New evidence on the risk of requiring long-term care

Friedberg, Leora, Wenliang Hou, Wei Sun, Anthony Webb, and Zhenyu Li. “New evidence on the risk of requiring long-term care”. CRR WP 2014-12, Chestnut Hill, Mass.: Center for Retirement Research at Boston College, November 2014. http://hdl.handle.net/2345/bc-ir:104756.
PREVIEW Datastream

Abstract

The expectation of needing long-term care is an essential input into optimal saving and long-term care insurance decisions. Previous optimization models have used the Robinson (2002) transition probabilities, which have not been systematically updated and which underpredict the use of care while overpredicting the average stay of people who enter care. We develop a new statistical model and use current data to estimate health impairment and care transition probabilities. We show that impairment and care use have declined and that, after incorporating the new transition probabilities, optimal long-term care insurance holdings are much lower and are close to actual holdings.

Title
New evidence on the risk of requiring long-term care
Author
Friedberg, Leora
Hou, Wenliang
Sun, Wei
Webb, Anthony
Li, Zhenyu
Center
Center for Retirement Research
Genre
working paper
Date Issued
November 2014
Publisher
Center for Retirement Research at Boston College
Series Title
CRR WP
Series Number
2014-12
Persistent Link
http://hdl.handle.net/2345/bc-ir:104756
Use Restrictions
These materials are made available for use in research, teaching and private study, pursuant to U.S. Copyright Law. The user must assume full responsibility for any use of the materials, including but not limited to, infringement of copyright and publication rights of reproduced materials. Any materials used for academic research or otherwise should be fully credited with the source. The publisher or original authors may retain copyright to the materials.
Subject
Health/long-term care

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