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On the value of Medicaid in providing access to long‐term care

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  • Markus Fels

Abstract

The crowding‐out by Medicaid has been identified as a possible reason for the low demand for private long‐term care (LTC) insurance in the USA. I extend the previous analysis to the case in which budget constraints inhibit access to care. This reduces the role of the implicit tax and fundamentally changes the nature, scope, and welfare implications of crowding‐out. It suggests a large value of Medicaid that a private insurance market is unable to offer due to a dilemma prevalent in—but not exclusive to—the market for LTC insurance: a dilemma between access and affordability.

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  • Markus Fels, 2020. "On the value of Medicaid in providing access to long‐term care," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(4), pages 933-948, August.
    • Handle: RePEc:bla:jpbect:v:22:y:2020:i:4:p:933-948
    DOI: 10.1111/jpet.12380
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    References listed on IDEAS

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    1. Jeffrey R. Brown & Norma B. Coe & Amy Finkelstein, 2007. "Medicaid Crowd-Out of Private Long-Term Care Insurance Demand: Evidence from the Health and Retirement Survey," NBER Chapters, in: Tax Policy and the Economy, Volume 21, pages 1-34, National Bureau of Economic Research, Inc.
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    5. Markus Fels, 2020. "Mental Accounting, Access Motives, and Overinsurance," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(2), pages 675-701, April.
    6. Brown, Jeffrey R. & Finkelstein, Amy, 2007. "Why is the market for long-term care insurance so small?," Journal of Public Economics, Elsevier, vol. 91(10), pages 1967-1991, November.
    7. Jeffrey R. Brown & Amy Finkelstein, 2008. "The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market," American Economic Review, American Economic Association, vol. 98(3), pages 1083-1102, June.
    8. Congressional Budget Office, 2013. "Rising Demand for Long-Term Services and Supports for Elderly People," Reports 44363, Congressional Budget Office.
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    Cited by:

    1. Markus Rieger‐Fels, 2024. "Why do people buy insurance? A modern answer to an old question," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 27(1), pages 89-114, April.
    2. Rabah Amir & Helmuth Cremer & Rim Lahmandi‐Ayed, 2020. "Introduction to the thematic issue on government‐provided services," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(4), pages 839-844, August.
    3. Christophe Courbage & Guillem Montoliu‐Montes, 2020. "Estate recovery and long‐term care insurance," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(4), pages 949-972, August.

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