IDEAS home Printed from https://ideas.repec.org/p/hal/journl/halshs-03957967.html
   My bibliography  Save this paper

Private, social and self-insurance for long-term care in the presence of family help. A political economy analysis

Author

Listed:
  • Pierre Pestieau

    (UCL - Université Catholique de Louvain = Catholic University of Louvain, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Philippe de Donder

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

We study the political determination of the level of social long-term care insurance when voters can top up with private insurance, saving and family help. Agents differ in income, probability of becoming dependent and of receiving family help, and amount of family help received. Social insurance redistributes across income and risk levels, while private insurance is actuarially fair. The income-to-dependency probability ratio of agents determines whether they prefer social or private insurance. Family support crowds out the demand for both social and, especially, private insurance, as strong prospects of family help drive the demand for private insurance to zero. The availability of private insurance decreases the demand for social insurance but need not decrease its majority-chosen level. A majority of voters would oppose banning private insurance.

Suggested Citation

  • Pierre Pestieau & Philippe de Donder, 2017. "Private, social and self-insurance for long-term care in the presence of family help. A political economy analysis," Post-Print halshs-03957967, HAL.
    • Handle: RePEc:hal:journl:halshs-03957967
    DOI: 10.1111/jpet.12163
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Nuscheler, Robert & Roeder, Kerstin, 2013. "The political economy of long-term care," European Economic Review, Elsevier, vol. 62(C), pages 154-173.
    2. Amy Finkelstein & Erzo F. P. Luttmer & Matthew J. Notowidigdo, 2009. "Approaches to Estimating the Health State Dependence of the Utility Function," American Economic Review, American Economic Association, vol. 99(2), pages 116-121, May.
    3. Amy Finkelstein & Erzo F. P. Luttmer & Matthew J. Notowidigdo, 2013. "What Good Is Wealth Without Health? The Effect Of Health On The Marginal Utility Of Consumption," Journal of the European Economic Association, European Economic Association, vol. 11, pages 221-258, January.
    4. Hansen, Lars Peter & Singleton, Kenneth J, 1983. "Stochastic Consumption, Risk Aversion, and the Temporal Behavior of Asset Returns," Journal of Political Economy, University of Chicago Press, vol. 91(2), pages 249-265, April.
    5. De Donder, Philippe & Leroux, Marie-Louise, 2012. "Behavioral Biases and Long Term Care Annuities: A Political Economy Approach," IDEI Working Papers 749, Institut d'Économie Industrielle (IDEI), Toulouse, revised Feb 2013.
    6. repec:bla:revinw:v:41:y:1995:i:3:p:309-29 is not listed on IDEAS
    7. Edward C. Norton, 1995. "Elderly Assets, Medicaid Policy, And Spend‐Down In Nursing Homes," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 41(3), pages 309-329, September.
    8. Mellor, Jennifer M., 2001. "Long-term care and nursing home coverage: are adult children substitutes for insurance policies?," Journal of Health Economics, Elsevier, vol. 20(4), pages 527-547, July.
    9. De Donder Philippe & Leroux Marie-Louise, 2013. "Behavioral Biases and Long-Term Care Insurance: A Political Economy Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(2), pages 551-575, May.
    10. Brown, Jeffrey R. & Finkelstein, Amy, 2007. "Why is the market for long-term care insurance so small?," Journal of Public Economics, Elsevier, vol. 91(10), pages 1967-1991, November.
    11. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
    12. Joan Costa-Font, 2010. "Family ties and the crowding out of long-term care insurance," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(4), pages 691-712, Winter.
    13. Georges Casamatta & Helmuth Cremer & Pierre Pestieau, 2000. "The Political Economy of Social Security," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(3), pages 503-522, September.
    14. Tsvetanka Karagyozova & Peter Siegelman, 2012. "Can Propitious Selection Stabilize Insurance markets?," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 35(2), pages 121-158.
    15. Pauly, Mark V, 1990. "The Rational Nonpurchase of Long-term-Care Insurance," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 153-168, February.
    16. Van Houtven, Courtney Harold & Norton, Edward C., 2008. "Informal care and Medicare expenditures: Testing for heterogeneous treatment effects," Journal of Health Economics, Elsevier, vol. 27(1), pages 134-156, January.
    17. MOSSIN, Jan, 1968. "Aspects of rational insurance purchasing," LIDAM Reprints CORE 23, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    18. Bonsang, Eric, 2009. "Does informal care from children to their elderly parents substitute for formal care in Europe?," Journal of Health Economics, Elsevier, vol. 28(1), pages 143-154, January.
    19. Zweifel, Peter & Struwe, Wolfram, 1996. "Long-Term Care Insurance and Bequests as Instruments for Shaping Intergenerational Relationships," Journal of Risk and Uncertainty, Springer, vol. 12(1), pages 65-76, January.
    20. Christophe Courbage & Peter Zweifel, 2011. "Two-sided intergenerational moral hazard, long-term care insurance, and nursing home use," Journal of Risk and Uncertainty, Springer, vol. 43(1), pages 65-80, August.
