On insuring and caring for parents’ long-term care needs
AbstractWhen adult children are financially responsible for their parents, they can take considerable interest in the amount of their parents’ long-term care (LTC) insurance. In this paper, we look at the optimal levels of LTC insurance and of informal care, and at the link between these two decisions when the child, who provides informal care, is also the decision-maker with regard to LTC insurance. Interestingly, results differ depending on the degree of both parental and child altruism and indicate either complementarity or substitutability between insurance and informal care. In particular, we show in the presence of child altruism that insurance stimulates the offer of informal care, contrary to the case where the insurance decision is made by the elderly parent. We also investigate how exogenous shocks with respect to the opportunity cost of informal care, initial wealth levels and bequests modify simultaneously the optimal level of insurance and informal care.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Health Economics.
Volume (Year): 31 (2012)
Issue (Month): 6 ()
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Web page: http://www.elsevier.com/locate/inca/505560
Long-term care; Insurance; Informal care; Adult children;
Find related papers by JEL classification:
- D19 - Microeconomics - - Household Behavior - - - Other
- G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies
- J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
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