Long‐Term Care Partnership Effects on Medicaid and Private Insurance

Abstract

We examine the impact of the Long‐Term Care Insurance Partnership (LTCIP) program—a collaborative initiative between the state‐level Medicaid programs and private health insurance companies designed to promote private long‐term care insurance (LTCI)—on insurance ownership and Medicaid utilization. We draw on individual‐level longitudinal data and employ a difference‐in‐differences (DD) design adjusted for the staggered implementation of the program between 2005 and 2018. Our results suggest that the rollout of the LTCIP program led to a 1.54 percentage point (pp) (14.7%) increase in LTCI ownership and a 0.82 pp (13.3%) reduction in Medicaid uptake. Our estimates suggest that these combined effects led to an approximate average cost saving of $74 per 65‐year‐old participant. These findings are explained by a certain degree of substitution between LTCIP and traditional LTCI contracts, ultimately postponing the use of Medicaid benefits.