Financing Long‐Term Care: Ex Ante, Ex Post or Both?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This paper examines the heterogeneity in the public financing of long-term care (LTC), and the wide-ranging instruments in place to finance long-term care services. We distinguish and classify the institutional responses to the need for LTC financing as ex-ante (occurring prior to when the need arises, such as insurance) and ex-post (occurring after the need arises, such as public sector and family financing). Then we examine country-specific data to ascertain whether the two types of financing are complements or substitutes. Finally, we examine exploratory cross-national data on public expenditure determinants, specifically economic, demographic and social determinants. We show that although both ex-ante and ex-post mechanisms exist in all countries with advanced industrial economies and despite the fact that instruments are different across countries, ex-ante and ex-post instruments are largely substitutes for each other. Expenditure estimates to date indicate that the public financing of long-term care is highly sensitive to a country's income, ageing of the population, and the availability of informal caregiving. Terms of use: Documents inJEL-Code: I180, H500, J100.

Informal Caregiving, Employment Status and Work Hours of the 50+ Population in Europe

“…Such care is currently the most common source of long-term care (see Costa-Font et al 2016 and references therein). The ageing of industrialized countries' populations, and notably the growing number of the very old, is increasing the need for informal caregiving and, more generally, the need for long-term care services (Costa-Font et al 2015). Informal caregiving may affect the employment status and work hours of caregivers, since caregiving is a time and energy consuming activity that may be hard to combine with work duties.…”

Explaining Declining Rates of Institutional LTC Use in the Netherlands: A Decomposition Approach

“…Aging populations have pushed up the demand for long-term care (LTC). As a result, LTC expenditures in Organisation for Economic Co-operation and Development (OECD) countries have soared in recent decades (Colombo, 2011;Costa-Font et al, 2015). In the Netherlands, for instance, real LTC expenditures grew on average by 3.9% annually in the period 1995-2010 (Pommer, 2012).…”

Crowding Out of Long‐Term Care Insurance: Evidence from European Expectations Data

“…We do so by developing a theoretical model and by drawing on individual data containing individual expectation records in a sample of European countries restricted to 15 countries and examining cohort-specific effects. Specifically, we have attempted to provide some theory and evidence to understand the reasons for the limited development of a market for LTC insurance, namely the presence of motivational interactions between society's responses to the need of such care, and government financing both ex-ante and ex-post (Costa-Font et al, 2015). Our theoretical model predicts that, when informal care is treated as exogenously determined, expectations of both state support and informal care crowd out LTC insurance expectations, while this is not necessarily the case when informal care is endogenous to insurance, as happens when intra-family moral hazard is integrated in the insurance decision.…”