The Distributional Impact of a Universal Long-Term Care Benefit

In this project, we propose to study the equity and efficiency trade-offs of an expansion of public LTC insurance benefits to older adults using existing programs. The private benefits of a Medicare long-term care benefit can be thought of as consisting of two pieces. First, (the “transfer” component) individuals who are already paying for long-term care services out-of-pocket (the “private pay” population) and those whose family members are taking care of them (informal care) will benefit directly in the form of large financial transfers (to the private pay population) and more time for labor or leisure (the informal care population). Importantly, almost all of these benefits will accrue not to the patient themselves but to their spouses and children. Second, (the “behavioral response” component) for some individuals a long-term care benefit will allow them to access services that they would like to use but can’t afford. These individuals also benefit, though the value of this additional utilization of long-term care services is more difficult to quantify.