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Financing Long-Term Care, Replacing a Welfare: Model with an Insurance Model

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  • Walter M. Cadette

Abstract

The nation is not prepared to deal with the jump in expenditures for long-term care that will come with the aging of the baby boom generation. Only a small part of that care is paid for privately (out-of-pocket or through private insurance). Most is financed through Medicaid, the program that is intended to ensure medical care for the indigent. This use of Medicaid comes at a high cost for individuals and society: the allotment of more than a third of the Medicaid budget to long-term care; a two-tier care system; and the commandeering of limited funds by middle- and high-income people through elaborate estate planning to circumvent eligibility requirements. These problems would be mitigated by replacing the welfare model with an insurance model--voluntary or compulsory private insurance, with subsidies through income-scaled tax credits to ensure affordability. An equitable and efficient system could be created with a blend of public money, private insurance, and other private saving, with a safety net for those in greatest need

Suggested Citation

  • Walter M. Cadette, "undated". "Financing Long-Term Care, Replacing a Welfare: Model with an Insurance Model," Economics Public Policy Brief Archive ppb_59, Levy Economics Institute.
    • Handle: RePEc:lev:levppb:ppb_59
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    References listed on IDEAS

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    1. Walter M. Cadette, "undated". "Caring for a Large Geriatric Generation: The Coming Crisis in U.S. Health Care," Economics Policy Note Archive 03-3, Levy Economics Institute.

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