Funding long-term care by applying the trade-off principle to public and private insurance

Abstract

The uncertain need for long-term care (LTC) services is a risk that is best protected by insurance. However, current LTC funding in the United States relies heavily on personal payment and public welfare and only lightly on social insurance and private insurance. This method is akin to sitting on a two-legged stool, which is likely to be unstable. This brief describes a "three-legged" funding model where social insurance would provide basic LTC protection that would be supplemented by private insurance and personal payment. The model would mobilize public and private resources more effectively by linking LTC insurance to social security, private life insurance, and other financial products.