Page 157 - 臺大管理論叢第33卷第1期

NTU Management Review Vol. 33 No. 1 Apr. 2023

Associations of Demand for Private Long-Term Care Insurance,
Willingness to Pay, and Precautionary Savings with Preferences
for Long-Term Care Systems

Ying-Che Tsai, Department of Finance, Ming Chuan University

1. Purpose and Objective

How a rational individual maximizes utility when selecting a public Long-term Care
(LTC) system on the basis of household-financial efficacy, longevity risk, and wealth
inequalities is a topic that warrants further investigation. Furthermore, it is essential for
an individual to apply household-financial efficacy to raise funds with a heavy-tailed
distribution for LTC services. We conduct a survey to investigate whether Taiwanese

people prefer other countries’ mandatory public LTC insurance systems over Taiwan’s
tax-funded LTC 2.0 system because of the benefits of access to high-quality medical
services of Taiwan’s National Health Insurance (NHI), which provides universal,

mandatory coverage with long-term low copayments. We also evaluate whether the survey
participants expect the current tax-funded LTC 2.0 Plan to be replaced by the mandatory
public LTC insurance system.
Few studies have described how individuals make choices of different public LTC
systems; by contrast, quite a few studies have demonstrated the positive and negative

tradeoffs of a tax-funded LTC system and mandatory public LTC insurance system. The
major difference between the present study and other studies is we focus on how an
individual’s choice of a public LTC system is affected by household-financial efficacy,

namely self-choice financial preferences (including demand for commercial LTC
insurance, willingness to pay for LTC, and precautionary savings for LTC), reciprocal
preferences, and altruism related to the LTC service needs of families. Specifically, we
examine the context of using demand for commercial LTC insurance and willingness to
pay for LTC to measure differences in risk aversion among individuals, and establish a

basis for developing theoretical models for describing behaviors related to the selection
of a public LTC system. Furthermore, precautionary savings for LTC are examined to
measure the differences in time preferences and establish a foundation for predicting

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