The Experts below are selected from a list of 18402 Experts worldwide ranked by ideXlab platform
Amy Finkelstein - One of the best experts on this subject based on the ideXlab platform.
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the private market for long term Care Insurance in the united states a review of the evidence
Journal of Risk and Insurance, 2009Co-Authors: Jeffrey R Brown, Amy FinkelsteinAbstract:This paper reviews the growing literature on the market for private Long-Term Care Insurance, a market notable for its small size despite the fact that Long-Term Care expenses are potentially large and highly uncertain. After summarizing Long-Term Care utilization and Insurance coverage in the United States, the paper reviews research on the supply of and the demand for private Long-Term Care Insurance. It concludes that demand-side factors impose important limits on the size of the private market and that we currently have a limited understanding of how public policies could be designed to encourage the growth of this market.
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the interaction of public and private Insurance medicaid and the long term Care Insurance market
The American Economic Review, 2008Co-Authors: Jeffrey R Brown, Amy FinkelsteinAbstract:A long tradition in public finance examines how public programs can crowd out private activ? ity in areas as diverse as education, savings, and Insurance, among others. These studies typi? cally focus on aggregate economic implications, particularly for government expenditures and national savings. In this paper, we demonstrate that crowd-out can also have an important effect on individual welfare. Specifically, we show that the provision of even very incomplete public Insurance can crowd out more comprehensive private policies by imposing a large implicit tax on private Insurance benefits, thus potentially increasing overall risk exposure for individuals. We examine the interaction of public and private Insurance for one of the largest uninsured financial risks facing the elderly in the United States: Long-Term Care expenditures. At $135 bil? lion in 2004, Long-Term Care expenditures represented over 8.5 percent of total health expendi? tures/or all ages, or roughly 1.2 percent of GDP. Moreover, real Long-Term Care expenditures are projected to triple over the next 35 years due to rising medical costs and the aging of the baby boomers. Only 10 percent of the elderly, however, have any private Long-Term Care Insurance, and one-third of expenditures are paid for out of pocket (Congressional Budget Office (CBO) 1999; CBO 2004; Brown and Finkelstein 2007). One potential explanation for the small size of the private market is that the public Insurance provided by Medicaid may crowd out demand for private Insurance. Medicaid was designed to provide Long-Term Care Insurance for the poor elderly. Mark V. Pauly (1989,1990) has established the qualitative result that, as an incomplete but publicly funded source of Long-Term Care insur? ance, Medicaid has the potential to reduce substantially demand for private Long-Term Care insur? ance, even among the nonpoor. Our work builds on this insight by quantifying the magnitude of Medicaid's crowd-out effect and the incomplete nature of Medicaid coverage. We also illustrate the mechanism behind Medicaid's crowd-out effect, and are, therefore, able to assess the likely impact of alternative policies on private Insurance demand. We develop a utility-based model of a 65-year-old risk-averse individual who chooses an opti? mal intertemporal consumption path in the presence of uncertainty about Long-Term Care expen? ditures. We calibrate the model using data on the distribution of Long-Term Care expenditure risk, common state Medicaid rules, and the prices and coverage of typical private Long-Term Care Insurance policies.
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why is the market for long term Care Insurance so small
Journal of Public Economics, 2007Co-Authors: Jeffrey R Brown, Amy FinkelsteinAbstract:Abstract Long-Term Care represents one of the largest uninsured financial risks facing the elderly in the United States. We present evidence of supply side market failures in the private Long-Term Care Insurance market. In particular, the typical policy purchased exhibits premiums marked up substantially above expected benefits. It also provides very limited coverage relative to the total expenditure risk. However, we present additional evidence suggesting that the existence of supply side market failures is unlikely, by itself, to be sufficient to explain the very small size of the private Long-Term Care Insurance market. In particular, we find enormous gender differences in pricing that do not translate into differences in coverage, and we show that more comprehensive policies are widely available, if seldom purchased, at similar loads to purchased policies. This suggests that factors limiting demand for Insurance are also likely to be important in this market. Our evidence also sheds light on the likely nature of these demand-side factors.
