Cato Policy Analysis No. 144 December 13, 1990

Policy Analysis

Long-Term Care:
Why a New Entitlement Program Would Be Wrong

by Peter J. Ferrara

Peter J. Ferrara is an associate professor at the George Mason University Law School and a senior fellow of the Cato Institute.


Executive Summary

Despite all the talk of budget woes and runaway entitlement spending, some people in Washington are pressing for still another massive new entitlement program to pay for nursing home and home health care for everyone, regardless of wealth or income. A universal, comprehensive program to pay for such long-term care would probably add $60 billion to $80 billion in net new federal spending each year. Not only is such a new program financially infeasible, there is no sound policy rationale for it even if it were feasible. Lesser, incomplete versions of a universal long-term-care entitlement program represent incoherent policy and still involve infeasible new financial burdens for the federal government.

The federal and state governments already spend about $33 billion per year on long-term care. In general, individuals not covered by current government benefits can and should finance their own care through private insurance and other private-sector alternatives. Policy reforms can broaden the viability and attractiveness of private financing alternatives and even reduce future financial dependence on government for long-term care.

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