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Reforming Long-Term Care in Germany: A Simulation Study

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  • Hans Fehr
  • Gitte Halder

Abstract

The present study quanti?es the revenue and distributional effects of various reform options for the German long-term care system. Starting from a baseline path of the economy which represents the existing public and private mixture of the German long-term care system, we either switch to a pay-as-you-go ?nanced citizen premium or alternative funded systems of long-term care. Our simulations indicate three central policy implications of the discussed reform models. First, the citizen premium model has negligible labor market effects while a move to a funded system improves employment significantly in the long run. Second, while the citizen premium model mainly redistributes within generations, all models with funded premiums mainly redistribute across generations. Third, a delayed elimination of the pay-as-you-go system as proposed by the Herzog commission might be preferred to an immediate funding strategy since the former smoothes the short-run redistributive e?ects while keeping the long run gains of future generations.

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Bibliographic Info

Article provided by Duncker & Humblot, Berlin in its journal Applied Economics Quarterly.

Volume (Year): 52 (2006)
Issue (Month): 1 ()
Pages: 75-98

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Handle: RePEc:aeq:aeqaeq:v52_y2006_i1_q1_p75-98

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Keywords: CGE models; long-term care reform in Germany;

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