Wharton Pension Research Council Working Papers

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Working Paper

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Policymakers have long tried and failed to solve the vexing problem of long-term care insurance. The federal Community Living Assistance Services and Supports (CLASS) Act, a voluntary, publicly administered long-term care (LTC) insurance program, was repealed in 2013, and the problem has gone from bad to worse. The number of private insurers offering LTC insurance has plummeted from over 100 in 2002, to about a dozen today. While some of this is due to consolidation, the larger force driving the exit is lack of profitability. This paper explores issues surrounding the LTC market including pricing, modeling, and alternative payment models, to better understand the reasons for market failure. We provide a review of innovative approaches used successfully in other industries, which may serve as a model for new ways to finance and deliver long-term care. Based on interviews with thought leaders across multiple disciplines and industries, we identify three of the most promising solutions: public and private long-term care insurance solutions, Medicare expansion solutions, and technology solutions.


The published version of this working paper may be found in the 2022 publication: New Models for Managing Longevity Risk: Public-Private Partnerships.


older adults, aging, long-term care, Medicaid, Medicare, long-term care insurance, health savings accounts, assistive technology, telehealth, remote monitoring, predictive analytics

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Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the author and not those of the Wharton School or the Pension Research Council. © 2020 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.


The authors thank Transamerica Institute for its generous support of this research, and Randy Hardock, Gretchen Alkema, Caitlin MacLean, Paul Irving, and Lauren Dunning for helpful comments. They especially appreciate Cara Levy for her excellent research assistance.

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Economics Commons



Date Posted: 29 July 2020