To what extent do individual preferences constrain the development of the LTC insurance market?

Summary In the context of an aging population, various scenarios are being considered for reforming the organization and financing of care for dependent elderly people. The role of individual insurance in the financing of dependency is widely debated. At present, despite potentially substantial out-of-pocket expenses, few individuals have insurance coverage. This article aims to add to the existing literature by assessing the extent to which the preferences observed in the population limit this coverage. To do so, we mobilize the 2011 Pater survey (Patrimoine et préférences vis-à-vis du temps et du risque). At the request of the Fondation Médéric Alzheimer, the 2011 wave of the Pater survey included a complementary questionnaire on the perception of long-term care risk and insurance behavior (Pated). The Pater survey allows the construction of scores quantifying four dimensions of preferences likely to influence risk perception and the likelihood of purchasing insurance among individuals perceiving the risk: preference for the present, risk aversion, family altruism and the presumed taste for informal help. The estimation results show a significant role for each of these dimensions in the demand for insurance. Nevertheless, even in a population with the most favorable preferences for insurance purchase, the simulations show that the rate of equipment would not exceed 20%. Increased recourse to personal insurance through the generalization of private insurance coverage therefore seems difficult to envisage unless there is a strong evolution in the supply of insurance or public regulation encouraging or forcing the purchase of insurance. JEL codes: C25, D91, G22, I12, I18, J14. Keywords : dependence, loss of autonomy, dependence insurance, insurance demand, present preference, risk aversion.