Long-term care and nursing home coverage: are adult children substitutes for insurance policies?

Abstract

Recent theoretical work suggests that in some cases, parents will forego the purchase of long-term care insurance and rely on child-provided care in old age. This paper uses data from the Asset and Health Dynamics survey and the Panel Study of Income Dynamics to examine whether the availability of children and other potential caregivers explains why so few elderly persons have long-term care insurance. In contrast to the notion that family members serve as substitutes for long-term care insurance, variables measuring the availability of informal caregivers have no statistically significant effect in models of insurance ownership and models of intentions to purchase insurance.