Private Long-Term Care Insurance
American society widely uses insurance to protect against loss from potentially catastrophic events such as hospitalization, automobile accidents, home fires, theft, and early death.* Insurance against the potentially devastating costs of long-term care, however, is relatively rare. To date, only about 423,000 long-term care insurance policies have been sold. 1 And in 1985 private insurance covered only about 1 percent of total nursing home expenditures. 2
Despite these small numbers, private long-term care insurance is a rapidly changing market. The number of insurance products more than tripled between 1983 and 1987, so that sixty different products were on the market as of mid-1987. 3 Some of the newer products are offering improved benefits. Most of the large insurance companies, including Prudential, Aetna, Travelers, and Metropolitan Life, are now offering policies, at least on an experimental basis. And several government agencies have recently issued reports encouraging long-term care insurance. 4
Although the use of private insurance is likely to spread substantially, none of our simulations suggest that it will become the dominant form of long-term care financing. A reasonably optimistic estimate would be that by 2016-20 a third of the elderly could afford a moderately comprehensive freestanding insurance product. Even in the two simulations with the most generous purchase assumptions, a third or more of the elderly could not afford insurance. Moreover, the effect of____________________
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Publication information: Book title: Caring for the Disabled Elderly:Who Will Pay?. Contributors: Alice M. Rivlin - Author, Joshua M. Wiener - Author, Raymond J. Hanley - Author, Denise A. Spence - Author. Publisher: Brookings Institution. Place of publication: Washington, DC. Publication year: 1988. Page number: 59.