Does Publicly Provided Home Care Substitute for Family Care? Experimental Evidence with Endogenous Living Arrangements

Pezzin, Liliana E.; Kemper, Peter; Reschovsky, James D.

doi:10.2307/146270

Cited by 165 publications

(119 citation statements)

References 16 publications

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“…18 This supports the notion that publicly-provided home care and publicly-provided long-term care in facility-based institutions are substitutes to some degree. The negative effect of publicly provided homecare on institutionalization is consistent with the findings of Sarma and Simpson (2007), Ettner (1994), Pezzin et al (1995) and Picone and Wilson (1999). The social support variables have a negative effect on institutional living, but only one social support variable has a negative effect, at the 10% level of significance, on intergenerational living arrangements.…”

Section: Insert Tablesupporting

confidence: 87%

“…Utilizing data from the Channeling experiment of publicly financed home care in the United States in early 1980s, some authors find no, or a very small effect of home care on institutionalization (Rabiner et al, 1994;Wooldridge and Schore, 1988). By contrast, Pezzin et al (1995) using the same data find that public home care program increases the probability of independent living for unmarried persons and reduces the probability of living in shared households or nursing homes. They argue that their result arises from modelling living arrangements and care provisions jointly, an approach that previous studies ignored.…”

Section: Related Literaturementioning

confidence: 89%

“…See, for instance, Sarma and Simpson (2007), Börsch-Supan (1990), Börsch-Supan et al (1992), Pezzin et al (1995) and Hoerger et al (1996). The time-invariant individual effect accounts for unobserved heterogeneity (Heckman and Singer, 1984) in the transition rates not accounted for by the included covariates and assumed to come from a discrete probability distribution with a small number of mass points m .…”

Section: The Empirical Frameworkmentioning

confidence: 99%

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Transitions in living arrangements of Canadian seniors: Findings from the NPHS longitudinal data

Sarma

Hawley

Basu

2009

Social Science & Medicine

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Section: Insert Tablesupporting

confidence: 87%

Section: Related Literaturementioning

confidence: 89%

Section: The Empirical Frameworkmentioning

confidence: 99%

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Transitions in living arrangements of Canadian seniors: Findings from the NPHS longitudinal data

Sarma

Hawley

Basu

2009

Social Science & Medicine

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“…Indeed, empirical studies confirm a substitution effect between informal and formal care (Greene, 1983;Hanley, Wiener, and Harris, 1991;Ettner, 1994, Pezzin, Kemper, andRechovsky, 1996). Moreover, home care programs often have little or no retarding effect on the probability of entering a nursing home (Christianson, 1988;Wooldridge and Schore, 1988).…”

Section: Personal Budgets As a Complement To Current Ltci Benefitsmentioning

confidence: 99%

Crowding Out Informal Care? Evidence from a Social Experiment in Germany

Arntz

Thomsen

2008

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp08113.pdf Non-technical summaryDuring the next decades, western societies at a varying speed face a demographic transition that more than doubles the number of elderly individuals in need of long-term care and that at the same time decreases the number of informal caregivers. As a consequence, public responsibility for the provision of long-term care will continue to grow. In the German context, the demographic transition fuels doubts about the fiscal sustainability of the Long-Term Care Insurance (LTCI).According to several forecasts, contribution rates to LTCI would have to triple in the next decades to maintain the current level of support. Since institutionalized care tends to be costly, one way of mitigating the impact of the demographic transition on public expenditures is to strengthen the provision of home care.The legislator therefore passed an amendment of the LTCI law in 2002 as the legal basis for testing a professionally assisted consumer directed home care program, Personal Budgets, as an alternative to the provision of agency-directed home care. Agency care is restricted to a legally approved and limited catalogue of care services that are provided by authorized agencies only. Personal budgets correspond to the monetary value of agency care, but extend the use of these funds beyond the restrictive catalogue to any care-related services. Due to the extended coverage and the additional assistance of a care manager, personal budgets are likely to produce better care outcomes compared to agency care. However, in case of supplementing the LTCI home care scheme by personal budgets, personal budgets would also compete with cash payments, an unassisted consumer-directed home care program of the LTCI that grants only half the monetary value of personal budgets, but can be spent for any desired services or goods. Cash recipients whose care needs are mainly met by informal care may now choose the more generous personal budget in order to substitute informal by formal care.Personal budgets were tested in a long-run social experiment that was carried out in seven German counties between 2004 and 2008. Based on the random assignment of participants into a treatment group of personal budget recipients and a control group of standard home care recipients, this paper evaluates the impact of personal budgets on the extent of support by four different types of formal and inform...

