Finance Nursing Homes

Are nursing home expenses driving savings?

From a working paper by Karen A. Kopecky and Tatyana Koreshkova.

…even though they are only a third of OOP [out-of-pocket] health expenses, the presence of nursing home expenses accounts for more than half of savings for all health expenses…We find that 27 percent of savings for old-age OOP health expenses, 3.7 percent of private wealth, is savings for cross-sectional OOP expense risk and that more than 80 percent of these precautionary savings…is accumulated to self-insure against cross-sectional OOP nursing home expense risk. This is a substantial amount: if savings for cross-sectional OOP nursing home expense risk were held in the form of vehicles, it is large enough to account for the entire stock of transportation equipment in the US.

HT: Marginal Revolution.

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