Article (Scientific journals)
Insurance with a deductible. A way out of the long term care insurance puzzle
Klimaviciute, Justina; Pestieau, Pierre
2020In Journal of Economics, 130 (3), p. 297–307
Peer reviewed
 

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Keywords :
Arrow’s theorem; Deductible; Long-term care insurance; Reimbursement rule
Abstract :
[en] Long-term care (LTC) is one of the largest uninsured risks facing the elderly. In this paper, we first survey the standard causes of what has been dubbed the LTC insurance puzzle and then suggest that a possible way out of this puzzle is to make the reimbursement formula less threatening for those who fear a too long period of dependence. We adopt a reimbursement formula resting on Arrow’s theorem of the deductible, i.e. that it is optimal to focus insurance coverage on the states with largest expenditures. It implies full self-insurance for the first years of dependency followed by full insurance thereafter. We show that this result remains at work with ex post moral hazard. © 2020, Springer-Verlag GmbH Austria, part of Springer Nature.
Disciplines :
Special economic topics (health, labor, transportation...)
Author, co-author :
Klimaviciute, Justina ;  Université de Liège - ULg
Pestieau, Pierre  ;  Université de Liège - ULiège > HEC Liège > HEC Liège
Language :
English
Title :
Insurance with a deductible. A way out of the long term care insurance puzzle
Publication date :
2020
Journal title :
Journal of Economics
ISSN :
0931-8658
eISSN :
1617-7134
Publisher :
Springer, Wien, Austria
Volume :
130
Issue :
3
Pages :
297–307
Peer reviewed :
Peer reviewed
Funders :
BELSPO - Belgian Federal Science Policy Office [BE]
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