Optimal Long-Term Care Provision and Insurance with Heterogeneous Preferences and Risks

Nicholas-James Clavet, Pierre-Carl Michaud and Julien Navaux

Cahiers de recherche / Working Papers from Chaire de recherche Jacques-Parizeau en politiques économiques / Jacques-Parizeau Research Chair in Economic Policy

Abstract: We develop a model of optimal long-term care provision and insurance with heterogeneous risk and preferences. Using a novel survey experiment, we estimate preferences (demand) for care settings and service bundles. We then calibrate health transitions and the supply of services using Canadian administrative data for the province of Quebec. The optimal insurance scheme has lower co-insurance in nursing homes and higher co-insurance in home care while leading to a constrained expansion of home care services. Relative to the prevailing system in Quebec, optimal provision increases home care utilization, raises public expenditure threefold, and delivers a large increase in consumer surplus.

Keywords: long-term care; insurance; preferences; risk; supply constraints. (search for similar items in EconPapers)
JEL-codes: H51 I18 J14 J26 (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cjp.hec.ca/wp-content/uploads/2026/06/Cahier-no7.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:rsi:cjpcha:07

Access Statistics for this paper

More papers in Cahiers de recherche / Working Papers from Chaire de recherche Jacques-Parizeau en politiques économiques / Jacques-Parizeau Research Chair in Economic Policy
Bibliographic data for series maintained by Lee Boyle ().