Means‐Tested Long‐Term Care and Family Transfers

One of the pervasive problems with means‐tested public long‐term care programs is their inability to prevent individuals who could afford private long‐term services from taking advantage of public care. They often manage to elude the means‐test net through ‘strategic impoverishment’. We show in a simple model how this problem comes about, how it affects welfare and how it can be mitigated.