Long-Term Care: Is There Crowding Out of Informal Care, Private Insurance as Well as Saving?

Zweifel Peter () and Courbage Christophe
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Zweifel Peter: Department of Economics, University of Zurich, Rämistr 71, Zurich 8006, Switzerland
Courbage Christophe: Geneva School of Business Administration, University of Applied Sciences Western Switzerland (HES-SO)

Asia-Pacific Journal of Risk and Insurance, 2016, vol. 10, issue 1, 107-132

Abstract: Publicly provided long-term care (LTC) insurance with means-tested benefits is suspected to crowd out either private LTC insurance (Brown and Finkelstein 2008. The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market. American Economic Review 98(3):1083–102), private saving (Gruber and Yelowitz 1999. Public Health Insurance and Private Saving. Journal of Political Economy 107(6):1249–74; Sloan and Norton 1997. Adverse Selection, Bequests, Crowding Out, and Private Demand for Insurance: Evidence from the Long-term Care Insurance Market. Journal of Risk and Uncertainty 15:201–19), or informal care (Pauly 1990. The Rational Non-purchase of Long-term Care Insurance. Journal of Political Economy 95:153–68; Zweifel and Strüwe 1998. Long-term Care Insurance in a Two-generation Model. Journal of Risk and Insurance 65(1):13–32). This contribution predicts crowding-out effects for both private LTC insurance and informal care on the one hand and private saving and informal care on the other. These effects result from the interaction of a parent who decides about private LTC insurance before retirement and the amount of saving in retirement and a caregiver who decides about effort devoted to informal care. Some of the predictions are tested using a recent survey from China.

Keywords: long-term care; insurance; saving; crowding out; means testing; China (search for similar items in EconPapers)
JEL-codes: D19 H51 J14 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1515/apjri-2015-0012

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