Funding Long-Term Care Applications of the Trade-Off Principle in Both Public and Private Sectors

The uncertain need for long-term care services is a risk best protected by insurance. However, the current funding relies heavily on personal payment and public welfare, and only lightly on social and private insurances. This method, akin to sitting on a two-legged stool, is unlikely to be sustainab...

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Bibliographic Details
Published inJournal of aging and health Vol. 15; no. 1; pp. 15 - 44
Main Author Chen, Yung-Ping
Format Journal Article
LanguageEnglish
Published Thousand Oaks, CA Sage Publications 01.02.2003
SAGE PUBLICATIONS, INC
Subjects
Aged
Baby boomers
Economic models
Financing, Government - economics
Health Care Services Policy
Health Expenditures
Health Insurance
Health technology assessment
Humans
Insurance Coverage - economics
Insurance, Long-Term Care - economics
Long Term Care
Long term health care
Long-Term Care - economics
Medicaid
Medicaid - economics
Medicare
Models, Economic
Policy Reform
Private Sector - economics
Psychology
Public Sector - economics
Social Security
Social Security - economics
United States
United States
baby boomers
private insurance
behavioral economics
cognitive psychology
long-term care
social insurance
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Summary:The uncertain need for long-term care services is a risk best protected by insurance. However, the current funding relies heavily on personal payment and public welfare, and only lightly on social and private insurances. This method, akin to sitting on a two-legged stool, is unlikely to be sustainable. To incorporate insurance as a key component of funding and to mobilize public and private resources more effectively, we propose a three-legged-stool funding model under which social insurance would provide a basic protection, to be supplemented by private insurance and personal payment. When these sources do not provide sufficient protection for some individuals, Medicaid as public welfare would serve as a safety net. This article (a) discusses how to implement this funding model by using the trade-off principle in both the public and private sectors when resources for long-term care are scarce, and (b) analyzes several objections to this model from cognitive psychology∕behavioral economics.
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ISSN:0898-2643
1552-6887
DOI:10.1177/0898264302239013