many of them, 119 and by charging very high premiums to those purchasers who qualify for coverage. Those high prices, in turn, make private long-term care insurance unaffordable for many people who otherwise might be interested. 120 The other main barrier to the sale of private long-term care insurance policies is the crowding-out effect of the Medicaid program. 121 “The crowding out effect is an economic theory stipulating that rises in public sector spending drive down or even eliminate private sector spending.” 122 Because many people incorrectly perceive that Medicare will pay for their eventual LTSS, 123 but correctly perceive that Medicaid ultimately will be available to them as a safety net payment program for LTSS if they fail to save or expend their financial assets, they feel no strong imperative to devote their own current dollars to insurance premium payments for protection they may never use or will use only in the future. 124 As one set of commentators has aptly summarized the situation, “Unfortunately, because the majority of middle-class Americans have failed to plan for their future long-term care needs, Medicaid has in effect become the primary financier rather than a means of last resort for the indigent.” 125 Besides difficulties in selling policies, the insurance industry has at least two fundamental problems: first, a “long-standing one—buyers are dropping coverage less often than the industry predicted;” and second, “historically low interest rates are sucking the profit out of the business.” 126 As a consequence of this multifactorial economic dynamic, the number of companies offering private long-term care insurance policies for sale to the public has constricted significantly in the last several years. 127 Some of these
119. Zamora et al., supra note 107, at 100 (“As these policies are medically underwritten, the older an individual becomes, the more likely they are to suffer medical conditions, which could lead to the insurance company declining the applicant.”). 120. Long-Term Services and Supports, supra note 115. 121. See infra Section III.E. 122. Crowding Out Effect, INVESTOPEDIA, http://www.investopedia.com/terms/c/ crowdingouteffect.asp (last visited Apr. 15, 2016). 123. See infra Section III.D. 124. See Kyle, supra note 107, at 113–14; see also Andrew M. Hyer et al., Paying for Long-Term Care in the Gem State: A Survey of the Federal and State Laws Influencing How Long-Term Care Services for Idaho’s Growing Aged and Disabled Populations Are—and Will Be—Funded, 48 IDAHO L. REV. 351, 358 (2012). 125. Zamora et al., supra note 107, at 88; see generally Sean R. Bleck et al., Preserving Wealth and Inheritance Through Medicaid Planning for Long-Term Care, 17 MICH. ST. U. J. MED. & L. 153 (2013). 126. Howard Gleckman, What’s Killing the Long-Term Care Insurance Industry, FORBES (Aug. 29, 2012, 8: 12 PM), http://www.forbes.com/sites#/sites/howardgleckman/2012/08/ 29/whats-killing-the-long-term-care-insurance-industry. 127. Kelly Greene, Long-Term Care: What Now?, WALL ST. J. (Mar. 9, 2012, 9: 46 PM), http://www.wsj.com/articles/SB10001424052970203961204577269842991276650.