Long‐Term Care Insurance Purchase Patterns

Given the aging population and high cost of long‐term care, many Americans are concerned about financing long‐term care services. Despite this concern, private long‐term care insurance policy sales have experienced slow growth. On average only about 7 percent of the population aged 65 and older has long‐term care insurance, but this percentage varies greatly across the states. In this study we test hypothesized relationships between purchase of long‐term care insurance and various explanatory factors. We provide evidence that state Medicaid nursing home expenditure levels and the relative sizes of the elderly population and the nursing home population are significant explanatory factors of purchase rates. We find no evidence that public–private partnership regulation, the quality of available facilities, or agent marketing controls affect purchase. Findings of the study are useful to insurers, legislators, regulators, and others involved in the public policy debate about financing long‐term care.