On balance, the increase in nursing home use induced by expanded availability of third-party payments is likely to be modest. In the case of home care services, however, the increase in use is likely to be substantial.

Long- term care insurance ($30, $40, and $50 nursing home daily benefit). All nondisabled individuals and couples aged 67 with $10,000 or more in nonhousing assets buy policies as the cost of the premiums is 5 percent or less of their income. The policy provides six years of nursing home care after a 100-day elimination period at $30, $40, or $50 a day (in 1986 dollars) depending on what the person can afford. The indemnity benefit level is moderately indexed for inflation for ten years after initial purchase. A prior hospitalization requirement allows 75 percent of the people who meet the elimination period to receive benefits.