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medicaid crowd out of private long term Care Insurance demand evidence from the health and retirement survey
Production Engineer, 2007Co-Authors: Jeffrey R Brown, Norma B Coe, Amy FinkelsteinAbstract:This paper provides empirical evidence of Medicaid crowd out of demand for private Long-Term Care Insurance. Using data on the near-and young-elderly in the Health and Retirement Survey, our central estimate suggests that a $10,000 decrease in the level of assets an individual can keep while qualifying for Medicaid would increase private Long-Term Care Insurance coverage by 1.1 percentage points. These estimates imply that if every state in the country moved from their current Medicaid asset eligibility requirements to the most stringent Medicaid eligibility requirements allowed by federal law--a change that would decrease average household assets protected by Medicaid by about $25,000--demand for private Long-Term Care Insurance would rise by 2.7 percentage points. While this represents a 30 percent increase in Insurance coverage relative to the baseline ownership rate of 9.1 percent, it also indicates that the vast majority of households would still find it unattractive to purchase private Insurance. We...
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multiple dimensions of private information evidence from the long term Care Insurance market
The American Economic Review, 2006Co-Authors: Amy Finkelstein, Kathleen McgarryAbstract:We demonstrate the existence of multiple dimensions of private information in the Long-Term Care Insurance market. Two types of people purchase Insurance: individuals with private information that they are high risk and individuals with private information that they have strong taste for Insurance. Ex post, the former are higher risk than Insurance companies expect, while the latter are lower risk. In aggregate, those with more Insurance are not higher risk. Our results demonstrate that Insurance markets may suffer from asymmetric information even absent a positive correlation between Insurance coverage and risk occurrence. The results also suggest a general test for asymmetric information.
Jeffrey R Brown - One of the best experts on this subject based on the ideXlab platform.
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long term Care Insurance demand limited by beliefs about needs concerns about insurers and Care available from family
Health Affairs, 2012Co-Authors: Jeffrey R Brown, Gopi Shah Goda, Kathleen McgarryAbstract:In spite of the high costs and major financial risks involved in Long-Term Care, the majority of older Americans do not own Long-Term Care Insurance. We conducted a survey designed to learn more about the role of the following four broad factors in affecting the demand for Long-Term Care Insurance: preferences and beliefs, such as notions about the likelihood that one will become disabled; substitutes for Insurance, such as savings that could be spent on Long-Term Care; substitutes for formal Care, such as Care provided by family members; and features of the private market, such as concerns about the high costs of coverage. We found evidence that each of these factors was important in explaining low demand for Long-Term Care Insurance. For example, people who believed they might need Long-Term Care were more likely to purchase Long-Term Care coverage. People who had alternative ways to pay for Care, such as through savings, or those who could use unpaid Care from family members, were less likely to purcha...
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the private market for long term Care Insurance in the united states a review of the evidence
Journal of Risk and Insurance, 2009Co-Authors: Jeffrey R Brown, Amy FinkelsteinAbstract:This paper reviews the growing literature on the market for private Long-Term Care Insurance, a market notable for its small size despite the fact that Long-Term Care expenses are potentially large and highly uncertain. After summarizing Long-Term Care utilization and Insurance coverage in the United States, the paper reviews research on the supply of and the demand for private Long-Term Care Insurance. It concludes that demand-side factors impose important limits on the size of the private market and that we currently have a limited understanding of how public policies could be designed to encourage the growth of this market.
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the interaction of public and private Insurance medicaid and the long term Care Insurance market
The American Economic Review, 2008Co-Authors: Jeffrey R Brown, Amy FinkelsteinAbstract:A long tradition in public finance examines how public programs can crowd out private activ? ity in areas as diverse as education, savings, and Insurance, among others. These studies typi? cally focus on aggregate economic implications, particularly for government expenditures and national savings. In this paper, we demonstrate that crowd-out can also have an important effect on individual welfare. Specifically, we show that the provision of even very incomplete public Insurance can crowd out more comprehensive private policies by imposing a large implicit tax on private Insurance benefits, thus potentially increasing overall risk exposure for individuals. We examine the interaction of public and private Insurance for one of the largest uninsured financial risks facing the elderly in the United States: Long-Term Care expenditures. At $135 bil? lion in 2004, Long-Term Care expenditures represented over 8.5 percent of total health expendi? tures/or all ages, or roughly 1.2 percent of GDP. Moreover, real Long-Term Care expenditures are projected to triple over the next 35 years due to rising medical costs and the aging of the baby boomers. Only 10 percent of the elderly, however, have any private Long-Term Care Insurance, and one-third of expenditures are paid for out of pocket (Congressional Budget Office (CBO) 1999; CBO 2004; Brown and Finkelstein 2007). One potential explanation for the small size of the private market is that the public Insurance provided by Medicaid may crowd out demand for private Insurance. Medicaid was designed to provide Long-Term Care Insurance for the poor elderly. Mark V. Pauly (1989,1990) has established the qualitative result that, as an incomplete but publicly funded source of Long-Term Care insur? ance, Medicaid has the potential to reduce substantially demand for private Long-Term Care insur? ance, even among the nonpoor. Our work builds on this insight by quantifying the magnitude of Medicaid's crowd-out effect and the incomplete nature of Medicaid coverage. We also illustrate the mechanism behind Medicaid's crowd-out effect, and are, therefore, able to assess the likely impact of alternative policies on private Insurance demand. We develop a utility-based model of a 65-year-old risk-averse individual who chooses an opti? mal intertemporal consumption path in the presence of uncertainty about Long-Term Care expen? ditures. We calibrate the model using data on the distribution of Long-Term Care expenditure risk, common state Medicaid rules, and the prices and coverage of typical private Long-Term Care Insurance policies.
