Private insurance: no solution for long-term care

As part of its turn from care in facilities, the Ontario government has let the wait lists for long-term care facilities explode.  This problem has been around for several years now, and there is little sign the government intends to remedy the problem.  

Instead they simply talk about keeping people in their homes.  It sounds great -- until you need long-term care.  With a tsunami of aging coming, this problem is set to get worse.  

Fitting nicely with this plan, the for-profit long-term care industry has commissioned a report that actually calls for less publicly funded long-term care: instead, the publicly funded long-term care sector would expand into hospital services and provide short-term care.   

As noted a few days ago, the private insurance corporations have seized on the government's turn away from publicly funded long-term care and called for an expansion of private insurance for long-term care needs  -- along with private delivery and no price caps to protect residents.   (There's certainly no flies on these guys when it comes to drumming up business.)

But private insurance offers no solution.  The industry cites the USA as a model. 

Despite claims otherwise, private insurance is no more a solution there than it is here. In a recent report on this difficult situation the New York Times reports, "Few Americans buy private long-term care insurance, and such insurance was dropped from the Affordable Care Act last year as actuarially unsound or unaffordable."

“More than $80,000 a year on average for a nursing home — who can sustain that?” said Robyn Grant, director of public policy and advocacy for the National Consumer Voice for Quality Long Term Care. “We’re forced, most of us, to go onto Medicaid. People don’t realize this.”

Even in the mecca of health care privatization, only about ten percent of Americans have at least some private long term care insurance.  That leaves the other 90% out.  Fortunately, until now, only about 2-4% of long-term care costs in the US have been covered by long-term care private insurance. Private long-term care insurance is not widespread in other countries --  and only 1% of Canadians have private long-term care insurance.  

A recent study from the Institute for Research on Public Policy concludes:

Private long-term care insurance, by its nature, is subject to significant market failures. As a result, taking this option would require heavy government regulation and large subsidies. Because of their effect on individuals’ decisions and behaviour regarding long-term care insurance, last-resort options, such as obtaining care in public hospitals, would also have to be curtailed. Moreover, individuals would still end up paying more for coverage than they would if they contributed to a public insurance plan.

Encouraging private savings for long-term care (about $300,000) is also an "inefficient" option as an "estimated 31 percent of people turning 65 in 2005 will not need any long-term care before they die".  

Instead, the authors recommend governments adopt a universal public insurance plan that provides full coverage based on a standard evaluation of care needs.


The vast majority of long-term care residents in the USA rely on Medicaid (not Medicare) to pay for long-term care.  But quite a few states in the USA are desperately trying to reduce public funding of long-term care.  That does not bode well for stronger public coverage of long-term care needs in Canada.