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Can Catastrophic Long-Term Care Insurance Policies Increase Private Insurance Coverage and Reduce Medicaid Expenditure?

Author

Listed:
  • Ma Guoxuan

    (Department of Economics, Pennsylvania State University, University Park, PA16802, USA)

  • Sun Wei

    (Hanqing Advanced Institute of Economics and Finance and School of Finance, Renmin University of China, Beijing100872, China)

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.

Suggested Citation

  • Ma Guoxuan & Sun Wei, 2017. "Can Catastrophic Long-Term Care Insurance Policies Increase Private Insurance Coverage and Reduce Medicaid Expenditure?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(1), pages 1-6, January.
    • Handle: RePEc:bpj:bejeap:v:17:y:2017:i:1:p:6:n:8
    DOI: 10.1515/bejeap-2016-0243
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    More about this item

    Keywords

    catastrophic long-term care insurance policies; Medicaid expenditure; private insurance coverage; social welfare;
    All these keywords.

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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