Financing long-term care. An insurance-based approach.

A joint public-private insurance program is the best approach to resolving the problem of financing long-term care. In this report, we describe one possible approach in detail. A modest expansion of the current (ie, after repeal of the Medicare Catastrophic Coverage Law of 1988) Medicare benefit for persons needing relatively short-term nursing home and home care services would be a first step. For those with extended long-term service needs, a non-means tested, publicly funded program with joint federal-state financing and administration would provide coverage after a substantial elimination period and with an income-related copayment. Private long-term care insurance purchased through employers before retirement or in the periretirement period, through use of income or equity accumulated in life insurance, pension funds, or home ownership, would be used to fund the exclusionary period or copayments of the public program by those who wish to have greater protection for income or assets. The role of Medicaid would be limited to paying for the deductible, copayments, and initial long-stay expenses of those with low incomes and limited assets.