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On the Consumption Insurance Effects of Long-term Care Insurance in Japan: Evidence from Micro-level Household Data

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  • Yasushi Iwamoto
  • Miki Kohara
  • Makoto Saito

Abstract

Using micro-level household data in the 2001 Comprehensive Survey of the Living Conditions of the People on Health and Welfare compiled by the Japanese Ministry of Health, Labor and Welfare, this paper examines how having a household member in need of long-term nursing care can result in welfare losses measured in terms of consumption. In so doing, this study evaluates the role of the public long-term care insurance scheme implemented in Japan in April 2000. The results indicate that when households include a disabled family member, household consumption net of long-term care costs do not decrease as much as before the introduction of long-term care insurance. Further, when compared with the surveys conducted in 1998, theadverse effects on consumption net of long-term care costs have become much weaker. These findings suggest that the introduction of social insurance in 2000 helped Japanese households to reduce the welfare losses associated with a disabled family member.

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Paper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd09-109.

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Date of creation: Dec 2009
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Handle: RePEc:hst:ghsdps:gd09-109

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Keywords: social insurance; consumption insurance; long-term care insurance;

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  1. Brown, Jeffrey R. & Finkelstein, Amy, 2007. "Why is the market for long-term care insurance so small?," Journal of Public Economics, Elsevier, vol. 91(10), pages 1967-1991, November.
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  3. Amy Finkelstein & Kathleen McGarry & Amir Sufi, 2005. "Dynamic Inefficiencies in Insurance Markets: Evidence from Long-Term Care Insurance," American Economic Review, American Economic Association, vol. 95(2), pages 224-228, May.
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  7. Cochrane, John H, 1995. "Time-Consistent Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 445-73, June.
  8. Olivia S. Mitchell & John Piggott & Satoshi Shimizutani, 2004. "Aged-Care Support in Japan: Perspectives and Challenges," NBER Working Papers 10882, National Bureau of Economic Research, Inc.
  9. Hans G. Bloemen & Elena G. F. Stancanelli, 2005. "Financial Wealth, Consumption Smoothing and Income Shocks Arising from Job Loss," Economica, London School of Economics and Political Science, vol. 72(3), pages 431-452, 08.
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  12. Mellor, Jennifer M., 2001. "Long-term care and nursing home coverage: are adult children substitutes for insurance policies?," Journal of Health Economics, Elsevier, vol. 20(4), pages 527-547, July.
  13. David M. Cutler, 1993. "Why Doesn't the Market Fully Insure Long-Term Care?," NBER Working Papers 4301, National Bureau of Economic Research, Inc.
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  15. Pauly, Mark V, 1990. "The Rational Nonpurchase of Long-term-Care Insurance," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 153-68, February.
  16. Sloan, Frank A. & Thomas J. Hoerger & Gabriel Picone, 1996. "Effects of Strategic Behavior and Public Subsidies on Families' Savings and Long-Term Care Decisions," Working Papers 96-01, Duke University, Department of Economics.
  17. Gruber, Jonathan, 1997. "The Consumption Smoothing Benefits of Unemployment Insurance," American Economic Review, American Economic Association, vol. 87(1), pages 192-205, March.
  18. Cochrane, John H, 1991. "A Simple Test of Consumption Insurance," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 957-76, October.
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Cited by:
  1. Shinya Sugawara & Jiro Nakamura, 2013. "Is Elderly Care Socialized in Japan? Analyzing the Effects of the 2006 Amendment to the LTCI on the Female Labor Supply," CIRJE F-Series CIRJE-F-888, CIRJE, Faculty of Economics, University of Tokyo.
  2. Tomoaki Yamada & Minchung Hsu & Gary D. Hansen, 2011. "Financing Health Care in Japan: The Impact of an Aging Population," 2011 Meeting Papers 717, Society for Economic Dynamics.
  3. Shinya Sugawara & Jiro Nakamura, 2014. "Can Formal Elderly Care Stimulate Female Labor Supply? The Japanese Experience," CIRJE F-Series CIRJE-F-924, CIRJE, Faculty of Economics, University of Tokyo.

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