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why is the market for long term Care Insurance so small
Journal of Public Economics, 2007Co-Authors: Jeffrey R Brown, Amy FinkelsteinAbstract:Abstract Long-Term Care represents one of the largest uninsured financial risks facing the elderly in the United States. We present evidence of supply side market failures in the private Long-Term Care Insurance market. In particular, the typical policy purchased exhibits premiums marked up substantially above expected benefits. It also provides very limited coverage relative to the total expenditure risk. However, we present additional evidence suggesting that the existence of supply side market failures is unlikely, by itself, to be sufficient to explain the very small size of the private Long-Term Care Insurance market. In particular, we find enormous gender differences in pricing that do not translate into differences in coverage, and we show that more comprehensive policies are widely available, if seldom purchased, at similar loads to purchased policies. This suggests that factors limiting demand for Insurance are also likely to be important in this market. Our evidence also sheds light on the likely nature of these demand-side factors.
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medicaid crowd out of private long term Care Insurance demand evidence from the health and retirement survey
Production Engineer, 2007Co-Authors: Jeffrey R Brown, Norma B Coe, Amy FinkelsteinAbstract:This paper provides empirical evidence of Medicaid crowd out of demand for private Long-Term Care Insurance. Using data on the near-and young-elderly in the Health and Retirement Survey, our central estimate suggests that a $10,000 decrease in the level of assets an individual can keep while qualifying for Medicaid would increase private Long-Term Care Insurance coverage by 1.1 percentage points. These estimates imply that if every state in the country moved from their current Medicaid asset eligibility requirements to the most stringent Medicaid eligibility requirements allowed by federal law--a change that would decrease average household assets protected by Medicaid by about $25,000--demand for private Long-Term Care Insurance would rise by 2.7 percentage points. While this represents a 30 percent increase in Insurance coverage relative to the baseline ownership rate of 9.1 percent, it also indicates that the vast majority of households would still find it unattractive to purchase private Insurance. We...
Kathleen Mcgarry - One of the best experts on this subject based on the ideXlab platform.
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long term Care Insurance demand limited by beliefs about needs concerns about insurers and Care available from family
Health Affairs, 2012Co-Authors: Jeffrey R Brown, Gopi Shah Goda, Kathleen McgarryAbstract:In spite of the high costs and major financial risks involved in Long-Term Care, the majority of older Americans do not own Long-Term Care Insurance. We conducted a survey designed to learn more about the role of the following four broad factors in affecting the demand for Long-Term Care Insurance: preferences and beliefs, such as notions about the likelihood that one will become disabled; substitutes for Insurance, such as savings that could be spent on Long-Term Care; substitutes for formal Care, such as Care provided by family members; and features of the private market, such as concerns about the high costs of coverage. We found evidence that each of these factors was important in explaining low demand for Long-Term Care Insurance. For example, people who believed they might need Long-Term Care were more likely to purchase Long-Term Care coverage. People who had alternative ways to pay for Care, such as through savings, or those who could use unpaid Care from family members, were less likely to purcha...
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multiple dimensions of private information evidence from the long term Care Insurance market
The American Economic Review, 2006Co-Authors: Amy Finkelstein, Kathleen McgarryAbstract:We demonstrate the existence of multiple dimensions of private information in the Long-Term Care Insurance market. Two types of people purchase Insurance: individuals with private information that they are high risk and individuals with private information that they have strong taste for Insurance. Ex post, the former are higher risk than Insurance companies expect, while the latter are lower risk. In aggregate, those with more Insurance are not higher risk. Our results demonstrate that Insurance markets may suffer from asymmetric information even absent a positive correlation between Insurance coverage and risk occurrence. The results also suggest a general test for asymmetric information.
