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The Economics of Long-Term Care

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  • Siciliani Luigi

    (Department of Economics and Related Studies, University of York, Heslington York, North Yorkshire YO10 5DD, UK)

Abstract

Long-term care expenditure is expected to rise, driven by an ageing population. Given that public long-term care expenditure is high in many OECD countries, governments are increasingly concerned about its future growth. This study focuses on three relevant issues. First, we discuss factors that affect the growth of long-term expenditure and its projections. These include demographics, the balance in provision between informal and formal care, whether higher life expectancy translates into higher disability, the interrelation between health and long-term care, and whether long-term care suffers from Baumol’s disease. Second, given that a significant proportion of long-term care expenditure is nursing- and care-home expenditure, we discuss the role of government regulation aimed at ensuring that individuals receive appropriate quality of care in such institutions. We focus in particular on price regulation, competition, and the non-profit sector; these have been the subject of considerable empirical work (mainly in the United States). Third, we discuss the relative merits of public and private insurance. Countries differ greatly in their approach. Some countries have nearly exclusively public insurance but in others this is small. We consider the conditions under which public insurance can overcome the limitations of a private insurance market.

Suggested Citation

  • 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.
  • Handle: RePEc:bpj:bejeap:v:14:y:2013:i:2:p:343-375:n:5
    DOI: 10.1515/bejeap-2012-0063
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    Cited by:

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    2. Joan Costa-Font & Martin Karlsson & Henning Øien, 2015. "Informal Care and the Great Recession," CINCH Working Paper Series 1502, Universitaet Duisburg-Essen, Competent in Competition and Health, revised Feb 2015.
    3. Ozbugday, Fatih Cemil & Tirgil, Abdullah & Kose, Elif Gul, 2020. "Efficiency changes in long-term care in OECD countries: A non-parametric Malmquist Index approach," Socio-Economic Planning Sciences, Elsevier, vol. 70(C).
    4. Joan Costa‐Font & Martin Karlsson & Henning Øien, 2016. "Careful in the Crisis? Determinants of Older People's Informal Care Receipt in Crisis‐Struck European Countries," Health Economics, John Wiley & Sons, Ltd., vol. 25(S2), pages 25-42, November.
    5. Cremer, Helmuth & Roeder, Kerstin, 2013. "Long-Term Care and Lazy Rotten Kids," IZA Discussion Papers 7565, 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. Fernandez, Jose-Luis & McGuire, Alistair & Raikou, Maria, 2018. "Hospital coordination and integration with social care in England: The effect on post-operative length of stay," Journal of Health Economics, Elsevier, vol. 61(C), pages 233-243.
    8. James Gaughan & Hugh Gravelle & Luigi Siciliani, 2014. "Testing the bed-blocking hypothesis: does higher supply of nursing and care homes reduce delayed hospital discharges?," Working Papers 102cherp, Centre for Health Economics, University of York.

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