Abstract
Using an inter-temporal optimization model of long-term care insurance purchase decisions, we evaluate catastrophic long-term care insurance policies that cover the tail risk of long-term care costs at affordable premiums. Under our baseline model, we show theoretically that introducing catastrophic policies will induce 11 percent of middle-income men and 3 percent of middle-income women to initiate private insurance coverage. As a result, Medicaid costs will be reduced by 0.20 percent and 0.19 percent for men and women, respectively.
References
America’s Health Insurance Plans.Who Buys Long-Term Care Insurance in 2010-2011? 2012; Available at: http://www.ahip.org/Issues/Long-Term-Care-Insurance.aspx.Search in Google Scholar
Auerbach, David I., Peggy G. Chen, Mark W. Friedberg, Rachel Reid, Christopher Lau, Peter I. Buerhaus, and Ateev Mehrotra. 2013. “Nurse-Managed Health Centers and Patient-Centered Medical Homes Could Mitigate Expected Primary Care Physician Shortage.” Health Affairs 32(11): 1933–1941.10.1377/hlthaff.2013.0596Search in Google Scholar
Brown, Jeffery R., Gopi Shah Goda, and Kathleen McGarry. 2012. “Long-Term Care Insurance Demand Limited By Beliefs About Needs, Concerns About Insurers, And Care Available From Family.” Health Affairs 31(6): 1294–1302.10.1377/hlthaff.2011.1307Search in Google Scholar
Brown, Jeffrey R., and Amy Finkelstein. 2007. “Why Is the Market for Long-Term Care Insurance so Small?” Journal of Public Economics 91: 1967–1991.10.1016/j.jpubeco.2007.02.010Search in Google Scholar
Brown, Jeffrey R., and Amy Finkelstein. 2008. “The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market.” American Economic Review 98(3): 1083–1102.10.3386/w10989Search in Google Scholar
Brown, Jeffrey R., and Amy Finkelstein. 2009. “The Private Market for Long-Term Care Insurance in the United States: A Review of the Evidence.” Journal of Risk and Insurance 76(1): 5–29.10.1111/j.1539-6975.2009.01286.xSearch in Google Scholar
Courtemanche, Charles, and Daifeng He. 2009. “Tax Incentives and the Decision to Purchase Long-Term Care Insurance.” Journal of Public Economics 93: 296–310.10.1016/j.jpubeco.2008.05.007Search in Google Scholar
Dolan, Paul, and Claire Gudex. 1995. “Time Preference, Duration and Health State Valuations.” Health Economics 4: 289–299.10.1002/hec.4730040405Search in Google Scholar
Feng, Zhanlian, David C. Grabowski, Orna Intrator, Jacqueline Zinn, and Vincent Mor. 2008. “Medicaid Payment Rates, Case-Mix Reimbursement, and Nursing Home Staffing: 1996-2004.” Medical Care 46(1): 33–40.10.1097/MLR.0b013e3181484197Search in Google Scholar
Friedberg, Leora, Wenliang Hou, Wei Sun, and Anthony Webb. 2016;“Medicaid and Crowd-out of Long-Term Care Insurance.” Working Paper.Search in Google Scholar
Friedberg, Leora, Wenliang Hou, Wei Sun, Anthony Webb, and Li. Zhenyu. 2014;“New Evidence on the Risk of Requiring Long-Term Care.” Working Paper 2014-12. Chestnut Hill, MA: Boston College Center for Retirement Research.10.2139/ssrn.2542572Search in Google Scholar
Fuchs, Victor R.. 1980;“Time Preference and Health: An Exploratory Study.” Working Paper, NBER No. 539.10.3386/w0539Search in Google Scholar
Gruber, Jonathan, and Botond Koszegi. 2004. “Tax Incidence When Individuals are Time-Inconsistent: The Case of Cigarette Excise Taxes.” Journal of Public Economics 88: 1959–1987.10.1016/j.jpubeco.2003.06.001Search in Google Scholar
Hurd, Michael, Pierre-Carl Michaud, and Susann Rohwedder. 2014. “The Lifetime Risk of Nursing Home Use.” In Discoveries in the Economics of Aging. , edited by David A. Wise, 81–109. Chicago, IL: University of Chicago Press.10.7208/chicago/9780226146126.003.0003Search in Google Scholar
Laibson, David. 1997. “Golden Eggs and Hyperbolic Discounting.” The Quarterly Journal of Economics 112(2): 443–477.10.2307/j.ctvcm4j8j.20Search in Google Scholar
Lin, Haizhen, and Jeffrey Prince. 2013. “The Impact of the Partnership Long-Term Care Insurance Program on Private Coverage.” Journal of Health Economics 32(6): 1205–1213.10.1016/j.jhealeco.2013.09.010Search in Google Scholar
MetLife Mature Market Institute. 2012. Market Survey of Long-Term Care Costs. New York, NY: MetLife Mature Market Institute.Search in Google Scholar
