2021 SEP 24 (NewsRx) – By a Journalist-Staff News Editor at Economics Daily Report – New Economics Research – Health Care Economics Reported. According to news from Quebec, Canada, per NewsRx correspondents, the research said, “We are studying the demand for long-term care insurance (LTC below) in a context where agents have state-dependent preferences on both a consumer goods of daily living and over LTC spending. We assume that dependency creates demand for LTC spending while decreasing the marginal utility of daily consumption, regardless of the level of consumption.

Funders for this research include the Fonds de Recherche du Québec-Société et Culture, the Agence Nationale de la Recherche, Social Sciences and Humanities Research Council of Canada, Social Sciences and Humanities Research Council of Canada.

Our press journalists obtained a quote from the study: “Agents optimize their consumption of both goods as well as the amount of long-term care insurance (LTCI). We first show that some agents optimally choose not to take out insurance, while no agent wants to take out full insurance, in accordance with the LTCI puzzle. In equilibrium, the transfer received from the insurer covers only a fraction of the LTC expenses. Demand for LTCI does not need to increase with income when preferences are not state dependent or insurance is actuarially unfair. In addition, preferences must be dependent on the state with no insurance taken out to rationalize the empirical observation of higher marginal utility at equilibrium when autonomous.

According to the editors, the research concluded: “Finally, focusing on iso-elastic preferences, we find the empirical observation that health / LTC spending is not very sensitive to income, and we show that the LTCI as a fraction of income should decrease with income and then become zero above a threshold.

This research has been peer reviewed.

For more information on this research, see: Long Term Care Insurance with State Dependent Preferences. Health economics, 2021. Health economics can be contacted at: Wiley, 111 River Street, Hoboken 07030-5774, NJ, United States. (Wiley-Blackwell – http://www.wiley.com/; Health Economics – http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-1050)

Press correspondents report that further information can be obtained from Marie-Louise Leroux, Department of Economics, ESG-UQAM, Montreal, Quebec, Canada.

The direct object identifier (DOI) for this additional information is: https://doi.org/10.1002/hec.4423. This DOI is a link to an electronic document online that is free or to purchase, and can be your direct source for a journal article and its citation.

Contact details of the journal editor Health economics is: Wiley, 111 River Street, Hoboken 07030-5774, NJ, United States.

(Our reports provide factual information on research and discoveries from around the world.)