Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/172974
Authors: 
Boyer, Martin
De Donder, Philippe
Fluet, Claude
Leroux, Marie-Louise
Michaud, Pierre-Carl
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6698
Abstract: 
We conduct a stated-choice experiment where respondents are asked to rate various insurance products aimed to protect against financial risks associated with long-term care needs. Using exogenous variation in prices from the survey design, and objective risks computed from a dynamic microsimulation model, these stated-choice probabilities are used to predict market equilibrium for long-term care insurance using the framework developped by Einav et al. (2010). We investigate in turn causes for the low observed take-up of long-term care insurance in Canada despite substantial residual out-of-pocket financial risk. We first find that awareness and knowledge of the product is low in the population: 44% of respondents who do not have long-term care insurance were never offered this type of insurance while overall 31% report no knowledge of the product. Although we find evidence of adverse selection, results suggest it plays a minimal role in limiting take-up. On the demand side, once respondents have been made aware of the risks, we find that demand remains low, in part because of misperceptions of risk, lack of bequest motive and home ownership which may act as a substitute.
Subjects: 
long-term care insurance
adverse selection
stated-preference
health
insurance
JEL: 
I11
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.