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Family ties and the crowding out of long-term care insurance

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  • Joan Costa-Font

Abstract

Insurance for long-term care (LTC) has developed only moderately compared to other areas of welfare, which has been explained variously as the result of market failures, public misconceptions of the risk of LTC needs, and intergenerational contracts. This paper offers a cultural explanation for the limited LTC insurance development in Europe. It argues that family ties, by enhancing informal care-giving duties, inhibit individuals' expected (public and private) insurance coverage. The empirical analysis of the paper exploits cross-country and sub-group variability of a representative database of European Union member states, containing records on LTC coverage and family structure. Drawing upon two measures of familistic culture or family ties, we find a negative association between family ties and expected coverage of LTC for different sub-samples. These results are robust to a set of checks for different definitions of family ties and controls, and for a sub-sample of first- and second-generation migrants. Policy implications suggest that widespread expansion of LTC coverage might need to accommodate existing familistic cultural norms to avoid insurance crowding out. Copyright 2010, Oxford University Press.

Suggested Citation

  • Joan Costa-Font, 2010. "Family ties and the crowding out of long-term care insurance," Oxford Review of Economic Policy, Oxford University Press, vol. 26(4), pages 691-712, Winter.
  • Handle: RePEc:oup:oxford:v:26:y:2010:i:4:p:691-712
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    File URL: http://hdl.handle.net/10.1093/oxrep/grq040
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    Cited by:

    1. Elena Gentili & Giuliano Masiero & Fabrizio Mazzonna, 2016. "The Role of Culture in Long-term Care," IdEP Economic Papers 1605, USI Università della Svizzera italiana.
    2. repec:eee:jeborg:v:143:y:2017:i:c:p:186-200 is not listed on IDEAS
    3. Joan COSTA‐FONT & Christophe Courbage & Katherine Swartz, 2015. "Financing Long‐Term Care: Ex Ante, Ex Post or Both?," Health Economics, John Wiley & Sons, Ltd., vol. 24, pages 45-57, March.
    4. De Donder, Philippe & Pestieau, Pierre, 2013. "Private, social and self-insurance for long-term care in the presence of family help: A political economy analysis," CEPR Discussion Papers 9587, C.E.P.R. Discussion Papers.
    5. repec:ces:ifodic:v:9:y:2011:i:2:p:16132672 is not listed on IDEAS
    6. Joan Costa‐Font & Christophe Courbage, 2015. "Crowding Out of Long‐Term Care Insurance: Evidence from European Expectations Data," Health Economics, John Wiley & Sons, Ltd., vol. 24, pages 74-88, March.
    7. Joan Costa Font & Valentina Zigante, 2017. "Mortgaging Europe’s periphery," LEQS – LSE 'Europe in Question' Discussion Paper Series 125, European Institute, LSE.
    8. 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), pages 755-785.
    9. DE DONDER, Philippe & PESTIEAU, Pierre, 2011. "Private, social and self insurance for long-term care: A political economy analysis," CORE Discussion Papers 2011053, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    10. Alders, Peter & Costa-Font, Joan & de Klerk, Mirjam & Frank, Richard, 2015. "What is the impact of policy differences on nursing home utilization? The cases of Germany and the Netherlands," Health Policy, Elsevier, vol. 119(6), pages 814-820.
    11. repec:ifs:fistud:v:38:y:2017:i::p:445-468 is not listed on IDEAS
    12. repec:kap:ijhcfe:v:17:y:2017:i:2:d:10.1007_s10754-016-9206-4 is not listed on IDEAS
    13. Joan Costa-Font, 2011. "Insurance Crowding Out and Long-Term Care Partnerships," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 9(2), pages 52-54, 07.
    14. Joan Costa‐Font & Edward C. Norton & Luigi Siciliani & Vincenzo Carrieri & Cinzia Di Novi & Cristina Elisa Orso, 2017. "Home Sweet Home? Public Financing and Inequalities in the Use of Home Care Services in Europe," Fiscal Studies, Institute for Fiscal Studies, vol. 38, pages 445-468, September.
    15. Jean-Marc Bascans & Christophe Courbage & Cornel Oros, 2017. "Means-tested public support and the interaction between long-term care insurance and informal care," International Journal of Health Economics and Management, Springer, vol. 17(2), pages 113-133, June.
    16. Duanmu, Jing-Lin & Guney, Yilmaz, 2013. "Heterogeneous effect of ethnic networks on international trade of Thailand: The role of family ties and ethnic diversity," International Business Review, Elsevier, vol. 22(1), pages 126-139.
    17. Heger, Dörte & Korfhage, Thorben, 2016. "Care choices in Europe: To each according to his needs?," Ruhr Economic Papers 649, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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