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Moral hazard and cash benefits in long-term home care, CHERE Working Paper 2006/12

Author

Listed:
  • Bernard van den Berg

    (Vrije University Amsterdam)

  • Wolter Hassink

Abstract

This paper tests empirically for moral hazard in a system based on demand-side subsidies. In the Netherlands, demand-side subsidies were introduced in 1996. Clients receive a cash benefit to purchase the type of home care (housework, personal care, support with mobility, organisational tasks or social support) they need from the care supplier of their choice (private care provider, regular care agency, commercial care agency or paid informal care provider). Furthermore, they negotiate with the care supplier about price and quantity. Our main findings are the following. 1) The component of the cash benefit a client has no residual claimant on, has a positive impact on the price of care. 2) In contrast, the components of the cash benefit a client has residual claimant on, have no or a negative impact on the price of care. Both results point at the existence of moral hazard in a system of demand-side subsidies.

Suggested Citation

  • Bernard van den Berg & Wolter Hassink, 2006. "Moral hazard and cash benefits in long-term home care, CHERE Working Paper 2006/12," Working Papers 2006/12, CHERE, University of Technology, Sydney.
  • Handle: RePEc:her:chewps:2006/12
    as

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    File URL: http://www.chere.uts.edu.au/pdf/wp2006_12.pdf
    File Function: First version, November 2006
    Download Restriction: no
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    References listed on IDEAS

    as
    1. Bernard van den Berg & Han Bleichrodt & Louis Eeckhoudt, 2005. "The economic value of informal care: a study of informal caregivers' and patients' willingness to pay and willingness to accept for informal care," Health Economics, John Wiley & Sons, Ltd., vol. 14(4), pages 363-376, April.
    2. Barbara Baarsma, 2003. "The Valuation of the IJmeer Nature Reserve using Conjoint Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 25(3), pages 343-356, July.
    3. McKnight, Robin, 2006. "Home care reimbursement, long-term care utilization, and health outcomes," Journal of Public Economics, Elsevier, vol. 90(1-2), pages 293-323, January.
    4. Joseph E. Stiglitz, 2000. "The Contributions of the Economics of Information to Twentieth Century Economics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(4), pages 1441-1478.
    5. Zweifel, Peter & Manning, Willard G., 2000. "Moral hazard and consumer incentives in health care," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 8, pages 409-459, Elsevier.
    6. Leslie Foster & Randall Brown & Barbara Phillips & Barbara Lepidus Carlson, "undated". "Easing the Burden of Caregiving: The Impact of Consumer Direction of Primary Informal Caregivers in Arkansas (Journal Article)," Mathematica Policy Research Reports ee4e4b20c0cb4dbeb966a105f, Mathematica Policy Research.
    7. repec:mpr:mprres:4666 is not listed on IDEAS
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    More about this item

    Keywords

    Long-term care; cash benefits; consumer directed services; demand-side subsidies; direct payments; moral hazard;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General

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