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Consumer Decision-Making Abilities and Long-Term Care Insurance Purchase

Author

Listed:
  • Brian E McGarry
  • Helena Tempkin-Greener
  • David C Grabowski
  • Benjamin P Chapman
  • Yue Li

Abstract

ObjectivesTo determine the impact of consumer decision-making abilities on making a long-term care insurance (LTCi) purchasing decision that is consistent with normative economic predictions regarding policy ownership.MethodUsing data from the Health and Retirement Study, multivariate analyses are implemented to estimate the effect of decision-making ability factors on owning LTCi. Stratified multivariate analyses are used to examine the effect of decision-making abilities on the likelihood of adhering to economic predictions of LTCi ownership.ResultsIn the full sample, better cognitive capacity was found to significantly increase the odds of ownership. When the sample was stratified based on expected LTCi ownership status, cognitive capacity was positively associated with ownership among those predicted to own and negatively associated with ownership among those predicted not to own who could likely afford a policy.DiscussionConsumer decision-making abilities, specifically cognitive capacity, are an important determinant of LTCi decision outcomes. Deficits in this ability may prevent individuals from successfully preparing for future long-term care expenses. Policy makers should consider changes that reduce the cognitive burden of this choice, including the standardization of the LTCi market, the provision of consumer decision aids, and alternatives to voluntary and private insuring mechanisms.

Suggested Citation

  • Brian E McGarry & Helena Tempkin-Greener & David C Grabowski & Benjamin P Chapman & Yue Li, 2018. "Consumer Decision-Making Abilities and Long-Term Care Insurance Purchase," The Journals of Gerontology: Series B, The Gerontological Society of America, vol. 73(4), pages 1-10.
    • Handle: RePEc:oup:geronb:v:73:y:2018:i:4:p:e1-e10.
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    File URL: http://hdl.handle.net/10.1093/geronb/gbx059
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    References listed on IDEAS

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    1. 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.
    2. Daniel Gottlieb & Olivia S. Mitchell, 2020. "Narrow Framing and Long‐Term Care Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 87(4), pages 861-893, December.
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    3. Shi, Hon-Yi & Yeh, Shu-Chuan Jennifer & Chou, Hsueh-Chih & Wang, Wen Chun, 2023. "Long-term care insurance purchase decisions of registered nurses: Deep learning versus logistic regression models," Health Policy, Elsevier, vol. 129(C).
    4. Wang, Qun & Abiiro, Gilbert Abotisem & Yang, Jin & Li, Peng & De Allegri, Manuela, 2021. "Preferences for long-term care insurance in China: Results from a discrete choice experiment," Social Science & Medicine, Elsevier, vol. 281(C).

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