Uninsured by choice? A choice experiment on long term care insurance

Faical Akaichi, Joan Costa-Font and Richard Frank

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We examine evidence from two unique discrete choice experiments (DCE) on long term care insurance and values several of its relevant attributes. More specifically, the experiments examine choices made by a large sample made of 15,298 individuals in the United States with and without insurance. We study the valuation of a number of insurance attributes, namely the daily insurance benefit, insurance coverage, the compulsory and voluntary nature of the insurance policy design, alongside the costs (insurance premium) and health requirements. This paper elicits both respondents’ preferences and willingness to pay (WTP) for these care insurance's attributes using a random parameter logit model, and assesses the heterogeneity of choice responses using demographic, socioeconomic and attitudinal motivations to segment response to insurance choices. We find that an increase in the insurance premium by an additional $100 would reduce insurance uptake by 1pp. Insurance policy uptake is higher when it provides benefits for the lifetime (the monthly marginal WTP being $178.64), and voluntary (the monthly marginal WTP increases by an extra $74.71) as opposed to universal, and when it forgoes health checks (the monthly marginal WTP increases by an extra 28US$).

Keywords: long term care insurance; constrained choices; self-insurance; behavioural constraints; insurance design (search for similar items in EconPapers)
JEL-codes: I18 I31 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2020-05-01
New Economics Papers: this item is included in nep-dcm, nep-exp, nep-hea and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published in Journal of Economic Behavior & Organization, 1, May, 2020, 173, pp. 422 - 434. ISSN: 0167-2681

Downloads: (external link)
http://eprints.lse.ac.uk/101215/ Open access version. (application/pdf)

Related works:
Journal Article: Uninsured by Choice? A choice experiment on long term care insurance (2020)
Working Paper: Uninsured by Choice? A Choice Experiment on Long Term Care Insurance (2019)
Working Paper: Uninsured by Choice? A Choice Experiment on Long Term Care Insurance (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:101215

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