Morbidity, disability, and long-term care of the elderly: implications for insurance financing.

A scarcity of empirical information to specify appropriate provisions and base rates for coverage has hindered the development of long-term-care (LTC) insurance. Data from three nationally representative surveys on the prevalence of morbidity and functional limitations among the elderly population suggest that health status among older Americans is highly dynamic, especially at higher disability levels. The bioactuarial data may help insurers define potential markets of purchasers of policies, and identify the numbers of persons with disabilities severe enough to trigger use of benefits. If the accuracy of individual service predictions could be increased further, reserve requirements and overall costs to LTC insurance carriers might be reduced.