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“…For recipients of cash benefits, the more generous personal budget enables care households to potentially increase total service hours. Whether this happens, however, is an empirical question because a number of empirical studies show that subsidized formal home care may crowd out informal care (Greene, 1983;Hanley, Wiener, and Harris, 1991;Ettner, 1994, Pezzin, Kemper, and Rechovsky, 1996, Arntz and Thomsen, 2008. As a consequence, public spending on long-term care may rise while total care provided remains constant (Grabowski, 2006).…”

Section: Introductionmentioning

confidence: 99%

Reforming Home Care Provision in Germany - Evidence from a Social Experiment

Arntz

Thomsen

2008

SSRN Journal

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In a long-run social experiment, personal budgets have been tested as an alternative to the home care programs of the German long-term care insurance (LTCI). Due to extending the coverage beyond LTCI approved services and agencies, personal budgets may improve care outcomes compared to the provision of in-kind services at a constant benefit level. This is a highly desirable result in light of the ongoing demographic challenge. However, personal budgets also compete with the less generous cash option of the LTCI. Any transition from cash recipients to personal budgets increases LTCI spending, while care outcomes may remain unchanged if informal caregivers are crowded out by formal care. This paper compares care outcomes of the different home care programs and provides a rough cost analysis from the perspective of the LTCI. While personal budgets improve care outcomes compared to in-kind services, the nationwide introduction of personal budgets increases LTCI spending for former cash recipients without any traceable effect on care outcomes.Keywords: consumer directed long-term care; long-term care insurance; crowding out; formal and informal care JEL Classification: I38, I12, C93 * Financial support from the project "Evaluating the use of direct payments in the long term care of the elderly. A social experiment in the context of advancing the compulsory long term care insurance according to §8 III SGB XI" is gratefully acknowledged. The usual disclaimer applies. Non-technical SummaryRising numbers of frail elderly and simultaneously shrinking numbers of informal carers pose a challenge to future viability of the mandatory and non-means-tested long-term care insurance in Germany (LTCI). In particular, the retreat of informal care and teh corresponding rising demand for formal home care (i.e. agency care) or nursing home care increases LTCI spending.With the aim of reforming professional home care to better address care needs, the German legislator therefore passed an amendment to test personal budgets (Pflegebudget) as an alternative to agency care. A personal budgets is a professionally assisted consumer-directed home care program that grants the monetary value of agency services in cash for the purchase of any care-related services, thus expanding the restricted catalogue of services and providers in case of agency care. If personal budgets supplemented existing LTCI home care programs, personal budgets would, however, also compete with the cash option of the LTCI, a consumer-directed home care program that is less generous but somewhat less restrictive than personal budgets.Based on a long-run social experiment, we therefore estimate the heterogenous effect of personal budgets on total care hours as a proxy of the attained care level, and the contribution of formal and informal carers. While we may expect personal budgets to increase formal care and the attained care level among agency care recipients, the corresponding effects for former cash recipients are ambiguous due to a potential substitution of ...

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Does Publicly Provided Home Care Substitute for Family Care? Experimental Evidence with Endogenous Living Arrangements

Cited by 165 publications

References 16 publications

Transitions in living arrangements of Canadian seniors: Findings from the NPHS longitudinal data

Transitions in living arrangements of Canadian seniors: Findings from the NPHS longitudinal data

Crowding Out Informal Care? Evidence from a Social Experiment in Germany

Reforming Home Care Provision in Germany - Evidence from a Social Experiment

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