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Long-term care social insurance. How to avoid big losses?

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  • Klimaviciute, Justina
  • Pestieau, Pierre

Abstract

Long-term care (LTC) needs are expected to rapidly increase in the next decades and at the same time the main provider of LTC, namely the family is stalling. This calls for more involvement of the state that today covers less than 20% of these needs and most often in an inconsistent way. Besides the need to help the poor dependent, there is a mounting concern in the middle class that a number of dependent people are incurring costs that could force them to sell all their assets. In this paper we study the design of a social insurance that meets this concern. Following Arrow (1963), we suggest a policy that is characterized by complete insurance above a deductible amount.

Suggested Citation

  • Klimaviciute, Justina & Pestieau, Pierre, 2016. "Long-term care social insurance. How to avoid big losses?," CEPR Discussion Papers 11359, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:11359
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    Cited by:

    1. DE DONDER Philippe, & LEROUX Marie-Louise,, 2019. "Long term care insurance with state-dependent preferences," LIDAM Discussion Papers CORE 2019032, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Justina Klimaviciute & Pierre Pestieau & Jérôme Schoenmaeckers, 2020. "Long‐Term Care Insurance With Family Altruism: Theory and Empirics," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 87(4), pages 895-918, December.
    3. Drèze, Jacques H. & Pestieau, Pierre & Schokkaert, Erik, 2016. "Arrow’s theorem of the deductible and long-term care insurance," Economics Letters, Elsevier, vol. 148(C), pages 103-105.
    4. PESTIEAU, Pierre & PONTHIERE, Gregory, 2016. "The Public Economics of Long Term Care," LIDAM Discussion Papers CORE 2016008, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Yakita, Akira, 2019. "Optimal long-term care policy in an intergenerational exchange setting," Research in Economics, Elsevier, vol. 73(4), pages 321-328.

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    More about this item

    Keywords

    Arrow's theorem; capped spending; long-term care insurance; optimal taxation;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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