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Long‐Term Care Insurance Purchase Patterns

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  • Helen I. Doerpinghaus
  • Sandra G. Gustavson

Abstract

Given the aging population and high cost of long‐term care, many Americans are concerned about financing long‐term care services. Despite this concern, private long‐term care insurance policy sales have experienced slow growth. On average only about 7 percent of the population aged 65 and older has long‐term care insurance, but this percentage varies greatly across the states. In this study we test hypothesized relationships between purchase of long‐term care insurance and various explanatory factors. We provide evidence that state Medicaid nursing home expenditure levels and the relative sizes of the elderly population and the nursing home population are significant explanatory factors of purchase rates. We find no evidence that public–private partnership regulation, the quality of available facilities, or agent marketing controls affect purchase. Findings of the study are useful to insurers, legislators, regulators, and others involved in the public policy debate about financing long‐term care.

Suggested Citation

  • Helen I. Doerpinghaus & Sandra G. Gustavson, 2002. "Long‐Term Care Insurance Purchase Patterns," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 5(1), pages 31-43, September.
    • Handle: RePEc:bla:rmgtin:v:5:y:2002:i:1:p:31-43
    DOI: 1098-1616.00008
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    References listed on IDEAS

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    1. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 619-632, Nov.-Dec..
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    Cited by:

    1. Tennyson, Sharon & Yang, Hae Kyung, 2014. "The role of life experience in long-term care insurance decisions," Journal of Economic Psychology, Elsevier, vol. 42(C), pages 175-188.
    2. Olivia S. Mitchell & John Piggott & Satoshi Shimizutani, 2004. "Aged-Care Support in Japan: Perspectives and Challenges," NBER Working Papers 10882, National Bureau of Economic Research, Inc.
    3. Sergi Jiménez‐Martín & José M. Labeaga‐Azcona & Cristina Vilaplana‐Prieto, 2016. "Interactions between Private Health and Long‐term Care Insurance and the Effects of the Crisis: Evidence for Spain," Health Economics, John Wiley & Sons, Ltd., vol. 25(S2), pages 159-179, November.
    4. Michael K. McShane & Larry A. Cox, 2009. "Issuance Decisions and Strategic Focus: The Case of Long‐Term Care Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 76(1), pages 87-108, March.
    5. Larry A. Cox & Yanling Ge, 2004. "Temporal Profitability and Pricing of Long‐Term Care Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 71(4), pages 677-705, December.
    6. Maximilien Nayaradou & Sébastien Nouet & Manuel Plisson, 2016. "Les mécanismes économiques et financiers associés à la couverture dépendance : une analyse exploratoire sur données bancaires," Revue d'économie financière, Association d'économie financière, vol. 0(2), pages 273-326.
    7. Lambregts, Timo R. & Schut, Frederik T., 2020. "Displaced, disliked and misunderstood: A systematic review of the reasons for low uptake of long-term care insurance and life annuities," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).

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