What We Know About Buyers and Non-Buyers of Private Long-Term Care Insurance: A Review of Studies. C. LTC Attitudes and Experience


One would expect that people's attitudes toward and experience with LTC would influence their thinking about the potential value of having a private policy. Table 2 displays whether certain attitudinal or experiential variables distinguish between buyers and non-buyers of the product.

TABLE 2: Attitudes and Experiences that Distinguish between Buyers and Non-Buyers
Attitudes Employees Retirees
Buyers are more likely to perceive their risk of needing LTC to be high Yes Yes
Buyers more likely to have prior experience with LTC, primarily as caregivers Yes Yes
Buyers indicate less willingness to rely on family if they need care Yes Yes
Buyers more likely to say it is important to plan ahead for the possibility of needing care Yes Yes
Buyers worry more about how to pay for LTC expenses if they need care Contradicting evidence Contradicting evidence
Buyers are more likely to view themselves at personal financial risk if they should need LTC Yes Yes
Buyers less likely to believe that the government will pay for care if they need it Yes Yes
Buyers less likely to believe that major public payers -- Medicare or Medicaid will pay for care if it is needed Not significant Yes

Buyers, both employed and retired, are much more likely to see themselves at risk of needing LTC either in a nursing home or in their homes. Given that insurance is designed to substitute an unknown potentially catastrophic risk for a certain ongoing payment, it is not surprising that those who perceive themselves to be at higher risk are also more likely to purchase a policy. Buyers are also more likely than non-buyers to have had prior experience with LTC -- primarily as caregivers. That direct personal experience has shown them that LTC can be needed, that it is expensive, and that it is not fully covered by medical insurance, Medicare or Medicaid. They have also learned that LTC needs can be best met when they are planned for.

Buyers in both markets also indicate that they are less willing to rely on their children to provide long term care or to help them with the expenditures associated with it. They also point out that it is important to plan ahead for the needs that may arise in the future. There is no significant difference in the degree to which buyers and non-buyers worry about paying for LTC. The 1990 HIAA individual and group studies and the 1986/87 AARP studies find that buyers worry more than non-buyers about how to pay for LTC, while the two subsequent HIAA individual studies of 1995 and 2000 and the HIAA group study of 2001 find that buyers worry less than non-buyers about that. The change in results over time may suggest an increasing confidence among buyers in the product they have purchased and an increasing awareness of non-buyers about the risk of needing LTC and the need to plan ahead for its financing. Among federal employees and retirees, this variable does not distinguish buyers from non-buyers.

Buyers -- primarily in the individual market -- also show a greater understanding of the fact that government programs are not likely to pay for most LTC costs and that in the absence of insurance, the primary responsibility for paying for LTC will rest with the family. While many buyers in the employee market do not fully understand public coverages, they are more likely to know something about how LTC will be paid than are non-buyers.

Table 3 summarizes the results of empirical studies. Holding all other variables constant, if one believes that there is a high risk for needing care, and that if care is needed, the government will not pay for most of it, one is more likely to purchase a policy. In addition, two of the empirical studies report that having a personal experience with LTC increases the probability of being a buyer. One however, shows the opposite to be true. It should be noted, however, that most of the LTC policies selling at the time of the survey used in the latter study did not include significant home health care coverage and were viewed primarily as policies for nursing home coverage. Because caregiving experience typically occurs in a community setting, it is not surprising the that such experience did not influence the probability of buying insurance mainly viewed to provide nursing home coverage.

TABLE 3: Summary of Empirical Results
Characteristics Significance
Being younger Contradicting evidence
Being female Increases the probability of buying
Being single Increases the probability of buying
Having a college degree Contradicting evidence
Having higher income Increases the probability of buying
Having more assets Increases the probability of buying
Citing health as excellent Contradicting evidence
Having children who live far away Increases the probability of buying
Having experience with LTC Contradicting evidence
Considering own risk of needing LTC as high Increases the probability of buying
Thinking that self/family, not the government will pay Increases the probability of buying
Thinking that Medicare/Medicaid will pay Decreases the probability of buying

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