Can long-term care partnership programmes increase insurance coverage and reduce Medicaid costs?

Although long-term care is a substantial financial risk for elderly Americans, only about 10% purchase insurance, with many of the remainder relying on Medicaid. Faced with rising Medicaid expenditure on long-term care, states introduced long-term care partnership programmes in the hope of reducing Medicaid spending by encouraging the purchase of private insurance. Using numerical optimization techniques, we show theoretically that partnership programmes will only modestly increase long-term care insurance coverage. Most of the benefits will go to those who would have purchased non-partnership policies. Thus, the potential costs to Medicaid will exceed the savings.