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2012 Conference Presentation

EconomicsMarkets/regulation United KingdomUnited States

7 September 2012

Barriers and opportunities for private long-term care insurance: the role of the public system

Adelina Comas-Herera, London School of Economics, United Kingdom
Rebecca Butterfield,
Jose-Luis Fernandez, London School of Economics, United Kingdom
Raphael Wittenberg, London School of Economics, United Kingdom
Joshua M. Wiener, RTI, United States


This presentation considers the rationale for insuring against the costs of long-term care, arguing that there appears to be strong rationale for the purchase of long-term care insurance by individuals. It then reviews the private long-term care insurance market in various countries and considers the barriers to the development of an efficient long-term care insurance market, focussing on the effects that the underlying public system can have on the structure and success of private long-term care insurance schemes, and what the state can do to encourage the development of private longterm care insurance, including an assessment of the scope for public/private partnerships.

The evidence suggests that, although the private long-term care insurance markets appear to have encountered important difficulties (mostly a result of lack of affordability) in countries where the public system operates as a safety-net and where private long-term care policies are expected to cover the full costs of care, in countries with universal public benefits that cover part of the costs of long-term care, private long-term care insurance, particularly when sold at a group (or employer) level, appears to be finding a niche as a top-up or supplementary product. Relying on private long-term care insurance as the main source of long-term care financing would require very substantial subsidies or compulsion.


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