    21. Meier, Volker, 1996. "Long-Term Care Insurance and Savings," Munich Reprints in Economics 19245, University of Munich, Department of Economics.
    22. repec:bla:scandj:v:102:y:2000:i:3:p:503-22 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Giorgio Fabbri & Marie-Louise Leroux & Paolo Melindi-Ghidi & Willem Sas, 2024. "Conditioning public pensions on health: effects on capital accumulation and welfare," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(2), pages 1-21, June.
    2. Marta Pascual-Sáez & David Cantarero-Prieto & María González-Diego, 2018. "Testing the effect of population ageing on national saving rates: panel data evidence from Europe," Working Papers. Collection B: Regional and sectoral economics 1803, Universidade de Vigo, GEN - Governance and Economics research Network.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. DE DONDER, Philippe & PESTIEAU, Pierre, 2011. "Private, social and self insurance for long-term care: A political economy analysis," LIDAM Discussion Papers CORE 2011053, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Philippe De Donder & Marie-Louise Leroux, 2015. "The Political Economy of (in)formal Long Term Care Transfers," Cahiers de recherche 1508, Chaire de recherche Industrielle Alliance sur les enjeux économiques des changements démographiques.
    3. Philippe Donder & Marie-Louise Leroux, 2017. "The political choice of social long term care transfers when family gives time and money," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 49(3), pages 755-786, December.
    4. Justina Klimaviciute & Pierre Pestieau, 2023. "The economics of long‐term care. An overview," Journal of Economic Surveys, Wiley Blackwell, vol. 37(4), pages 1192-1213, September.
    5. Courbage, Christophe & Eeckhoudt, Louis, 2012. "On insuring and caring for parents’ long-term care needs," Journal of Health Economics, Elsevier, vol. 31(6), pages 842-850.
    6. Jean-Marc Bascans & Christophe Courbage & Cornel Oros, 2017. "Means-tested public support and the interaction between long-term care insurance and informal care," International Journal of Health Economics and Management, Springer, vol. 17(2), pages 113-133, June.
    7. Philippe De Donder & Marie‐Louise Leroux, 2021. "Long term care insurance with state‐dependent preferences," Health Economics, John Wiley & Sons, Ltd., vol. 30(12), pages 3074-3086, December.
    8. Lambregts, Timo R. & Schut, Frederik T., 2020. "Displaced, disliked and misunderstood: A systematic review of the reasons for low uptake of long-term care insurance and life annuities," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    9. Martin Eling & Omid Ghavibazoo, 2019. "Research on long-term care insurance: status quo and directions for future research," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 44(2), pages 303-356, April.
    10. Joan Costa‐Font & Christophe Courbage, 2015. "Crowding Out of Long‐Term Care Insurance: Evidence from European Expectations Data," Health Economics, John Wiley & Sons, Ltd., vol. 24(S1), pages 74-88, March.
    11. Christophe Courbage & Guillem Montoliu-Montes & Joël Wagner, 2020. "The effect of long-term care public benefits and insurance on informal care from outside the household: empirical evidence from Italy and Spain," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 21(8), pages 1131-1147, November.
    12. Philippe De Donder & Marie-Louise Leroux, 2012. "Behavioral Biases and Long Term Care Annuities: A Political Economy Approach," CESifo Working Paper Series 3972, CESifo.
    13. Chiara Canta & Pierre Pestieau & Emmanuel Thibault, 2016. "Long-term care and capital accumulation: the impact of the State, the market and the family," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 61(4), pages 755-785, April.
    14. De Donder Philippe & Leroux Marie-Louise, 2013. "Behavioral Biases and Long-Term Care Insurance: A Political Economy Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(2), pages 551-575, May.
    15. repec:bla:glopol:v:8:y:2017:i:s2:p:38-45 is not listed on IDEAS
    16. Zweifel Peter & Courbage Christophe, 2016. "Long-Term Care: Is There Crowding Out of Informal Care, Private Insurance as Well as Saving?," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 10(1), pages 107-132, January.
    17. Coe, Norma B. & Goda, Gopi Shah & Van Houtven, Courtney Harold, 2023. "Family spillovers and long-term care insurance," Journal of Health Economics, Elsevier, vol. 90(C).
    18. Christophe Courbage & Peter Zweifel, 2015. "Double Crowding-Out Effects of Means-Tested Public Provision for Long-Term Care," Risks, MDPI, vol. 3(1), pages 1-16, February.
    19. Daniel Gottlieb & Olivia S. Mitchell, 2020. "Narrow Framing and Long‐Term Care Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 87(4), pages 861-893, December.
    20. repec:ces:ifodic:v:9:y:2011:i:2:p:16132672 is not listed on IDEAS
    21. Philippe De Donder & Marie-Louise Leroux & François Salanié, 2023. "Advantageous selection without moral hazard," Journal of Risk and Uncertainty, Springer, vol. 67(1), pages 21-43, August.
    22. Philippe De Donder & Marie-Louise Leroux & François Salanié, 2022. "Advantageous selection without moral hazard (with an application to life care annuities)," CIRANO Working Papers 2022s-13, CIRANO.

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:halshs-03957967. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.