Who is willing to pay for long-term care insurance in Catalonia?

Abstract

Both public and private insurance for long-term care (LTC) in European countries are underdeveloped. However, limited evidence is gathered on the behavioural demand responses to the introduction of insurance schemes expanding insurance coverage. This paper aims at empirically examining the determinants of the ex ante demand for LTC coverage drawing upon an insurance-based WTP referendum approach format. Data is collected from a representative population sample of Catalonia (Spain), before a countrywide funding system was developed. Our findings suggest that (based on our questionnaire format) only one-fifth of the population is willing to pay for LTC coverage though it is a highly elastic product. Ex ante demand for LTC coverage is driven by individual's perceptions of old age disability risk (private information asymmetry) and housing tenure (giving rise to self-insurance), the latter reduces the probability of insurance coverage demand