Supply or Demand: Why is the Market for Long-Term Care Insurance So Small?

Long-term care represents one of the largest uninsured financial risks facing the elderly in the United States. Whether the small size of this market is driven primarily by supply side market imperfections or by limitations to demand, however, is unresolved, largely due to the paucity of data about the structure of the private market. We provide what is to our knowledge the first empirical evidence on the pricing and benefit structure of long-term care insurance policies. We estimate that the typical policy purchased by a 65-year old has an average pricing load of about 18 percent and has a very limited benefit structure, covering only one-third of the expected present discounted value of long-term care expenditures. These findings are consistent with the presence of supply side market imperfections. However, we also find enormous gender differences in pricing -- typical loads are 44 cents on the dollar for men but better than actuarially fair for women -- that do not translate into differences in coverage. And, although purchased policies provide limited benefits, we demonstrate that more comprehensive policies are widely-available at similar loads, but are rarely purchased. These findings suggest that while supply-side market imperfections exist, they are not the primary cause of the small size of the private long-term care insurance market.

The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market

We show that the provision of even incomplete public insurance can substantially crowd out private insurance demand. We examine the interaction of the public Medicaid program with the private market for long-term care insurance and estimate that Medicaid can explain the lack of private insurance purchases for at least two-thirds and as much as 90 percent of the wealth distribution, even if comprehensive, actuarially fair private policies were available. Medicaid's large crowd out effect stems from the very large implicit tax (on the order of 60 to 75 percent for a median wealth individual) that Medicaid imposes on the benefits paid from private insurance policies. Importantly, Medicaid itself provides an inadequate mechanism for smoothing consumption for most individuals, so that its crowd out effect has important implications for overall risk exposure. An implication of our findings is that public policies designed to stimulate private insurance demand will be of limited efficacy as long as Medicaid continues to impose this large implicit tax.

Parallelism with limited nondeterminism

Computational complexity theory studies which computational problems can be solved with limited access to resources. The past fifty years have seen a focus on the relationship between intractable problems and efficient algorithms. However, the relationship between inherently sequential problems and highly parallel algorithms has not been as well studied. Are there efficient but inherently sequential problems that admit some relaxed form of highly parallel algorithm? In this dissertation, we develop the theory of structural complexity around this relationship for three common types of computational problems. Specifically, we show tradeoffs between time, nondeterminism, and parallelizability. By clearly defining the notions and complexity classes that capture our intuition for parallelizable and sequential problems, we create a comprehensive framework for rigorously proving parallelizability and non-parallelizability of computational problems. This framework provides the means to prove whether otherwise tractable problems can be effectively parallelized, a need highlighted by the current growth of multiprocessor systems. The views adopted by this dissertation—alternate approaches to solving sequential problems using approximation, limited nondeterminism, and parameterization—can be applied practically throughout computer science

Medicaid Crowd-Out of Private Long-Term Care Insurance Demand: Evidence from the Health and Retirement Survey

This paper provides empirical evidence of Medicaid crowd out of demand for private long-term care insurance. Using data on the near- and young-elderly in the Health and Retirement Survey, our central estimate suggests that a $10,000 decrease in the level of assets an individual can keep while qualifying for Medicaid would increase private long-term care insurance coverage by 1.1 percentage points. These estimates imply that if every state in the country moved from their current Medicaid asset eligibility requirements to the most stringent Medicaid eligibility requirements allowed by federal law – a change that would decrease average household assets protected by Medicaid by about$25,000 – demand for private long-term care insurance would rise by 2.7 percentage points. While this represents a 30 percent increase in insurance coverage relative to the baseline ownership rate of 9.1 percent, it also indicates that the vast majority of households would still find it unattractive to purchase private insurance. We discuss reasons why, even with extremely stringent eligibility requirements, Medicaid may still exert a large crowd-out effect on demand for private insurance.

Insuring Long Term Care In the US

Long-term care expenditures constitute one of the largest uninsured financial risks facing the elderly in the United States. This paper provides an overview of the economic and policy issues surrounding insuring long-term care expenditure risk. Through this lens we also discuss the likely impact of recent long-term care public policy initiatives at both the state and federal level.

How Lyman Alpha Emission Depends On Galaxy Stellar Mass

In this work, we show how the stellar mass (M) of galaxies affects the 3<z<4.6 Ly-alpha equivalent width (EW) distribution. To this end, we design a sample of 629 galaxies in the M range 7.6 < logM/Msun < 10.6 from the 3D-HST/CANDELS survey. We perform spectroscopic observations of this sample using the Michigan/Magellan Fiber System, allowing us to measure Ly-alpha fluxes and use 3D-HST/CANDELS ancillary data. In order to study the Ly-alpha EW distribution dependence on M, we split the whole sample in three stellar mass bins. We find that, in all bins, the distribution is best represented by an exponential profile of the form dN(M)/dEW= A(M)exp(-EW/W0(M))/W0(M). Through a Bayesian analysis, we confirm that lower M galaxies have higher Ly-alpha EWs. We also find that the fraction A of galaxies featuring emission and the e-folding scale W0 of the distribution anti- correlate with M, recovering expressions of the forms A(M)= -0.26(.13) logM/Msun+3.01(1.2) and W0(M)= -15.6(3.5) logM/Msun +166(34). These results are crucial for proper interpretation of Ly-alpha emission trends reported in the literature that may be affected by strong M selection biases.Comment: 4 pages, 5 figure