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The political economy of long-term care

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  • Nuscheler, Robert
  • Roeder, Kerstin

Abstract

We build a two-dimensional political economy model to explain the provision and financing of long-term care and income redistribution. Voting agents differ in need and income opening up two conflicts: one sets families with disabled parents, who are in favor of a public long-term care program, against the ones without such parents who oppose public financing. The other sets the poor against the rich with the former preferring heavier income taxation than the latter. We show that a structure induced equilibrium always exists and that it is unique if informal care is provided in equilibrium. The equilibrium not only explains the negative association of income inequality and long-term care financing but also allows predictions about how demographic change might impact long-term care arrangements and expenses.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 62 (2013)
Issue (Month): C ()
Pages: 154-173

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Handle: RePEc:eee:eecrev:v:62:y:2013:i:c:p:154-173

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Web page: http://www.elsevier.com/locate/eer

Related research

Keywords: Long-term care; Redistribution; Political economy; Parallel financing of private goods;

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References

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  1. Carmichael, Fiona & Charles, Sue, 1998. "The labour market costs of community care1," Journal of Health Economics, Elsevier, vol. 17(6), pages 747-765, December.
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  3. Kuhn, Michael & Nuscheler, Robert, 2011. "Optimal public provision of nursing homes and the role of information," Journal of Health Economics, Elsevier, vol. 30(4), pages 795-810, July.
  4. Cremer, Helmuth & Gahvari, Firouz, 1997. "In-kind transfers, self-selection and optimal tax policy," European Economic Review, Elsevier, vol. 41(1), pages 97-114, January.
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  7. Blackorby, Charles & Donaldson, David, 1988. "Cash versus Kind, Self-selection, and Efficient Transfers," American Economic Review, American Economic Association, vol. 78(4), pages 691-700, September.
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  9. Galasso, Vincenzo, 2008. "Postponing retirement: the political effect of aging," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 2157-2169, October.
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  11. Miguel Gouveia, 1997. "Majority rule and the public provision of a private good," Public Choice, Springer, vol. 93(3), pages 221-244, December.
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  13. Schulz, Erika & Leidl, Reiner & Konig, Hans-Helmut, 2004. "The impact of ageing on hospital care and long-term care--the example of Germany," Health Policy, Elsevier, vol. 67(1), pages 57-74, January.
  14. Van Houtven, Courtney Harold & Norton, Edward C., 2004. "Informal care and health care use of older adults," Journal of Health Economics, Elsevier, vol. 23(6), pages 1159-1180, November.
  15. Charles, Kerwin Kofi & Sevak, Purvi, 2005. "Can family caregiving substitute for nursing home care?," Journal of Health Economics, Elsevier, vol. 24(6), pages 1174-1190, November.
  16. Besley, T. & Coate, S., 1989. "Public Provision Of Private Goods And The Redistribution Of Income," Papers 36, Princeton, Woodrow Wilson School - Discussion Paper.
  17. Maurice March & Fred Schroyen, 2005. "Can a Mixed Health Care System be Desirable on Equity Grounds?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(1), pages 1-23, 03.
  18. Hoel, Michael & Saether, Erik Magnus, 2003. "Public health care with waiting time: the role of supplementary private health care," Journal of Health Economics, Elsevier, vol. 22(4), pages 599-616, July.
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Cited by:
  1. De Donder, Philippe & Pestieau, Pierre, 2011. "Private, social and self insurance for longterm care: a political economy analysis," TSE Working Papers 11-305, Toulouse School of Economics (TSE), revised Jun 2014.
  2. Philippe De Donder & Pierre Pestieau, 2013. "Private, Social and Self-Insurance for Long-Term Care in the Presence of Family Help - A Political Economy Analysis," CESifo Working Paper Series 4352, CESifo Group Munich.
  3. De Donder Philippe & Leroux Marie-Louise, 2013. "Behavioral Biases and Long-Term Care Insurance: A Political Economy Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(2), pages 551-575, May.
  4. Christina Schneider, 2010. "Fighting with one hand tied behind the back: political budget cycles in the West German states," Public Choice, Springer, vol. 142(1), pages 125-150, January.
  5. Philippe De Donder & Marie-Louise Leroux, 2012. "Behavioral Biases and Long Term Care Annuities: A Political Economy Approach," CESifo Working Paper Series 3972, CESifo Group Munich.

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