Long Term Care Partnerships: Are they 'Fit for Purpose'?

The risk of high costs of long-term care services and supports (LTSS) is one of the largest uninsured risks for American families and a major challenge to the sustainability of Medicaid. To address the latter, the so-called long-term care partnership (LTCP) program was designed to encourage middle-class individuals to purchase private long-term care insurance. The goal was to defer the time when an individual would become eligible for Medicaid to pay her LTSS expenses. This paper exploits the exogenous variation in the timing of state Partnership implementation (including four pilot states) to evaluate the program’s effects on new yearly insurance applications and contract uptake. We draw in unique data from the National Association of Insurance Commission (NAIC) and from four individual state Partnership programs, which contains data on new insurance contracts. Results indicate no significant effect of LTCP on insurance uptake but we do find evidence of both a small increase in insurance applications and some substitution between traditional and partnership contracts.