The effects of wealth shocks on public and private long-term care insurance

Costa-Font, Joan ORCID: 0000-0001-7174-7919, Frank, Richard and Raut, Nilesh ORCID: 0000-0002-2611-8432 (2026) The effects of wealth shocks on public and private long-term care insurance. Journal of Health Economics, 106. ISSN 0167-6296

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Abstract

The financing of long-term care services and supports (LTSS) relies heavily on self-insurance in the form of housing or financial wealth. Exploiting both local market variation in housing prices and individual-level variation in stock market wealth from 1996 to 2016, we show that exogenous wealth shocks significantly reduce the probability of LTCI coverage, without altering Medicaid eligibility among people with housing and financial assets. The effect of shocks to liquid wealth strongly dominates the effect of housing wealth changes. A $100 K increase in housing (financial) wealth reduces the likelihood of LTCI coverage by 1.24 (3.22) percentage points.

Item Type:	Article
Additional Information:	© 2026 The Author
Divisions:	Health Policy LSE Health
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HV Social pathology. Social and public welfare. Criminology R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine
JEL classification:	I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy; Regulation; Public Health J - Labor and Demographic Economics > J1 - Demographic Economics > J14 - Economics of the Elderly; Economics of the Handicapped
Date Deposited:	26 Nov 2025 10:48
Last Modified:	19 Jan 2026 10:51
URI:	http://eprints.lse.ac.uk/id/eprint/130325

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