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Optimal public provision of nursing homes and the role of information

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  • Kuhn, Michael
  • Nuscheler, Robert

Abstract

Increasing demand for long-term care poses at least five challenges to the policy-maker: (i) How should care be supplied, within a nursing home or within the family? (ii) What level of care should be provided in the different arrangements? (iii) How do the answers relate to the severity of dependence? (iv) How can financial strain be mitigated for families with severely dependent members? (v) What is the role of information constraints for the nature and scope of optimal long-term care policy? We consider a theoretical model of long-term care provision under adverse selection to address these challenges. Our main - and remarkably robust - result is that nursing home care facilitates self selection and mitigates and possibly eliminates distortions in caring levels and transfers. Informational asymmetries may thus lead to care being provided too often within institutions rather than within a family context.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:jhecon:v:30:y:2011:i:4:p:795-810
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    Cited by:

    1. Elena Gentili & Giuliano Masiero & Fabrizio Mazzonna, 2016. "The Role of Culture in Long-term Care," IdEP Economic Papers 1605, USI Università della Svizzera italiana.
    2. Gentili, Elena & Masiero, Giuliano & Mazzonna, Fabrizio, 2017. "The role of culture in long-term care arrangement decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 143(C), pages 186-200.
    3. Fevang, Elisabeth & Kverndokk, Snorre & Røed, Knut, 2009. "A model for supply of informal care to elderly parents," HERO Online Working Paper Series 2008:12, University of Oslo, Health Economics Research Programme.
    4. Nuscheler, Robert & Roeder, Kerstin, 2013. "The political economy of long-term care," European Economic Review, Elsevier, vol. 62(C), pages 154-173.
    5. Fevang, Elisabeth & Kverndokk, Snorre & Røed, Knut, 2008. "Informal Care and Labor Supply," IZA Discussion Papers 3717, Institute of Labor Economics (IZA).
    6. Chiara Canta & Pierre Pestieau & Emmanuel Thibault, 2016. "Long-term care and capital accumulation: the impact of the State, the market and the family," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 61(4), pages 755-785, April.
    7. Siciliani Luigi, 2013. "The Economics of Long-Term Care," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(2), pages 343-375, August.
    8. Leporatti Lucia & Montefiori Marcello, 2020. "The Challenge of Organizing Elderly Care Programmes: Optimal Policy Design under Complete and Asymmetric Information," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(1), pages 1-15, January.
    9. Jakobsson, Niklas & Kotsadam, Andreas & Syse, Astri & Øien, Henning, 2016. "Gender bias in public long-term care? A survey experiment among care managers," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PB), pages 126-138.
    10. Elisabeth Fevang & Snorre Kverndokk & Knut Røed, 2012. "Labor supply in the terminal stages of lone parents’ lives," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(4), pages 1399-1422, October.
    11. Nicolas R. Ziebarth, 2018. "Social Insurance and Health," Contributions to Economic Analysis, in: Health Econometrics, volume 127, pages 57-84, Emerald Group Publishing Limited.
    12. Jiahuan He & Xinggang Luo & Zhongliang Zhang & Yang Yu, 2021. "Strategic Analysis of Participants in the Provision of Elderly Care Services—An Evolutionary Game Perspective," IJERPH, MDPI, vol. 18(16), pages 1-27, August.
    13. Qiang Mu & Peng Guo & Ding Wang, 2022. "Optimal Subsidy Support for the Provision of Elderly Care Services in China Based on the Evolutionary Game Analysis," IJERPH, MDPI, vol. 19(5), pages 1-20, February.
    14. Joan Costa‐Font & Edward C. Norton & Luigi Siciliani & James Gaughan & Hugh Gravelle & Luigi Siciliani, 2017. "Delayed Discharges and Hospital Type: Evidence from the English NHS," Fiscal Studies, Institute for Fiscal Studies, vol. 38, pages 495-519, September.
    15. Zhiyong Zhang & Xiaodie Song & Yongqiang Shi, 2023. "Evolutionary Game Analysis of Behavior Strategies of Multiple Stakeholders in an Elderly Care Service System," IJERPH, MDPI, vol. 20(5), pages 1-22, February.
    16. Sergi Jiménez-Martín & Cristina Vilaplana Prieto, 2013. "Informal Care and intergenerational transfers in European Countries," Working Papers 2013-25, FEDEA.

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    More about this item

    Keywords

    D82 H23 I18 J14 Adverse selection Long-term care Nursing homes Redistribution;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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