When the affordable has no value, and the valuable is unaffordable: The U.S. market for long-term care insurance and the role of Medicaid

Markus Rieger-Fels

No 84, Working Paper Series in Economics from Karlsruhe Institute of Technology (KIT), Department of Economics and Management

Abstract: I consider the popular argument of Medicaid crowding out demand for private long-term care insurance. I show that this argument rests on a wrong counterfactual comparison. Furthermore, I question the welfare-decreasing impact of Medicaid as it neglects a large value of the program in providing access to care. I show that private insurance is unable to offer a similar value. I posit that the low take-up of private insurance is due to a dilemma prevalent in - but not exclusive to - the market for long term care insurance: a dilemma between access and affordability. Several empirical patterns in insurance uptake and lapsing behavior can be explained by considering the issue of limited affordability.

Keywords: Aging; Insurance; Long term Care; Medicaid (search for similar items in EconPapers)
JEL-codes: G22 I11 I38 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-hea and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:kitwps:84

DOI: 10.5445/IR/1000055418

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