Misperceptions About Medicare and Long-Term Care Insurance Demand

This research article investigates the relationship between misperceptions about Medicare coverage and the low demand for private long-term care insurance among older adults in the United States. The study highlights that a significant portion of the population mistakenly believes that Medicare covers extended long-term care services, which contributes to the reluctance to purchase private insurance. The authors analyze data from three surveys, including the Health and Retirement Study, the Survey of Long-term Care Awareness and Planning, and the RAND American Life Panel, to assess knowledge levels regarding Medicare's coverage. The findings indicate that individuals often correct their misconceptions about Medicare when they enroll in the program, leading to an increase in demand for private long-term care insurance. The article employs a regression discontinuity design to examine changes in insurance coverage rates at age 65, a critical age for Medicare eligibility, and evaluates alternative explanations for the observed trends.