Long-term care and the elderly

Long-term care expenditures represent one of the largest uninsured financial risks facing the elderly. Medicaid provides incomplete insurance against these costs: unlimited nursing home benefits with a deductible equal to the savings and income above the means-testing limits. While private insurance is available, fewer than 10 percent of the elderly are currently covered. This thesis explores how the elderly prepare for future nursing home use and the interactions between the private and public insurance systems. Chapter one exploits the state-variation in Medicaid generosity to study the financial response of the elderly to perceived future nursing home needs. I find that the elderly shift their consumption and savings decisions in response to Medicaid. Single households have lower net worth through the median of the distribution due to Medicaid policy. On the other hand, I find that married households do not lower total net worth, but they change their relative holdings of protected and non-protected assets. Chapter two explores the crowd-out effect of the public Medicaid program on demand for private long-term care insurance coverage. We estimate the impact of Medicaid program rules on private long-term care insurance coverage for the elderly. We find small but statistically significant marginal crowd-out effects.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Economics.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2005

Author dc:creator

• Coe, Norma B

Advisor dc:contributor.advisor

• James Poterba.

• Economics.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/33837

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/33837