Long-term care insurance

Abstract

This chapter summarizes the considerable variation in limitations to "activities of daily living" and associated expenditures on long-term care, with an emphasis on US data, then takes up the question of why the market for private insurance against this large risk is small. Donated care from family, otherwise illiquid home equity, and the shortened life and diminished demand for other consumption associated with receiving care may all undermine demand for long-term care insurance. Selection and moral hazard problems also affect the supply of public and private long-term care insurance.