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The Impact of Policy Incentives on Long-Term Care Insurance and Medicaid Costs: Does Underwriting Matter?

ABSTRACT: OBJECTIVE:To test whether underwriting modifies the effect of state-based incentives on individuals' purchase of long-term care insurance. DATA SOURCE:Health and Retirement Study (HRS), 1996-2012. STUDY DESIGN:We estimated difference-in-difference regression models with an interaction of state policy indicators with individuals' probabilities of being approved for long-term care insurance. DATA EXTRACTION:We imputed probabilities of underwriting approval for respondents in the HRS using a model developed with underwriting decisions from two U.S. insurance firms. We measured the elasticity response to long-term care insurance price using changes in simulated after-tax price as an instrumental variable for premium price. PRINCIPAL FINDINGS:Tax incentives and Partnership programs increased insurance purchase by 3.62 percentage points and 1.8 percentage points, respectively, among those with the lowest risk (highest approval probability). Neither had any statistically significant effects among the highest risk individuals. CONCLUSIONS:We show that ignoring the effects of underwriting may lead to biased estimates of the potential state budget savings of long-term care insurance tax incentives. If the private market is to play a role in financing long-term care, policies need to address the underlying adverse selection problems.

SUBMITTER: Cornell PY

PROVIDER: S-EPMC6153154 | biostudies-literature | 2018 Oct

REPOSITORIES: biostudies-literature

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The Impact of Policy Incentives on Long-Term Care Insurance and Medicaid Costs: Does Underwriting Matter?

Cornell Portia Y PY Grabowski David C DC

Health services research 20180516 5

<h4>Objective</h4>To test whether underwriting modifies the effect of state-based incentives on individuals' purchase of long-term care insurance.<h4>Data source</h4>Health and Retirement Study (HRS), 1996-2012.<h4>Study design</h4>We estimated difference-in-difference regression models with an interaction of state policy indicators with individuals' probabilities of being approved for long-term care insurance.<h4>Data extraction</h4>We imputed probabilities of underwriting approval for responde ...[more]

PMID: 29770443

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Project description:BackgroundSwallowing/feeding difficulty is a serious hidden health problem in the older population. Although oral intake services based on the degree of this difficulty have been provided and revised in Japanese public long-term care (LTC) insurance since 2006, their implementation has not been examined. We evaluated the impact of policy changes on these services.MethodsThe nationwide database of LTC service uses in Japan was analysed for three oral intake services: Enhanced Oral Function in daycare facilities whose users were slightly disabled, Maintenance of Oral Ingestion and Transition to Oral Ingestion from tube feeding in residential facilities. Data were extracted for each June from 2015 to 2020 when monthly usage of these services was aligned and each June from 2009 to 2020 for the proportion of users according to LTC insurance certification. The major policy changes were the addition of municipal provision in Enhanced Oral Function and a requirement for multidisciplinary collaboration in Maintenance of Oral Ingestion in 2015. The impact of the medical fee reduction for developing percutaneous gastro-tubing to Transition to Oral Ingestion was also examined.ResultsBetween 2015 and 2020, the use of Enhanced Oral Function and Maintenance of Oral Ingestion increased and Transition to Oral Ingestion decreased, resulting in a total increase in use of 275,000 times or approximately 5,000 times per 100,000 among all older adults with LTC insurance certification. Concerning the proportion of users' disability status, the major users of Enhanced Oral Function in 2020 were slightly disabled and independent older adults (70%, up from 55% to 2009). Regarding the major users of Maintenance of Oral Ingestion between 2013 and 2020, care-need level 5 (most severe) decreased by 11%, whereas the total of care-need levels 4 and 3 increased by 9%. The use of Transition to Oral Ingestion, which had been declining, showed a further decline after reduction of the medical fee for percutaneous gastro-tubing in 2014.ConclusionsDue to policy changes, Enhanced Oral Function and Maintenance of Oral Ingestion have increased in the number of use among slightly disabled persons. However, this increase may be insufficient given the hidden swallowing/feeding difficulty.

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The Impact of Policy Incentives on Long-Term Care Insurance and Medicaid Costs: Does Underwriting Matter?

Publications

The Impact of Policy Incentives on Long-Term Care Insurance and Medicaid Costs: Does Underwriting Matter?

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