¹University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, 1301 West Gregory Drive, 437 Mumford Hall, Urbana, Illinois 61801, US

Abstract

While the market for private long-term care insurance in the U.S. has grown dramatically, consumer advocates have argued for increased regulatory attention and for broadened consumer education programs concerning long-term care insurance. We analyse Health and Retirement Survey data from 1996, 1998, and 2000 using a zero-inflated negative binomial regression model of the counts of consecutive periods of long-term care insurance coverage. We find that while a significant proportion of Americans over the age of 50 purchase long-term care insurance, many of these purchasers drop their coverage within a five-year period. This finding raises questions for long-term care insurance researchers and it contains implications for market regulators, public policy makers interested in financing long-term care, as well as for insurance companies and consumer advocates.