.