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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Ludwig, Sandra / Schmitz, Hendrik

Ed. by Auriol, Emmanuelle / Barigozzi, Francesca / Brunner, Johann / Fleck, Robert / Mastrobuoni, Giovanni / Mendola, Mariapia / Requate, Till / de Vries, Frans / Wenzel, Tobias / Zulehner, Christine

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Volume 17, Issue 1


Volume 19 (2019)

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Volume 1 (2001)

Can Catastrophic Long-Term Care Insurance Policies Increase Private Insurance Coverage and Reduce Medicaid Expenditure?

Guoxuan Ma / Wei Sun
  • Corresponding author
  • Hanqing Advanced Institute of Economics and Finance and School of Finance, Renmin University of China, Beijing 100872, China
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Published Online: 2017-02-14 | DOI: https://doi.org/10.1515/bejeap-2016-0243


Using an inter-temporal optimization model of long-term care insurance purchase decisions, we evaluate catastrophic long-term care insurance policies that cover the tail risk of long-term care costs at affordable premiums. Under our baseline model, we show theoretically that introducing catastrophic policies will induce 11 percent of middle-income men and 3 percent of middle-income women to initiate private insurance coverage. As a result, Medicaid costs will be reduced by 0.20 percent and 0.19 percent for men and women, respectively.

Keywords: catastrophic long-term care insurance policies; Medicaid expenditure; private insurance coverage; social welfare

JEL Classification: H51; I13


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About the article

Published Online: 2017-02-14

Citation Information: The B.E. Journal of Economic Analysis & Policy, Volume 17, Issue 1, 20160243, ISSN (Online) 1935-1682, ISSN (Print) 2194-6108, DOI: https://doi.org/10.1515/bejeap-2016-0243.

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