Moral hazard and long-term care insurance

  • R. Tamara KonetzkaEmail author
  • Daifeng He
  • Jing Dong
  • John A. Nyman


In private long-term care insurance markets, moral hazard is central to pricing and long-run robustness of the market, yet there is remarkably little evidence on the extent to which moral hazard is present in long-term care insurance. We use Health and Retirement Study data from 1996 to 2014 to assess moral hazard in nursing home and home care use in private long-term care insurance, employing a combination of propensity score matching and instrumental variables approaches. We find evidence of significant moral hazard in home care use and a potentially meaningful but noisy effect on nursing home use. Policymakers designing incentives to promote private long-term care insurance should consider the consequences of moral hazard.


Moral hazard Long-term care insurance Ageing Nursing homes Home care 



We are grateful for funding from the National Institute on Aging, R01AG041108.


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Copyright information

© The Geneva Association 2019

Authors and Affiliations

  • R. Tamara Konetzka
    • 1
    Email author
  • Daifeng He
    • 2
  • Jing Dong
    • 3
  • John A. Nyman
    • 4
  1. 1.Department of Public Health Sciences and Department of Medicine, The University of Chicago Biological SciencesUniversity of ChicagoChicagoUSA
  2. 2.Swarthmore CollegeSwarthmoreUSA
  3. 3.IMPAQ InternationalColumbiaUSA
  4. 4.University of MinnesotaMinneapolisUSA

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