Long-Term Care Financing

January 9, 2020 Aaron Helmbrecht

Long-Term Care Financing


An estimated 70 percent of Americans ages 65 and older will one day need long-term care (LTC) services and supports, which include nursing facilities, home health aides, personal care, and family caregiving. With Medicare not providing LTC coverage and private LTC insurance coverage low, Medicaid is a major provider of LTC services and supports for the elderly. The increasing growth in state Medicaid budgets, due in part to the LTC needs of a growing elderly population combined with the low level of penetration into the potential market by private LTC insurance, have prompted a number of proposals for reforms in the way LTC is financed in the United States. Proposed reforms can be expected to address both public and private financing mechanisms, as well as mechanisms involving both types of financing.

In 2012, the American Academy of Actuaries hosted a roundtable, “A National Conversation on Long-Term Care Financing,” comprised of stakeholders from public policy, actuarial, research, private provider, and retirement benefits backgrounds to discuss potential reforms to the LTC system. Building further upon that conversation, the Academy’s LTC Criteria Work Group developed criteria in the following areas that should be considered in any discussion on reform:

Coverage (with reference to how many individuals are covered by the reform). Reform proposals should consider both the level and makeup of coverage, including factors such as:

  • Demographic, health, and wealth/income characteristics of the covered population.
  • Whether the program will be mandatory, voluntary, or some combination of the two.