Social long term care insurance and redistribution
We study the role of social long term care (LTC) insurance when income taxation and private insurance markets are imperfect. Policy instruments include public provision of LTC as well as a subsidy on private insurance. The subsidy scheme may be linear or nonlinear. For the linear part we consider a continuous distribution of types, characterized by earnings and survival probabilities. In the nonlinear part, society consists of three types: poor, middle class and rich. The first type is too poor to provide for dependence; the middle class type purchases private insurance and the high income type is self-insured. The main questions are at what level LTC should be provided to the poor and whether it is desirable to subsidize private LTC for the middle class. Interestingly, the results are similar under both linear and nonlinear schemes. First, in both cases, a (marginal) subsidy of private LTC insurance is not desirable. As a matter of fact, private insurance purchases should typically be taxed (at least at the margin). Second, the desirability of public provision of LTC services depends on the way the income tax is restricted. In the linear case, it may be desirable only if no demogrant (uniform lump-sum transfer) is available. In the nonlinear case, public provision is desirable when the income tax is sufficiently restricted. Specifically, this is the case when the income is subject only to a proportional payroll tax while the LTC reimbursement policy can be nonlinear.
|Date of creation:||01 May 2011|
|Date of revision:|
|Contact details of provider:|| Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)|
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jonathan Eaton & Harvey S. Rosen, 1980. "Optimal Redistributive Taxation and Uncertainty," The Quarterly Journal of Economics, Oxford University Press, vol. 95(2), pages 357-364.
- CREMER, Helmuth & PESTIEAU, Pierre & PONTHIERE, Grégory, 2012.
"The economics of long-term care: a survey,"
CORE Discussion Papers
2012030, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- JOUSTEN, Alain & LIPSZYC, Barbara & MARCHAND, Maurice & PESTIEAU, Pierre, .
"Long-term care insurance and optimal taxation for altruistic children,"
CORE Discussion Papers RP
1753, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Alain Jousten & Barbara Lipszyc & Maurice Marchand & Pierre Pestieau, 2005. "Long-term Care Insurance and Optimal Taxation for Altruistic Children," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(1), pages 1-, March.
- Besley, Timothy & Coate, Stephen, 1991.
"Public Provision of Private Goods and the Redistribution of Income,"
American Economic Review,
American Economic Association, vol. 81(4), pages 979-84, September.
- Besley, T. & Coate, S., 1989. "Public Provision Of Private Goods And The Redistribution Of Income," Papers 36, Princeton, Woodrow Wilson School - Discussion Paper.
- PESTIEAU, Pierre & SATO, Motohiro, 2004.
"Long term care: the state, the market and the family,"
CORE Discussion Papers
2004082, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Pierre Pestieau & Motohiro Sato, 2008. "Long-Term Care: the State, the Market and the Family," Economica, London School of Economics and Political Science, vol. 75(299), pages 435-454, 08.
- Cremer, Helmuth & Roeder, Kerstin, 2011.
"Long-term care policy, myopia and redistribution,"
IDEI Working Papers
723, Institut d'Économie Industrielle (IDEI), Toulouse, revised May 2012.
- Cremer, Helmuth & Roeder, Kerstin, 2013. "Long-term care policy, myopia and redistribution," Munich Reprints in Economics 20065, University of Munich, Department of Economics.
- Cremer, Helmuth & Roeder, Kerstin, 2011. "Long-term care policy, myopia and redistribution," TSE Working Papers 12-314, Toulouse School of Economics (TSE), revised May 2012.
- Helmuth Cremer & Kerstin Roeder, 2012. "Long-Term Care Policy, Myopia and Redistribution," CESifo Working Paper Series 3843, CESifo Group Munich.
- repec:cor:louvrp:-1753 is not listed on IDEAS
- Cremer, Helmuth & Gahvari, Firouz, 1995. "Uncertainty, Optimal Taxation and the Direct versus Indirect Tax Controversy," Economic Journal, Royal Economic Society, vol. 105(432), pages 1165-79, September.
- 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.
- Jeffrey R. Brown & Amy Finkelstein, 2007. "Why is the market for long-term care insurance so small?," NBER Chapters, in: Trans-Atlantic Public Economics Seminar (TAPES), Public Policy and Retirement, pages 1967-1991 National Bureau of Economic Research, Inc.
- Jeffrey R. Brown & Amy Finkelstein, 2009. "The Private Market for Long-Term Care Insurance in the United States: A Review of the Evidence," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 76(1), pages 5-29.
- Varian, Hal R., 1980. "Redistributive taxation as social insurance," Journal of Public Economics, Elsevier, vol. 14(1), pages 49-68, August.
- Helmuth Cremer & Pierre Pestieau, 1996.
"Redistributive taxation and social insurance,"
International Tax and Public Finance,
Springer;International Institute of Public Finance, vol. 3(3), pages 281-295, July.
- CREMER, Helmuth & PESTIEAU, Pierre, 1995. "Redistributive Taxation and Social Insurance," CORE Discussion Papers 1995054, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Cremer, H. & Pestieau, P., . "Redistributive taxation and social insurance," CORE Discussion Papers RP 1235, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- P. A. Diamond, 1975.
"A Many-Person Ramsey Tax Rule,"
146, Massachusetts Institute of Technology (MIT), Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:cor:louvco:2011024. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alain GILLIS)
If references are entirely missing, you can add them using this form.