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The effects of wealth shocks on public and private long-term care insurance

Author

Listed:
  • Costa-Font, Joan
  • Frank, Richard
  • Raut, Nilesh

Abstract

The financing of long-term care services and supports (LTSS) relies heavily on self-insurance in the form of housing or financial wealth. Exploiting both local market variation in housing prices and individual-level variation in stock market wealth from 1996 to 2016, we show that exogenous wealth shocks significantly reduce the probability of LTCI coverage, without altering Medicaid eligibility among people with housing and financial assets. The effect of shocks to liquid wealth strongly dominates the effect of housing wealth changes. A $100 K increase in housing (financial) wealth reduces the likelihood of LTCI coverage by 1.24 (3.22) percentage points.

Suggested Citation

  • Costa-Font, Joan & Frank, Richard & Raut, Nilesh, 2026. "The effects of wealth shocks on public and private long-term care insurance," LSE Research Online Documents on Economics 130325, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:130325
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    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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