DPHS Research Highlights Long-Term Care Insurance's Impact on Caregivers and the Economy in Presidential Report

According to research highlighted in the recent 2024 Economic Report of the President, long-term care insurance (LTCI) and other policies can indirectly affect the livelihoods and mobility of adult-children caregivers, resulting in impacts to the U.S. labor market.

These insights are found in Box 3-6 Long-Term Care of Chapter 3: Population, Aging, and the Economy, which examines how trends in fertility and mortality are shaping the U.S. population and labor force. The highlight combines the expertise of researchers to emphasize the increasing demand for long-term care due to an aging U.S. population, the need for better access to affordable care, the role of Medicaid, and the impact of caregiving on labor market participation. The highlight also advocates for continued federal investment in caregiving.

Courtney Van Houtven"This section, where our project was cited, makes the point that long-term care improvements are important not just for older adults and their loved ones, but also the labor market," said Courtney Van Houtven, PhD, professor in the Duke Department of Population Health Sciences. "Different policies, programs, and consumer products, such as LTCI, do impact the ability of younger generations to work."

That impact was the subject of Family spillovers and long-term care insurance, published in July 2023 in the Journal of Health Economics by Van Houtven, Norma B. Coe of the University of Pennsylvania, and Gopi Shah Goda at Stanford University. Their research is one of the first to examine insurance design and policy levers affecting unpaid caregivers. It found that LTCI does not significantly reduce the use of informal care among insured individuals over approximately eight years. However, it does influence family dynamics, leading to a decrease in parents' expectations of their children's willingness to provide future care and a lower likelihood of adult children co-residing with their parents, coupled with a stronger attachment to the labor market.

LTCI is an additional form of insurance coverage individuals may opt to purchase to help cover the costs of nursing home, home health, or other personal care often encountered by older adults or those with chronic or disabling conditions. For LTCI to take effect, policyholders must maintain the insurance over decades. This additional, long-term expense is financially prohibitive for many Americans. Lack of coverage often leads adult children, particularly women, to make the difficult choice of reducing their working hours, or leaving the labor market, potentially risking their own long-term economic security.

"Women are the default caregivers and tend to be the most intensive caregivers," said Van Houtven. "This is really a gender equity issue, considering our long-term care system relies on unpaid and informal caregivers. Similarly, people with marginalized identities are also bearing the brunt of this due to lack of generational wealth. Addressing universal long-term care insurance at the federal level would be more equitable."

Van Houtven continues to research how other policies, like the Affordable Care Act Medicaid expansion and Earned Income Tax Credit Program, impact unpaid caregivers. Future work will analyze these spillover effects.