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The Impact of Private Long-Term Care Insurance Benefits on Selected Medicare Services - Executive Summary

Publication Date
Mar 11, 2002

Jessica Miller, M.S., Boryana Dimitrova, M.A. and Marc Cohen, Ph.D.

LifePlans, Inc.

This report was prepared under contract #BPA-OS-01-0267C between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and LifePlans, Inc. For additional information about this subject, you can visit the DALTCP home page at or contact the ASPE Project Officer, Pamela Doty, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, S.W., Washington, D.C. 20201. Her e-mail address is:

The opinions and views expressed in this report are those of the authors. They do not necessarily reflect the views of the Department of Health and Human Services, the contractor or any other funding organization.


The purpose of this study is to gain a better understanding of how having a private long-term care (LTC) insurance policy interacts with and affects the use of Medicare financed home health, skilled nursing and inpatient services. We use Medicare claims data provided by the Centers for Medicare and Medicaid Services (CMS) and link it to a sample of 578 community-based disabled elders receiving benefits under their long-term care insurance policies. Results are compared to a similarly disabled population -- derived from the 1994 National Long-Term Care Survey -- of 1,349 disabled elders who are not privately insured.

Key findings include:

  • Between one-quarter and one-third of private insurance claimants used Medicare home health services in the year immediately preceding the use of insurance benefits or within one year of their claim being opened.

  • Most privately insured individuals who access Medicare financed home health care use skilled nursing visits, and the proportion of those who do so actually increases after the receipt of private insurance benefits.

  • Long-term care insurance claimants tend to be less likely than similarly disabled non-insured elders to use home health aide services.

  • The privately insured have fewer home health aide visits and fewer skilled nursing visits. In fact, they receive roughly half as many visits as their non-insured counterparts.

  • The per-visit home health aide and skilled nursing cost for privately insured claimants is much higher than for the non-privately insured.

  • While Medicare does spend less on the privately insured for home-based services, this is somewhat offset by higher expenditures on facility-based skilled care.

  • After accounting for the differences in the health and socio-demographic characteristics of the two samples, individuals who are receiving private long-term care insurance payments:
    • are less likely to access Medicare financed home health aide services;
    • have fewer visits and lower expenditures (i.e. $2,400 lower) for home health aide services;
    • are just as likely to use Medicare skilled nursing services and have roughly similar expenditures; and
    • use similar levels of facility-based skilled nursing services and inpatient hospital care.

In sum, as more individuals purchase private LTC insurance policies, the use of and expenditures on the Medicare home health aide benefit should decline. To the extent that over time the differential between Medicare reimbursement and private pay rates for skilled nursing diminishes, the proliferation of private insurance policies will also lead to expenditure reductions in Medicare skilled nursing services. Taken together, these findings support the proposition that patterns of service use in the private market can and do have an effect on the use of publicly financed long-term care expenditures.

The Full Report is also available from the DALTCP website ( or directly at


Medicare Beneficiaries