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Strategic cost-shifting in long-term care. Evidence from the Netherlands

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  • Alders, Peter
  • Schut, Frederik T.

Abstract

With the reform in 2015 of the system of long-term care (LTC) in the Netherlands, responsibilities for the provision of social support and assistance were delegated from the central government to the municipalities. Unintentionally, the way municipalities are financed created incentives to shift cost from the local level back to central level. In this paper we examine whether municipalities respond to the prevailing financial incentives by shifting costs to the public LTC insurance scheme. Using data on almost all Dutch municipalities over the period 2015–2019, we estimate that municipalities with a solvency rate below 20% have a 2.5% higher admission rate to the public LTC scheme. Furthermore, we show that the tightening municipal budgets for social care since 2017 were accompanied with about 14% higher admission rates in 2018 and 2019 compared to 2015. The results point to strategic cost shifting by municipalities that can be counteracted by changing the financial incentives for municipalities and by reducing the existing overlap between the local and central care domains.

Suggested Citation

  • Alders, Peter & Schut, Frederik T., 2022. "Strategic cost-shifting in long-term care. Evidence from the Netherlands," Health Policy, Elsevier, vol. 126(1), pages 43-48.
    • Handle: RePEc:eee:hepoli:v:126:y:2022:i:1:p:43-48
    DOI: 10.1016/j.healthpol.2021.11.008
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    References listed on IDEAS

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    1. Bakx, Pieter & Douven, Rudy & Schut, Frederik T., 2021. "Does independent needs assessment limit use of publicly financed long-term care?," Health Policy, Elsevier, vol. 125(1), pages 41-46.
    2. Alders, Peter & Schut, Frederik T., 2019. "The 2015 long-term care reform in the Netherlands: Getting the financial incentives right?," Health Policy, Elsevier, vol. 123(3), pages 312-316.
    3. Alders, Peter & Schut, Frederik T., 2019. "Trends in ageing and ageing-in-place and the future market for institutional care: scenarios and policy implications," Health Economics, Policy and Law, Cambridge University Press, vol. 14(1), pages 82-100, January.
    4. Maarse, J.A.M. (Hans) & Jeurissen, P.P. (Patrick), 2016. "The policy and politics of the 2015 long-term care reform in the Netherlands," Health Policy, Elsevier, vol. 120(3), pages 241-245.
    5. Giuliano Bonoli & Philipp Trein, 2016. "Cost-Shifting in Multitiered Welfare States: Responding to Rising Welfare Caseloads in Germany and Switzerland," Publius: The Journal of Federalism, CSF Associates Inc., vol. 46(4), pages 596-622.
    6. Krabbe-Alkemade, Yvonne & Makai, Peter & Shestalova, Victoria & Voesenek, Tessa, 2020. "Containing or shifting? Health expenditure decomposition for the aging Dutch population after a major reform," Health Policy, Elsevier, vol. 124(3), pages 268-274.
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