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Are Personal Budgets a Financially Sound Reform Option for the German Long-Term Care Insurance?

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Author Info

  • Melanie Arntz

    ()
    (ZEW Mannheim)

  • Stephan L. Thomsen

    ()
    (ZEW Mannheim)

Abstract

In a long-run social experiment, personal budgets have been tested as an alternative home care program of the German long-term care insurance (LTCI). By granting the monetary value of in-kind services in cash, personal budgets are considered to enable customized home care arrangements, thereby avoiding costly nursing home care and thus saving LTCI spending. However, personal budgets also compete with the already existing and less generous cash option of the LTCI. Any transition from the receipt of cash benefits to personal budgets thus challenges the view of personal budgets as a cost savings device, unless personal budgets sufficiently reduce the use of costly nursing home care to balance these extra costs.This paper therefore contrasts the short-term costs of implementing personal budgets with potential cost savings if personal budgets enhance the stability of home care and avoid costly nursing home care. For this purpose, the paper investigates the effects of personal budgets on the duration of home care until moving to a nursing home as well as the perceived stability of home care. Despite a positive effect of personal budgets on the stability of home care, LTCI spending is likely to increase in the short to medium run. In the long run, however, the expected transition to decreasing numbers of cash recipients favors the introduction of personal budgets.

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Bibliographic Info

Article provided by Justus-Liebig University Giessen, Department of Statistics and Economics in its journal Journal of Economics and Statistics.

Volume (Year): 230 (2010)
Issue (Month): 4 (August)
Pages: 378-402

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Handle: RePEc:jns:jbstat:v:230:y:2010:i:4:p:378-402

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Related research

Keywords: Long-term care; long-term care insurance; consumer-directed home care; spending;

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References

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  1. Liliana Pezzin & Barbara Schone, 1999. "Parental marital disruption and intergenerational transfers: An analysis of lone elderly parents and their children," Demography, Springer, vol. 36(3), pages 287-297, August.
  2. Arntz, Melanie & Thomsen, Stephan L., 2008. "Crowding out Informal Care? Evidence from a Social Experiment in Germany," ZEW Discussion Papers 08-113, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Peter C. Coyte & Mark Stabile, 2001. "Household Responses to Public Home Care Programs," NBER Working Papers 8523, National Bureau of Economic Research, Inc.
  4. Wasem, Jurgen, 1997. "A study on decentralizing from acute care to home care settings in Germany," Health Policy, Elsevier, vol. 41(Supplemen), pages S109-S129, September.
  5. 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.
  6. Leslie Foster & Randall Brown & Barbara Phillips & Jennifer Schore & Barbara Carlson, 2003. "Improving the Quality of Medicaid Personal Assistance Through Consumer Direction," Mathematica Policy Research Reports 3503, Mathematica Policy Research.
  7. Heinicke, Katrin & Thomsen, Stephan L., 2010. "The social long-term care insurance in Germany: origin, situation, threats, and perspectives," ZEW Discussion Papers 10-012, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Liliana E. Pezzin & Peter Kemper & James Reschovsky, 1996. "Does Publicly Provided Home Care Substitute for Family Care? Experimental Evidence with Endogenous Living Arrangements," Journal of Human Resources, University of Wisconsin Press, vol. 31(3), pages 650-676.
  9. Jens Lundsgaard, 2005. "Consumer Direction and Choice in Long-Term Care for Older Persons, Including Payments for Informal Care: How Can it Help Improve Care Outcomes, Employment and Fiscal Sustainability?," OECD Health Working Papers 20, OECD Publishing.
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Cited by:
  1. Melanie Arntz & Stephan L. Thomsen, 2010. "The Social Long-term Care Insurance: A Frail Pillar of the German Social Insurance System," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 8(2), pages 29-34, 07.

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