Only a tiny fraction of the nonpoor population currently purchases private insurance coverage against long-term-care (LTC) costs. Studies generally attribute the failure to purchase private coverage to "unawareness" by potential purchasers of the benefits of coverage and a misperception that Medicare currently covers long-term care. I explore alternative reasons for failure to purchase coverage by well-informed, expected utility-maximizing risk-averse individuals for whom LTC is associated with a large increase in mortality and for whom family members represent an alternative source of care. There may be no demand for LTC insurance even if it is made available at actuarially fair premiums because the main consequence of coverage is to enhance the expected value of one's estate.

Relatively little is known about the behavior and performance of firms organized as partnerships. In this paper we attempt to fill that gap by developing and testing a model of the effect of alternative compensation arrangements on productive efficiency in medical group practices. The technique employed is maximum likelihood production frontier estimation. We provide a simple behavioral model of the determination of productive efficiency and a new interpretation of the economic measure of technical efficiency. We derive a "behavioral production function" that relates production to individual responses to incentives, and we indicate the impossibility of recovering the parameters of the production technology from observed behavior. Overall, the empirical results indicate that incentives do affect productivity. A larger number of members in a group decreases productivity while greater average experience leads to greater productivity.

I. The competitive allocation of insurance under moral hazard, 45. — II. "Competitive" equilibrium, 50. — III. Moral hazard and public provision, 52. — IV. Adverse selection and the competitive market, 54. — V. Alternative devices for dealing with adverse selection and moral hazard from overinsurance, 60.

Few health policy issues have been both subjects of more consensus and yet more debate than that of expanding insurance coverage of the uninsured. On the one hand, surveys show a majority of the public identifies the absence of insurance coverage for fifteen

Only a tiny fraction of the nonpoor population currently purchases private insurance coverage against long-term-care (LTC) costs. Studies generally attribute the failure to purchase private coverage to "unawareness" by potential purchasers of the benefits of coverage and a misperception that Medicare currently covers long-term care. I explore alternative reasons for failure to purchase coverage by well-informed, expected utility-maximizing risk-averse individuals for whom LTC is associated with a large increase in mortality and for whom family members represent an alternative source of care. There may be no demand for LTC insurance even if it is made available at actuarially fair premiums because the main consequence of coverage is to enhance the expected value of one's estate.