This paper examines long-term care insurance sales to assess whether state income tax subsidies are effective in encouraging the private purchase of long-term care insurance. Drawing from the most comprehensive available sales data on long-term care insurance policies, cross-state and over-time variation in sales data during the late 1990s and early 2000s are analysed. This analysis uses a panel model with fixed effects controls for potential endogeneity between state provision of tax subsidies and actual sales of long-term care insurance policies. Income, health and family support factors are significant determinants in the sale of long-term care insurance, but the tax incentives provided by many state governments do not induce any more sales of long-term care insurance than could be expected without such incentives. These costly subsidies have not been prudent uses of public dollars, and have not helped states cope with the challenge of long-term care costs.