National Health Policy Forum.2013;“National Spending for Long-Term Services and Supports (LTSS), 2011.” Available at: http://www.nhpf.org/library/the-basics/Basics_LTSS_02-01-13.pdf.Search in Google Scholar
Robinson, James.. 2002;“A Long-Term Care Status Transition Model.” Working paper, University of Wisconsin.Search in Google Scholar
Shah Goda, Gopi. 2011. “Do Tax Subsidies for Private Insurance Reduce Medicaid Costs? Evidence from the Market for Long-Term Care Insurance.” Journal of Public Economics 95(7–8): 744–757.10.1016/j.jpubeco.2010.11.001Search in Google Scholar
Sochalski, Julie. 2002. “Nursing Shortage Redux: Turning The Corner On An Enduring Problem.” Health Affairs 21(5): 157–164.10.1377/hlthaff.21.5.157Search in Google Scholar
Sun, Wei, and Anthony Webb. 2013;“Can Long-Term Care Partnership Programs Increase Insurance Coverage and Reduce Medicaid Costs?” Working Paper 2013-8. Chestnut Hill, MA: Boston College Center for Retirement Research.10.2139/ssrn.2359411Search in Google Scholar
Van Der Pol, Marjon M., and John A. Cairns. 2000. “Negative and Zero Time Preference for Health.” Health Economics Letters 9: 171–175.10.1002/(SICI)1099-1050(200003)9:2<171::AID-HEC492>3.0.CO;2-ZSearch in Google Scholar
© 2017 Walter de Gruyter GmbH, Berlin/Boston
Articles in the same Issue
- Research Articles
- The Market Value of R&D in Emerging Economies: Evidence from India
- Are You What You Eat? Healthy Behaviour and Risk Preferences
- The Impacts of Rural Property Rights on Urban Unemployment, Wage Inequality, and Welfare in Developing Countries
- Lobbying as a Guard against Extremism
- Information Acquisition in Vertical Relations
- What Extent of Welfare Loss is Caused by the Disparity between Perceived and Scientific Risks? A Case Study of Food Irradiation
- Characteristics and Employment of Applicants for Social Security Disability Insurance over the Business Cycle
- Preferences Toward Leniency under Mandatory Criminal Sentencing Guidelines: Role-in-the-Offense Adjustments for Federal Drug Trafficking Defendants
- The Effect of Kinship Placement Laws on Foster Children’s Well-Being
- Are Immigrants in Favour of Immigration? Evidence from England and Wales
- Competition, Product Innovation and Licensing
- The Impact of Educational Mismatches on Wages: The Influence of Measurement Error and Unobserved Heterogeneity
- Education Outcomes of Children of Asian Intermarriages: Does Gender of the Immigrant Parent Matter?
- Letters
- Endogenous Leadership in Tax Competition: A Combination of the Effects of Market Power and Strategic Interaction
- Can Catastrophic Long-Term Care Insurance Policies Increase Private Insurance Coverage and Reduce Medicaid Expenditure?
- Getting Girls to Schools! – Assessing the Impacts of a Targeted Program on Enrollment and Academic Performance
Articles in the same Issue
- Research Articles
- The Market Value of R&D in Emerging Economies: Evidence from India
- Are You What You Eat? Healthy Behaviour and Risk Preferences
- The Impacts of Rural Property Rights on Urban Unemployment, Wage Inequality, and Welfare in Developing Countries
- Lobbying as a Guard against Extremism
- Information Acquisition in Vertical Relations
- What Extent of Welfare Loss is Caused by the Disparity between Perceived and Scientific Risks? A Case Study of Food Irradiation
- Characteristics and Employment of Applicants for Social Security Disability Insurance over the Business Cycle
- Preferences Toward Leniency under Mandatory Criminal Sentencing Guidelines: Role-in-the-Offense Adjustments for Federal Drug Trafficking Defendants
- The Effect of Kinship Placement Laws on Foster Children’s Well-Being
- Are Immigrants in Favour of Immigration? Evidence from England and Wales
- Competition, Product Innovation and Licensing
- The Impact of Educational Mismatches on Wages: The Influence of Measurement Error and Unobserved Heterogeneity
- Education Outcomes of Children of Asian Intermarriages: Does Gender of the Immigrant Parent Matter?
- Letters
- Endogenous Leadership in Tax Competition: A Combination of the Effects of Market Power and Strategic Interaction
- Can Catastrophic Long-Term Care Insurance Policies Increase Private Insurance Coverage and Reduce Medicaid Expenditure?
- Getting Girls to Schools! – Assessing the Impacts of a Targeted Program on Enrollment and Academic Performance