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 individual cost estimates, these stated-choice probabilities are used to predict market equilibrium for long-term care insurance. We find that information frictions are pervasive. We measure the welfare losses associated with these three causes in a framework that also allows for selection. We show that information frictions reduce equilibrium take-up and lead to large welfare loss while selection plays little role.
Long-term care insurance; adverse selection; stated-preference; health; insurance;
Martin Boyer, Philippe De Donder, Claude Fluet, Marie-Louise Leroux, and Pierre-Carl Michaud, “Long-Term Care Insurance: Information Frictions and Selection”, TSE Working Paper, n. 19-1034, September 2019.
TSE Working Paper, n. 19-1034, September 2019