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When alternative
means of financing are considered, four characteristics of long-
term care take on special importance. First, only a minority
of the elderly have large long- term care expenses. On the average
day, only 4.6 percent of the elderly are in nursing. Moreover,
only between 35 and 50 percent of the elderly will spend any
time in a nursing home before they die. Over 40 percent of all
admissions to nursing homes are for 90 days or less. Because
relatively few people face long stays that involve a large outlay
of funds, long-term care lends itself to insurance and risk
pooling, whereby many people contribute to a fund to cover the
extraordinary expenses of the few.
Second,
if people wait until retirement age to begin buying insurance
or accumulating assets to pay for care, the premium payments
or level of savings required is large. To reduce the cost, people
should begin early in their working years to protect themselves
against a risk that will not be significant for another thirty
to fifty years. Human nature makes it difficult, however, to
convince young and middle-aged workers, or their employers or
unions, to pay for protection against a contingency that if
it occurs at all lies in the remote future.
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