Moral hazard and long-term care insurance

R. Tamara Konetzka, Daifeng He, Jing Dong, John A. Nyman

Research output: Contribution to journalArticlepeer-review

5 Scopus citations


In private long-term care insurance markets, moral hazard is central to pricing and long-run robustness of the market, yet there is remarkably little evidence on the extent to which moral hazard is present in long-term care insurance. We use Health and Retirement Study data from 1996 to 2014 to assess moral hazard in nursing home and home care use in private long-term care insurance, employing a combination of propensity score matching and instrumental variables approaches. We find evidence of significant moral hazard in home care use and a potentially meaningful but noisy effect on nursing home use. Policymakers designing incentives to promote private long-term care insurance should consider the consequences of moral hazard.

Original languageEnglish (US)
Pages (from-to)231-251
Number of pages21
JournalGeneva Papers on Risk and Insurance: Issues and Practice
Issue number2
StatePublished - Apr 16 2019

Bibliographical note

Funding Information:
We are grateful for funding from the National Institute on Aging, R01AG041108.

Publisher Copyright:
© 2019, The Geneva Association.


  • Ageing
  • Home care
  • Long-term care insurance
  • Moral hazard
  • Nursing homes


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