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Prediction of the economic cost of individual long-term care in the Spanish population

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  • Catalina Bolancé

    ()
    (Departament d'Econometria, Estadística i Economia Espanyola, RFA-IREA, Universitat de Barcelona)

  • Ramon Alemany

    ()
    (Departament d'Econometria, Estadística i Economia Espanyola, RFA-IREA, Universitat de Barcelona)

  • Montserrat Guillén

    ()
    (Departament d'Econometria, Estadística i Economia Espanyola, RFA-IREA, Universitat de Barcelona)

Abstract

Pensions together with savings and investments during active life are key elements of retirement planning. Motivation for personal choices about the standard of living, bequest and the replacement ratio of pension with respect to last salary income must be considered. This research contributes to the financial planning by helping to quantify long-term care economic needs. We estimate life expectancy from retirement age onwards. The economic cost of care per unit of service is linked to the expected time of needed care and the intensity of required services. The expected individual cost of long-term care from an onset of dependence is estimated separately for men and women. Assumptions on the mortality of the dependent people compared to the general population are introduced. Parameters defining eligibility for various forms of coverage by the universal public social care of the welfare system are addressed. The impact of the intensity of social services on individual predictions is assessed, and a partial coverage by standard private insurance products is also explored. Data were collected by the Spanish Institute of Statistics in two surveys conducted on the general Spanish population in 1999 and in 2008. Official mortality records and life table trends were used to create realistic scenarios for longevity. We find empirical evidence that the public long-term care system in Spain effectively mitigates the risk of incurring huge lifetime costs. We also find that the most vulnerable categories are citizens with moderate disabilities that do not qualify to obtain public social care support. In the Spanish case, the trends between 1999 and 2008 need to be further explored.

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File URL: http://www.pcb.ub.es/xreap/aplicacio/fitxers/XREAP2010-8.pdf
File Function: First version, 2010
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File URL: http://www.pcb.ub.es/xreap/aplicacio/fitxers/XREAP2010-8.pdf
File Function: Revised version, 2010
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Bibliographic Info

Paper provided by Xarxa de Referència en Economia Aplicada (XREAP) in its series Working Papers with number XREAP2010-08.

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Length: 35 pages
Date of creation: Sep 2010
Date of revision: Sep 2010
Handle: RePEc:xrp:wpaper:xreap2010-08

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Postal: Espai de Recerca en Economia, Facultat de Ciències Econòmiques i Empresarials, Universitat de Barcelona, c/ Tinent Coronel Valenzuela, 1-11, 08034 Barcelona
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Web page: http://www.pcb.ub.edu/xreap
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  1. D'Amico, Guglielmo & Guillen, Montserrat & Manca, Raimondo, 2009. "Full backward non-homogeneous semi-Markov processes for disability insurance models: A Catalunya real data application," Insurance: Mathematics and Economics, Elsevier, vol. 45(2), pages 173-179, October.
  2. Aïda Solé-Auró & Eileen M.Crimmins, 2008. "Health of Immigrants in European countries," IREA Working Papers 200809, University of Barcelona, Research Institute of Applied Economics, revised Jun 2008.
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Cited by:
  1. Ramon Alemany & Catalina Bolancé & Montserrat Guillén, 2012. "Nonparametric estimation of Value-at-Risk," Working Papers XREAP2012-19, Xarxa de Referència en Economia Aplicada (XREAP), revised Oct 2012.

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