Barriers and opportunities for private long-term care insurance: the role of the public system
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.
7 September 2012