Journal of Economic Perspectives: Vol. 25 No. 4 (Fall 2011)


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Insuring Long-Term Care in the United States

Article Citation

Brown, Jeffrey R., and Amy Finkelstein. 2011. "Insuring Long-Term Care in the United States." Journal of Economic Perspectives, 25(4): 119-42.

DOI: 10.1257/jep.25.4.119


Long-term care expenditures constitute one of the largest uninsured financial risks facing the elderly in the United States and thus play a central role in determining the retirement security of elderly Americans. In this essay, we begin by providing some background on the nature and extent of long-term care expenditures and insurance against those expenditures, emphasizing in particular the large and variable nature of the expenditures and the extreme paucity of private insurance coverage. We then provide some detail on the nature of the private long-term care insurance market and the available evidence on the reasons for its small size, including private market imperfections and factors that limit the demand for such insurance. We highlight how the availability of public long-term care insurance through Medicaid is an important factor suppressing the market for private long-term care insurance. In the final section, we describe and discuss recent long-term care insurance public policy initiatives at both the state and federal level.

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Brown, Jeffrey R. (U IL)
Finkelstein, Amy (MIT)

JEL Classifications

G22: Insurance; Insurance Companies
H75: State and Local Government: Health; Education; Welfare; Public Pensions
I18: Health: Government Policy; Regulation; Public Health
I38: Welfare and Poverty: Government Programs; Provision and Effects of Welfare Programs
J14: Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination
I13: Health Insurance, Public and Private


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