Individual Decision Making in the Non-Purchase of Long-Term Care Insurance

Abstract

Although prior research suggests that economic, behavioral, and psychosocial factors influence decisions not to purchase long-term care insurance, few studies have examined the interplay among these factors in depth and from the consumer's point of view. This study was intended to further illuminate these considerations, generate hypotheses about non-purchasing decisions, and inform the design of policies that are responsive to concerns and preferences of potential purchasers. Qualitative study using 32 in-depth interviews and 6 focus groups, following a grounded theory approach. Five themes characterize decisions not to purchase long-term care insurance: (a) the determination that a policy is "too costly" reflects highly individualized and complex trade-offs not solely economic in nature, (b) non-purchasers are skeptical about the viability and integrity of private insurance companies and seek an unbiased source of information, (c) family dynamics play an important role in insurance decisions, (d) contemplating personal risk for long-term care triggers psychological responses that have implications for decision making, and (e) non-purchasers feel inadequately informed and overwhelmed by the process of deciding whether to purchase long-term care insurance. States are seeking to offset escalating Medicaid long-term care expenditures through a variety of policy mechanisms, including stimulating individual purchase of long-term care insurance. Findings suggest that economic incentives such as lowering premiums will be necessary but not sufficient to attract appropriate candidates. Attention to behavioral and psychosocial factors is essential to designing incentives that are responsive to concerns and preferences of potential purchasers.