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dynamic inefficiencies in Insurance markets evidence from long term Care Insurance
The American Economic Review, 2005Co-Authors: Amy Finkelstein, Kathleen Mcgarry, Amir SufiAbstract:We examine whether unregulated, private Insurance markets efficiently provide Insurance against reclassification risk (the risk of becoming a bad risk and facing higher premiums). To do so, we examine the ex-post risk type of individuals who drop their Long-Term Care Insurance contracts relative to those who are continually insured. Consistent with dynamic inefficiencies, we find that individuals who drop coverage are of lower risk ex-post than individuals who were otherwise-equivalent at the time of purchase but who do not drop out of their contracts. These findings suggest that dynamic market failures in private Insurance markets can preclude the efficient provision of Insurance against reclassification risk.
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private information and its effect on market equilibrium new evidence from long term Care Insurance
California Center for Population Research, 2003Co-Authors: Amy Finkelstein, Kathleen McgarryAbstract:This paper examines the standard test for asymmetric information in Insurance markets: that its presence will result in a positive correlation between Insurance coverage and risk occurrence. We show empirically that while there is no evidence of this positive correlation in the Long-Term Care Insurance market, asymmetric information still exists. We use individuals' subjective assessments of the chance they will enter a nursing home, together with the Insurance companies' own assessment, to show that individuals do have private information about their risk type. Moreover, this private information is positively correlated with Insurance coverage. We reconcile this direct evidence of asymmetric information with the lack of a positive correlation between Insurance coverage and risk occurrence by demonstrating the existence of other unobserved characteristics that are positively related to coverage and negatively related to risk occurrence. Specifically, we find that more cautious individuals are both more likely to have Long-Term Care Insurance and less likely to enter a nursing home. Our results demonstrate that Insurance markets may suffer from asymmetric information, and its negative efficiency consequences, even if those with more Insurance are not higher risk. The results also suggest an alternative approach to testing for asymmetric information in Insurance markets.
David C Grabowski - One of the best experts on this subject based on the ideXlab platform.
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consumer numeracy and Insurance design decisions an examination of inflation protection take up among private long term Care Insurance policy holders
Medical Care Research and Review, 2020Co-Authors: Brian E Mcgarry, David C GrabowskiAbstract:Given the rising cost of Long-Term Care (LTC) services, the selection of a private Long-Term Care Insurance (LTCi) policy with inflation protection has critical implications for the ability of this coverage to protect against potentially catastrophic LTC expenses. This study examines the effect of consumers' numeric abilities on the decision to add inflation protection to private LTCi policies. Over 40% of current LTCi policies lack inflation protection. Higher scores on a three-question numeracy scale are associated with increases in the probability of choosing inflation protection at the time of policy purchase, with households answering all three questions correctly being 12 percentage points more likely to have this benefit type relative to those with a numeracy score of 0 (p = .002). Market reforms that simplify the task of evaluating LTCi plans and assessing the value of indexed benefits may be needed to ensure that LTCi policy purchasers are selecting adequate protection against future LTC costs.
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what do clinicians caring for aging patients need to know about private long term Care Insurance
Journal of the American Geriatrics Society, 2019Co-Authors: Brian E Mcgarry, David C GrabowskiAbstract:Preparing for future Long-Term Care (LTC) needs is a critical component of successful aging. Clinicians with aging patient panels may be a valuable source of information about the importance of LTC planning and the mechanisms available to do so, including private LTC Insurance (LTCi). This article provides an overview, from a clinician's perspective, of current LTC financing and the key questions patients should consider when assessing LTCi. Although actual purchasing decisions likely require support from impartial financial experts, clinicians may be well positioned to help initiate difficult conversations about LTC planning and point patients to unbiased resources concerning LTCi. J Am Geriatr Soc 67:2167-2173, 2019.
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the impact of policy incentives on long term Care Insurance and medicaid costs does underwriting matter
Health Services Research, 2018Co-Authors: Portia Y Cornell, David C GrabowskiAbstract:Objective To test whether underwriting modifies the effect of state-based incentives on individuals' purchase of Long-Term Care Insurance. Data source Health and Retirement Study (HRS), 1996-2012. Study design We estimated difference-in-difference regression models with an interaction of state policy indicators with individuals' probabilities of being approved for Long-Term Care Insurance. Data extraction We imputed probabilities of underwriting approval for respondents in the HRS using a model developed with underwriting decisions from two U.S. Insurance firms. We measured the elasticity response to Long-Term Care Insurance price using changes in simulated after-tax price as an instrumental variable for premium price. Principal findings Tax incentives and Partnership programs increased Insurance purchase by 3.62 percentage points and 1.8 percentage points, respectively, among those with the lowest risk (highest approval probability). Neither had any statistically significant effects among the highest risk individuals. Conclusions We show that ignoring the effects of underwriting may lead to biased estimates of the potential state budget savings of Long-Term Care Insurance tax incentives. If the private market is to play a role in financing Long-Term Care, policies need to address the underlying adverse selection problems.
