IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Private, social and self insurance for long-term care: A political economy analysis

  • DE DONDER, Philippe

    ()

    (IDEI, Toulouse School of Economics, France)

  • PESTIEAU, Pierre

    ()

    (Université de Liège, CREPP, B-4000 Liège, Belgium; Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium; PSE, Paris, France and CEPR.)

We analyze the determinants of the demand for social, private and self-insurance for long-term care in an environment where agents differ in income, probability of becoming dependent and of receiving family help. Uniform social benefits are financed with a proportional income tax and are thus redistributive, while private insurance is actuarially fair. We obtain a rich pattern of insights, depending on whether private insurance is available or not, on its loading factor, and on the correlation between, on the one hand, income and risk, and, on the other hand, income and family help. Although the availability of private insurance decreases the demand for social insurance, it only affects a minority of agents so that the majority-chosen social insurance level remains unaffected. Family support crowds out the demand for both private and social insurance, and may even suppress any demand for private insurance. Family help crowds out self-insurance only for agents whose demand for both social and private insurance is nil. A general increase in the probability of becoming dependent need not increase the demand for social insurance, since it decreases its return.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://uclouvain.be/cps/ucl/doc/core/documents/coredp2011_53web.pdf
Download Restriction: no

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2011053.

as
in new window

Length:
Date of creation: 21 Nov 2011
Date of revision:
Handle: RePEc:cor:louvco:2011053
Contact details of provider: Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)
Phone: 32(10)474321
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
Email:


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.:

as in new window
  1. CASAMATTA, Georges & CREMER, Helmuth & PESTIEAU, Pierre, 1999. "The political economy of social security," CORE Discussion Papers 1999055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Christophe Courbage & Peter Zweifel, 2011. "Two-sided intergenerational moral hazard, long-term care insurance, and nursing home use," Journal of Risk and Uncertainty, Springer, vol. 43(1), pages 65-80, August.
  3. DE DONDER, Philippe & LEROUX, Marie-Louise, 2013. "Behavioral biases and long term care insurance: A political economy approach," CORE Discussion Papers 2013020, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Meier, Volker, 1996. "Long-Term Care Insurance and Savings," Munich Reprints in Economics 19245, University of Munich, Department of Economics.
  5. Amy Finkelstein & Erzo F. P. Luttmer & Matthew J. Notowidigdo, 2009. "Approaches to Estimating the Health State Dependence of the Utility Function," American Economic Review, American Economic Association, vol. 99(2), pages 116-21, May.
  6. 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.
  7. Philippe De Donder & Marie-Louise Leroux, 2012. "Behavioral Biases and Long Term Care Annuities: A Political Economy Approach," CESifo Working Paper Series 3972, CESifo Group Munich.
  8. 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.
  9. Amy Finkelstein & Erzo F.P. Luttmer & Matthew J. Notowidigdo, 2008. "What Good Is Wealth Without Health? The Effect of Health on the Marginal Utility of Consumption," NBER Working Papers 14089, National Bureau of Economic Research, Inc.
  10. Norton, Edward C, 1995. "Elderly Assets, Medicaid Policy, and Spend-Down in Nursing Homes," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 41(3), pages 309-29, September.
  11. Van Houtven, Courtney Harold & Norton, Edward C., 2008. "Informal care and Medicare expenditures: Testing for heterogeneous treatment effects," Journal of Health Economics, Elsevier, vol. 27(1), pages 134-156, January.
  12. Hansen, Lars Peter & Singleton, Kenneth J, 1983. "Stochastic Consumption, Risk Aversion, and the Temporal Behavior of Asset Returns," Journal of Political Economy, University of Chicago Press, vol. 91(2), pages 249-65, April.
  13. Zweifel, Peter & Struwe, Wolfram, 1996. "Long-Term Care Insurance and Bequests as Instruments for Shaping Intergenerational Relationships," Journal of Risk and Uncertainty, Springer, vol. 12(1), pages 65-76, January.
  14. Eric Bonsang, 2008. "Does Informal Care from Children to their Elderly Parents Substitute for Formal Care in Europe?," CREPP Working Papers 0801, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
  15. Nuscheler, Robert & Roeder, Kerstin, 2013. "The political economy of long-term care," Munich Reprints in Economics 19324, University of Munich, Department of Economics.
  16. 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.
  17. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
  18. 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.
  19. Tsvetanka Karagyozova & Peter Siegelman, 2012. "Can Propitious Selection Stabilize Insurance markets?," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 35(2), pages 121-158.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:cor:louvco:2011053. 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 you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.