Adverse Selection, Bequests, Crowding Out, and Private Demand for Insurance: Evidence from the Long-term Care Insurance Market

Journal Article (Journal Article)

Adverse selection, moral hazard, and crowding out by public insurance have all been proposed as theoretical reasons for why the market for private long-term care insurance has been slow to evolve in the U.S. Using national samples of the elderly and near elderly, this study investigates which is most important. The data contain direct measures of risk aversion, expectations of future nursing home use and living to old age, and the bequest motive. For both groups, we find evidence of adverse selection, and, for the elderly, crowding out of private long-term care insurance by Medicaid. However, we do not find that demand for such insurance is motivated either by bequest or exchange motives.

Full Text

Duke Authors

Cited Authors

  • Sloan, FA; Norton, EC

Published Date

  • January 1, 1997

Published In

Volume / Issue

  • 15 / 3

Start / End Page

  • 201 - 219

International Standard Serial Number (ISSN)

  • 0895-5646

Digital Object Identifier (DOI)

  • 10.1023/A:1007749008635

Citation Source

  • Scopus