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consumer decision making abilities and long term Care Insurance purchase
Journals of Gerontology Series B-psychological Sciences and Social Sciences, 2018Co-Authors: Brian E Mcgarry, Helena Tempkingreener, David C Grabowski, Benjamin P Chapman, Yue LiAbstract:Objectives: To 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. Method: Using 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. Results: In 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. Discussion: Consumer 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.
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medical underwriting in long term Care Insurance market conditions limit options for higher risk consumers
Health Affairs, 2016Co-Authors: Portia Y Cornell, David C Grabowski, Marc A Cohen, David G StevensonAbstract:A key feature of private Long-Term Care Insurance is that medical underwriters screen out would-be buyers who have health conditions that portend near-term physical or cognitive disability. We applied common underwriting criteria based on data from two Long-Term Care insurers to a nationally representative sample of individuals in the target age range (50–71 years) for Long-Term Care Insurance. The screening criteria put upper bounds on the current proportion of Americans who could gain coverage in the individual market without changes to medical underwriting practice. Specifically, our simulations show that in the target age range, approximately 30 percent of those whose wealth meets minimum industry standards for suitability for Long-Term Care Insurance would have their application for such Insurance rejected at the underwriting stage. Among the general population—without considering financial suitability—we estimated that 40 percent would have their applications rejected. The predicted rejection rates ...
Gopi Shah Goda - One of the best experts on this subject based on the ideXlab platform.
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long term Care Insurance demand limited by beliefs about needs concerns about insurers and Care available from family
Health Affairs, 2012Co-Authors: Jeffrey R Brown, Gopi Shah Goda, Kathleen McgarryAbstract:In spite of the high costs and major financial risks involved in Long-Term Care, the majority of older Americans do not own Long-Term Care Insurance. We conducted a survey designed to learn more about the role of the following four broad factors in affecting the demand for Long-Term Care Insurance: preferences and beliefs, such as notions about the likelihood that one will become disabled; substitutes for Insurance, such as savings that could be spent on Long-Term Care; substitutes for formal Care, such as Care provided by family members; and features of the private market, such as concerns about the high costs of coverage. We found evidence that each of these factors was important in explaining low demand for Long-Term Care Insurance. For example, people who believed they might need Long-Term Care were more likely to purchase Long-Term Care coverage. People who had alternative ways to pay for Care, such as through savings, or those who could use unpaid Care from family members, were less likely to purcha...
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the impact of state tax subsidies for private long term Care Insurance on coverage and medicaid expenditures
Journal of Public Economics, 2011Co-Authors: Gopi Shah GodaAbstract:Abstract In spite of the large expected costs of needing Long-Term Care, only 10–12% of the elderly population has private Insurance coverage. Medicaid, which provides means-tested public assistance and pays for almost half of Long-Term Care costs, spends more than $100 billion annually on Long-Term Care. In this paper, I exploit variation in the adoption and generosity of state tax subsidies for private Long-Term Care Insurance to determine whether tax subsidies increase private coverage and reduce Medicaid's costs for Long-Term Care. The results indicate that the average tax subsidy raises coverage rates by 2.7 percentage points, or 28%. However, the response is concentrated among high income and asset-rich individuals, populations with low probabilities of relying on Medicaid. Simulations suggest each dollar of state tax expenditure produces approximately $0.84 in Medicaid savings, over half of which funnels to the federal government.
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the impact of state tax subsidies for private long term Care Insurance on coverage and medicaid expenditures
2010Co-Authors: Gopi Shah GodaAbstract:In spite of the large expected costs of needing Long-Term Care, only 10-12 percent of the elderly population has private Insurance coverage. Medicaid, which provides means-tested public assistance and pays for almost half of Long-Term Care costs, spends more than $100 billion annually on Long-Term Care. In this paper, I exploit variation in the adoption and generosity of state tax subsidies for private Long-Term Care Insurance to determine whether tax subsidies increase private coverage and reduce Medicaid's costs for Long-Term Care. The results indicate that the average tax subsidy raises coverage rates by 2.7 percentage points, or 28 percent. However, the response is concentrated among high income and asset-rich individuals, populations with low probabilities of relying on Medicaid. Simulations suggest each dollar of state tax expenditure produces approximately $0.84 in Medicaid savings, over half of which funnels to the federal government.
