Given the fact that we are just beginning to learn about the experience of claimants, the conclusions drawn from these analyses should be viewed cautiously. Even so, these multivariate analyses demonstrate that the role that private LTC insurance plays in financing the care needs of disabled elders is complex. While the insurance clearly finances greater levels of formal care, its benefits decrease reliance on informal care, but do not replace informal care. In fact, reductions in the level of informal caregiving are more than offset by increases in formal care. Thus, when disabled elders with and without private insurance are compared, even holding all other variables constant, insured individuals receive more weekly assistance with ADLs and IADLs than do those without the insurance.
There is an interaction between having LTC insurance and accessing Medicare funded home health care benefits. Those who have LTC insurance are much less likely to access Medicare funded services. This is true even when controlling for demographic and health variables as well as selection effects. This may either be due to a preference of the insured to use their private insurance benefits to purchase care or to a lack of awareness that Medicare covers such services. It may also reflect some degree of provider preference for private versus public dollars. In either case, expansions in the private insurance market are likely to lead initially to reductions in Medicare funded home care services. Whether this would be sustained over time is a question that cannot be answered from this data.
Regarding undermet need, when controlling for other significant demographic, health, and service utilization variables, the presence of insurance does not have an effect. Still, because of their characteristics those with private insurance are more likely to report undermet need. The fact that a sizeable minority of individuals reports undermet need certainly indicates that there are significant gaps in the service delivery system. Disabled elders and their caregivers may have difficulty arranging for and coordinating care, or they may be overly dependent on informal care, which appears to be somewhat less effective in meeting needs than formal care.
Given these observations, insurers may want to take a more active role in managing, coordinating, or monitoring both the finance and delivery of care. Aside from having a positive impact on reducing undermet need, this will likely improve consumer satisfaction. Among the roughly one in seven claimants who were dissatisfied with their policy, most linked their dissatisfaction to their interaction with the insurer and the servicing of their claim and not to the design of the policy.
As the market continues to grow, insurers will need to broaden their role and focus on how to help individuals use benefits judiciously. They may also be called upon to take a more active role in monitoring the quality of providers and assuring that services that are being provided meet needs. Results presented here strongly suggest that, as more people seek to protect themselves against the catastrophic costs of long-term care, successful marketing and retention of policyholders will depend on the customer service strategies of insurance companies as well as on the inherent value of their products.