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Policy dilemmas in financing long-term care in Europe

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  • Costa-Font, Joan
  • Courbage, Christophe
  • Zweifel, Peter

Abstract

Long-term care (LTC) is the largest insurable risk facing the elderly in most western societies. Paradoxically, institutional responses to the need to insure ex-ante (before the contingency occurs) the financial risks of needing LTC (by means of social and private insurance and self-insurance) exhibit limited development. In contrast, mechanisms to finance LTC ex-post continue to develop, primarily those supported by the public sector (by means of subsidies or tax deductions) and the family (by means of intergenerational transfers). Both ex-ante and ex-post types of financing mechanisms are found to be subject to shortcomings which give rise to dilemmas for public policy. Governments confront these dilemmas in different ways, causing a great deal of heterogeneity in the financing and provision of LTC services across Europe.

Suggested Citation

  • Costa-Font, Joan & Courbage, Christophe & Zweifel, Peter, 2017. "Policy dilemmas in financing long-term care in Europe," LSE Research Online Documents on Economics 61032, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:61032
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    File URL: http://eprints.lse.ac.uk/61032/
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    References listed on IDEAS

    as
    1. 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(S1), pages 74-88, March.
    2. Xian Xu & Peter Zweifel, 2014. "Bilateral Intergenerational Moral Hazard: Empirical Evidence from China," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 39(4), pages 651-667, October.
    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(S1), pages 45-57, March.
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    8. 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.
    9. Joan Costa-Font & Montserrat Font, 2009. "Does 'early purchase' improve the willingness to pay for long-term care insurance?," Applied Economics Letters, Taylor & Francis Journals, vol. 16(13), pages 1301-1305.
    10. Francesca Colombo & Jérôme Mercier, 2012. "Help Wanted? Fair and Sustainable Financing of Long-term Care Services," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 34(2), pages 316-332.
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    12. Courbage, Christophe & Eeckhoudt, Louis, 2012. "On insuring and caring for parents’ long-term care needs," Journal of Health Economics, Elsevier, vol. 31(6), pages 842-850.
    13. Joan Costa-Font, 2010. "Family ties and the crowding out of long-term care insurance," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(4), pages 691-712, Winter.
    14. 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(S1), pages 74-88, March.
    15. 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.
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    18. Joan Costa-Font & Christophe Courbage (ed.), 2012. "Financing Long-Term Care in Europe," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-34919-3.
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    Cited by:

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    2. Carlos Vidal-Meliá & Manuel Ventura-Marco & Juan Manuel Pérez-Salamero González, 2018. "Social Insurance Accounting for a Notional Defined Contribution Scheme Combining Retirement and Long-Term Care Benefits," Sustainability, MDPI, vol. 10(8), pages 1-36, August.
    3. Carlos Vidal-Meliá & Manuel Ventura-Marco & Juan Manuel Pérez-Salamero González, 2018. "Actuarial accounting for a notional defined contribution scheme combining retirement and longterm care benefits," Documentos de Trabajo del ICAE 2018-16, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
    4. de Bresser, Jochem & Knoef, Marike & van Ooijen, Raun, 2022. "Preferences for in-kind and in-cash home care insurance," Journal of Health Economics, Elsevier, vol. 84(C).
    5. van Ooijen, Raun & de Bresser, Jochem & Knoef, Marike, 2019. "Preferences for Long-Term Care Services: Bequests, Informal Care and Health Expectations," Other publications TiSEM a60a8e39-57eb-48e4-89b4-e, Tilburg University, School of Economics and Management.
    6. Rong Peng & Xueqin Deng & Yinghua Xia & Bei Wu, 2022. "Assessing the Sustainability of Long-Term Care Insurance Systems Based on a Policy–Population–Economy Complex System: The Case Study of China," IJERPH, MDPI, vol. 19(11), pages 1-17, May.
    7. J. Iñaki De La Peña & M. Cristina Fernández-Ramos & Asier Garayeta & Iratxe D. Martín, 2022. "Transforming Private Pensions: An Actuarial Model to Face Long-Term Costs," Mathematics, MDPI, vol. 10(7), pages 1-17, March.
    8. William Lim & Gaurav Khemka & David Pitt & Bridget Browne, 2019. "A method for calculating the implied no-recovery three-state transition matrix using observable population mortality incidence and disability prevalence rates among the elderly," Journal of Population Research, Springer, vol. 36(3), pages 245-282, September.
    9. Michel Fuino & Andrey Ugarte Montero & Joël Wagner, 2022. "On the drivers of potential customers' interest in long‐term care insurance: Evidence from Switzerland," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 25(3), pages 271-302, September.

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    More about this item

    Keywords

    long-term care; old age dependency; long-term care insurance; subsidies; tax deductions for providing formal care;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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