Title | Dynamic Inefficiencies in Insurance Markets: Evidence from Long-Term Care Insurance |
Publication Type | Journal Article |
Year of Publication | 2005 |
Authors | Finkelstein, A, McGarry, K, Sufi, A |
Journal | The American Economic Review |
Volume | 95 |
Issue | 2 |
Pagination | 224-228 |
ISSN Number | 00028282 |
Keywords | Long-term Care, Medicare/Medicaid/Health Insurance, Risk Factors |
Abstract | Most analyses of insurance market failures have been implemented in a one-period (static) setting, with considerably less attention devoted to problems arising in a multi-period (dynamic) context. In a dynamic framework, risk-averse individuals benefit not only from period-by-period "event" insurance, but also from insurance against becoming a bad risk and begin reclassified into a higher-risk group with a concomitant increase in premiums. We refer to this latter possibility as "reclassification risk." This article examines the private market for long-term care insurance in the US and present empirical evidence suggesting that it does not provide full insurance against reclassification risk. |
URL | http://proxy.lib.umich.edu/login?url=https://search.proquest.com/docview/233029440?accountid=14667 |
Citation Key | 9789 |