NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Medicaid Crowd-Out of Private Long-Term Care Insurance Demand: Evidence from the Health and Retirement Survey

Jeffrey R. Brown, Norma B. Coe, Amy Finkelstein

NBER Working Paper No. 12536
Issued in September 2006
NBER Program(s):   AG   HC   PE

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 â€" a change that would decrease average household assets protected by Medicaid by about $25,000 â€" 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 discuss reasons why, even with extremely stringent eligibility requirements, Medicaid may still exert a large crowd-out effect on demand for private insurance.

download in pdf format
   (152 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (152 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w12536

Published: Medicaid Crowd-Out of Private Long-Term Care Insurance Demand: Evidence from the Health and Retirement Survey, Jeffrey R. Brown, Norma B. Coe, Amy Finkelstein. in Tax Policy and the Economy, Volume 21, Poterba. 2007

Users who downloaded this paper also downloaded these:
Brown and Finkelstein w10782 Supply or Demand: Why is the Market for Long-Term Care Insurance So Small?
Brown and Finkelstein w10989 The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market
Brown and Finkelstein w17451 Insuring Long Term Care In the US
Brown, Coe, and Finkelstein Medicaid Crowd-Out of Private Long-Term Care Insurance Demand: Evidence from the Health and Retirement Survey
Goda w16406 The Impact of State Tax Subsidies for Private Long-Term Care Insurance on Coverage and Medicaid Expenditures
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us