Health risk, medical underwriting, and long-term care insurance partnerships

Given the high and uncertain costs of long-term care (LTC), insurers commonly rely on medical underwriting to determine eligibility. We examine the impact of the rollout of the Long-Term Care Insurance Partnership (LTCIP) programme—a joint federal–state initiative aimed at promoting private LTCI in the United States by shifting catastrophic costs to Medicaid and reducing insurers' risk exposure—using a difference-in-differences framework with heterogeneous effects by pre-LTCIP health status and chronic conditions. Using longitudinal data, we find that LTCIP increased LTCI take-up among both healthier and higher-risk individuals, with a positive effect of 2.1 percentage points among individuals with chronic conditions and a larger effect of 4.8 percentage points among those without chronic conditions. These findings are consistent with a partial relaxation of underwriting constraints.