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Long-Term Care Insurance: Information Frictions and Selection

Martin Boyer, Philippe De Donder (), Claude Fluet (), Marie-Louise Leroux and Pierre-Carl Michaud ()

No 19-1034, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We conduct a stated-choice experiment where respondents are asked to rate various insurance products aimed to protect against financial risks associated with long-term care needs. Using exogenous variation in prices from the survey design and individual cost estimates, these stated-choice probabilities are used to predict market equilibrium for long-term care insurance. We find that information frictions are pervasive. We measure the welfare losses associated with these three causes in a framework that also allows for selection. We show that information frictions reduce equilibrium take-up and lead to large welfare loss while selection plays little role.

Keywords: Long-term care insurance; adverse selection; stated-preference; health; insurance (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-exp, nep-hea and nep-ias
Date: 2019-09-03
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