Multi-State Actuarial Models of Functional Disability

33 Pages Posted: 6 May 2013

See all articles by Joelle H. Fong

Joelle H. Fong

National University of Singapore

Adam Wenqiang Shao

University of New South Wales - ARC Centre of Excellence in Population Ageing Research (CEPAR); Milliman

Michael Sherris

University of New South Wales - ARC Centre of Excellence in Population Ageing Research and School of Risk and Actuarial Studies; UNSW Australia Business School

Date Written: May 3, 2013

Abstract

We apply generalized linear models to evaluate disability transitions for individuals in old age based on a large sample of U.S. elderly. We estimate a multi-state model for long-term care insurance applications, and find significant differences in disability rate patterns and levels from the commonly-used Robinson (1996) model. Our results suggest that the elderly face a 10% chance of becoming long-term care disabled only at ages past 90, rather than in their 80s. Furthermore, age patterns of recovery are found to differ significantly between the sexes. These estimates of transition probability are sensitive to the definition of 'long-term care disability', which has implications for the design of benefit triggers for private and public long-term care insurance programs

Keywords: morbidity, health transitions, long-term care insurance, generalized linear models

JEL Classification: G22, H51, H75, C24

Suggested Citation

Fong, Joelle H. and Shao, Adam Wenqiang and Sherris, Michael, Multi-State Actuarial Models of Functional Disability (May 3, 2013). UNSW Australian School of Business Research Paper No. 2013ACTL14. Available at SSRN: https://ssrn.com/abstract=2261013 or http://dx.doi.org/10.2139/ssrn.2261013

Joelle H. Fong (Contact Author)

National University of Singapore ( email )

469C BUKIT TIMAH ROAD, LKYSPP
SINGAPORE, Singapore 259771
Singapore

HOME PAGE: http://https://lkyspp.nus.edu.sg/our-people/faculty/fong-hung-yee-joelle

Adam Wenqiang Shao

University of New South Wales - ARC Centre of Excellence in Population Ageing Research (CEPAR) ( email )

CEPAR, Level 3
East Wing, NICTA Building, UNSW
Sydney, New South Wales NSW 2052
Australia

Milliman ( email )

One Pennsylvania Plaza 38th Floor
New York, NY 10119
United States

Michael Sherris

University of New South Wales - ARC Centre of Excellence in Population Ageing Research and School of Risk and Actuarial Studies ( email )

UNSW Business School
Risk and Actuarial Studies
Sydney, NSW 2052
Australia
+61 2 9385 2333 (Phone)
+61 2 9385 1883 (Fax)

HOME PAGE: http://www.asb.unsw.edu.au/schools/Pages/MichaelSherris.aspx

UNSW Australia Business School ( email )

Sydney, NSW 2052
Australia

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