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Uninsured by Choice? A Choice Experiment on Long Term Care Insurance

Faical Akaichi (), Costa-Font, Joan () and Richard Frank ()
Additional contact information
Faical Akaichi: SRUC Edinburgh
Costa-Font, Joan: London School of Economics
Richard Frank: Harvard University

Authors registered in the RePEc Author Service: Joan Costa-i-Font ()

No 12501, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We examine evidence from two unique discrete choice experiments (DCE) on long term care insurance and several of its relevant attributes, and more specifically, choices made by 15,298 individuals in the United States with and without insurance. We study the valuation of the following insurance attributes, namely 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 investigates respondents' preferences and willingness to pay (WTP) for these care insurance's attributes using a random parameter logit model, and assess 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 100US$ 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: self-insurance; constrained choices; long term care insurance; behavioural constraints; insurance design (search for similar items in EconPapers)
JEL-codes: I18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm, nep-hea and nep-ias
Date: 2019-07
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Published in: Journal of Economic Behaviour and Organisation, available online 29 July 2019 (in press)

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