California’s Long-Term-Care Insurance Market Is Being Regulated Into Delay, ICLE Brief Finds
PORTLAND, Ore. (May 7, 2026) — California’s private long-term-care insurance market has weakened not because the state protects consumers too much, but because it regulates too slowly, according to a new issue brief from the International Center for Law & Economics (ICLE).
ICLE Editor-in-Chief R.J. Lehmann and Executive Director Ian Adams find that California’s prior-approval system has become a bottleneck for long-term-care products at the exact moment aging demographics and rising care costs make private coverage more important.
The paper’s central evidence comes from ICLE’s analysis of California SERFF data for individual long-term-care filings submitted from 2020 through 2025. Of 368 filings reviewed, 43 were substantive product or rate filings. Those substantive filings took an average of 905 days for rate filings, 951 days for form filings, and 957 days for combined rate/form filings to reach disposition. Nearly one-third took more than three years.
“California is not failing long-term-care consumers because it cares too much about protecting them,” Lehmann said. “It is failing them because the machinery built to protect them has become a bottleneck. When long-term-care filings take two and a half years to resolve, regulators are no longer reviewing the market frontier. They are approving products that may already be stale.”
The brief documents a widening financing gap. By 2040, Californians ages 65 and older will make up 22% of the state’s population, up from 14% in 2020. Federal estimates indicate that nearly 70% of people turning 65 today will need some form of long-term services and supports. California’s annual care costs exceed national benchmarks across every major setting, with private nursing-home rooms averaging more than $182,000 a year.
Medi-Cal cannot fill that gap alone. The program’s 2025-26 budget is estimated at $197 billion, and the number of Medi-Cal enrollees using long-term services and supports rose 20% from 2017 to 2022. Meanwhile, California’s flagship public-private bridge—the California Partnership for Long-Term Care—has stopped functioning as intended: No Partnership-approved insurers currently sell policies.
Private coverage is also shrinking. Total private long-term-care coverage in California fell from 750,963 covered lives in 2021 to 735,901 in 2024. Standalone coverage fell from 605,488 to 572,215 over the same period, while growth in hybrid and linked-benefit products failed to offset the decline.
“Timing is part of the long-term-care product,” Adams said. “Most consumers buy during a narrow midlife window, when underwriting is still accessible and premiums remain affordable. If California takes years to approve filings, consumers do not merely wait longer. They miss the window, face higher costs, and may lose access altogether.”
The brief identifies several structural drivers of California’s weak market performance: divided review authority within the California Department of Insurance, fragmented oversight of hybrid life/long-term-care products, nonparticipation in the Interstate Insurance Product Regulation Compact, and filing fees that dwarf those of some peer states. A standalone California long-term-care filing with one policy, one application, and three riders generates $9,830 in posted fees, compared with $100 for a comparable filing in Texas.
The authors argue that California can restore a functional market without weakening consumer protection. They recommend timeline accountability and escalation protocols, clearer ownership of hybrid-product review, more proportional filing fees, a pathway for limited-duration long-term-care coverage, and serious consideration of interstate review mechanisms.
“Strong consumer protection and functional insurance markets are not opposing goals,” Lehmann said. “California can preserve safeguards while improving the system that administers them. The question is whether consumers get real access to useful products while those products still matter.”
To arrange an interview with the authors, contact Jim Fellinger at [email protected]. Download the full report here.
About ICLE
The International Center for Law & Economics is a nonprofit, nonpartisan research center working with a roster of more than one-hundred academic affiliates and research centers from around the globe. ICLE scholars promote the use of law and economics methodologies to inform public policy debates.