Gone with the Windfall - Germany‘s Second LTC Strengthening Act and its Intergenerational Implications

Lewe Bahnsen, Stefan Fetzer, Fabian Franke () and Christian Hagist

No 18-05, WHU Working Paper Series - Economics Group from WHU - Otto Beisheim School of Management

Abstract: Due to the debate about the generosity of LTC insurance benefits the German government decided to increase benefits and widen the circle of LTC beneficiaries with the Second LTC Strengthening Act. In this paper, we evaluate the long-term implications of this recent reform for the German LTC insurance scheme. Using the framework of generational accounting we show that the reform has led to a widening of the short-term gap between revenues and expenditure and that the LTC insurance is not sustainably financed, neither pre- nor post-reform. By the early 2020s there will be fiscal pressure for further reforms. From an intergenerational perspective, the reform can be seen as a windfall to current beneficiaries increasing the intergenerational redistribution through the pay-as-you-go system.

Keywords: Generational accounting; long-term care insurance; intergenerational distribution (search for similar items in EconPapers)
JEL-codes: H51 I13 J14 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2018-10-26
New Economics Papers: this item is included in nep-age and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://nbn-resolving.org/urn:nbn:de:hbz:992-opus4-7027 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:whu:wpaper:18-05

Access Statistics for this paper

More papers in WHU Working Paper Series - Economics Group from WHU - Otto Beisheim School of Management Contact information at EDIRC.
Bibliographic data for series maintained by Rainer Michael Rilke ().