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Long-term Care Insurance Policy Dropping in the U.S. from 1996 to 2000: Evidence and Implications for Long-term Care Financing

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  • Paul E. McNamara

    (University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, 1301 West Gregory Drive, 437 Mumford Hall, Urbana, Illinois 61801, US)

  • Nayoung Lee

    (University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, 1301 West Gregory Drive, 437 Mumford Hall, Urbana, Illinois 61801, US)

Abstract

While the market for private long-term care insurance in the U.S. has grown dramatically, consumer advocates have argued for increased regulatory attention and for broadened consumer education programs concerning long-term care insurance. We analyse Health and Retirement Survey data from 1996, 1998, and 2000 using a zero-inflated negative binomial regression model of the counts of consecutive periods of long-term care insurance coverage. We find that while a significant proportion of Americans over the age of 50 purchase long-term care insurance, many of these purchasers drop their coverage within a five-year period. This finding raises questions for long-term care insurance researchers and it contains implications for market regulators, public policy makers interested in financing long-term care, as well as for insurance companies and consumer advocates. The Geneva Papers on Risk and Insurance (2004) 29, 640–651. doi:10.1111/j.1468-0440.2004.00307.x

Suggested Citation

  • Paul E. McNamara & Nayoung Lee, 2004. "Long-term Care Insurance Policy Dropping in the U.S. from 1996 to 2000: Evidence and Implications for Long-term Care Financing," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 29(4), pages 640-651, October.
    • Handle: RePEc:pal:gpprii:v:29:y:2004:i:4:p:640-651
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    Cited by:

    1. Lambregts, Timo R. & Schut, Frederik T., 2020. "Displaced, disliked and misunderstood: A systematic review of the reasons for low uptake of long-term care insurance and life annuities," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    2. Sergi Jiménez‐Martín & José M. Labeaga‐Azcona & Cristina Vilaplana‐Prieto, 2016. "Interactions between Private Health and Long‐term Care Insurance and the Effects of the Crisis: Evidence for Spain," Health Economics, John Wiley & Sons, Ltd., vol. 25(S2), pages 159-179, November.
    3. Mi, Hong & Fan, Xiaodong & Lu, Bei & Cai, Liming & Piggott, John, 2020. "Preparing for population ageing: Estimating the cost of formal aged care in China," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    4. Leora Friedberg & Wenliang Hou & Wei Sun & Anthony Webb, 2023. "Lapses in long‐term care insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 90(3), pages 569-595, September.

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