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On insuring and caring for parents' long-term care needs

Author

Listed:
  • COURBAGE, Christophe
  • EECKHOUDT, Louis

Abstract

When adult children are financially responsible for their parents, they can take considerable interest in the amount of their parents’ long-term care (LTC) insurance. In this paper, we look at the optimal levels of LTC insurance and of informal care, and at the link between these two decisions when the child, who provides informal care, is also the decision-maker with regard to LTC insurance. Interestingly, results differ depending on the degree of both parental and child altruism and indicate either complementarity or substitutability between insurance and informal care. In particular, we show in the presence of child altruism that insurance stimulates the offer of informal care, contrary to the case where the insurance decision is made by the elderly parent. We also investigate how exogenous shocks with respect to the opportunity cost of informal care, initial wealth levels and bequests modify simultaneously the optimal level of insurance and informal care.
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Suggested Citation

  • COURBAGE, Christophe & EECKHOUDT, Louis, 2012. "On insuring and caring for parents' long-term care needs," LIDAM Reprints CORE 2513, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2513
    Note: In : Journal of Health Economics, 31(6), 842-850, 2012
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    Cited by:

    1. Justina Klimaviciute & Pierre Pestieau & Jérôme Schoenmaeckers, 2019. "Family altruism and long-term care insurance," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 44(2), pages 216-230, April.
    2. Matteo Lippi Bruni & Cristina Ugolini, 2016. "Delegating home care for the elderly to external caregivers? An empirical study on Italian data," Review of Economics of the Household, Springer, vol. 14(1), pages 155-183, March.
    3. Philippe De Donder & Marie‐Louise Leroux, 2021. "Long term care insurance with state‐dependent preferences," Health Economics, John Wiley & Sons, Ltd., vol. 30(12), pages 3074-3086, December.
    4. 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).
    5. Miao Guo & Yang Li & Minghao Wu & Terence C. Cheng, 2024. "Services and Cash: How Long-term Care Insurance Benefit Design Affects Household Behavior in China," Papers 2024-13, Centre for Health Economics, Monash University.
    6. repec:bla:glopol:v:8:y:2017:i:s2:p:38-45 is not listed on IDEAS
    7. Christophe Courbage & Guillem Montoliu-Montes & Joël Wagner, 2020. "The effect of long-term care public benefits and insurance on informal care from outside the household: empirical evidence from Italy and Spain," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 21(8), pages 1131-1147, November.
    8. 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.
    9. Martin Eling & Omid Ghavibazoo, 2019. "Research on long-term care insurance: status quo and directions for future research," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 44(2), pages 303-356, April.
    10. Panos Kanavos & Olivier Wouters & Joan Costa-Font & Christophe Courbage & Peter Zweifel, 2017. "Policy Dilemmas in Financing Long-term Care in Europe," Global Policy, London School of Economics and Political Science, vol. 8, pages 38-45, March.
    11. 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.
    12. Christophe Courbage & Guillem Montoliu-Montes & Joël Wagner, 2023. "On children’s motives to influence parents’ long-term care insurance purchase: evidence from Switzerland," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 48(1), pages 102-129, January.

    More about this item

    JEL classification:

    • D19 - Microeconomics - - Household Behavior - - - Other
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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