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ABSTRACT:
Long term care is one of the few observable triggers for home sale among the elderly. Combined with a thin reverse mortgage market, this helps rationalize weak demand for Long Term Care Insurance (LTCI). Home equity typically tapped primarily in the event of long term care reduces the gain to insurance transfers from healthy states. Households in the Health and Retirement Study with large home equity to wealth ratios have significantly weaker demand for LTCI than other households, even among those so wealthy as to face weak temptation from Medicaid.

SUGGESTED CITATION:
THOMAS DAVIDOFF, "Illiquid Housing as Self-Insurance: The Case of Long Term Care" (August 24, 2007). Fisher Center for Real Estate & Urban Economics. Fisher Center Working Papers: Paper 304.
http://repositories.cdlib.org/iber/fcreue/fcwp/304