Canta, Chiara, Cremer, Helmuth and Gahvari, Firouz (2020) "Honor thy father and thy mother" or not : uncertain family aid and the design of social long term care insurance. Social Choice and Welfare, vol. 55 (n° 4). pp. 687-734.

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Identification Number : 10.1007/s00355-020-01260-4


We study the role and the design of long-term care insurance programs when informal care is uncertain; with and without active actuarially-fair private insurance markets against dependency. Three types of public insurance policies are considered: (i) a topping-up scheme, (ii) an opting-out scheme, and (iii) an opting-out-cum-transfer scheme which combines elements of the first two. A topping-up scheme can never do better than private insurance; opting out and opting-out-cum-transfer schemes can because they provide some insurance against the default of informal care. Long-term care policies have different implications for crowding out. A topping-up policy entails crowding out at both intensive and extensive margins and an opting-out policy leads to crowding out solely at the extensive margin. The opting-out feature of an opting-out-cum-transfer policy too leads to crowding out at the extensive margin, but its transfer element leads to crowding out at the intensive margin and crowding in at the extensive margin.

Item Type: Article
Language: English
Date: December 2020
Refereed: Yes
Uncontrolled Keywords: Long term care, uncertain altruism, private insurance, public insurance, topping, up, opting out, opting-out-cum-transfers
JEL Classification: H2 - Taxation, Subsidies, and Revenue
H5 - National Government Expenditures and Related Policies
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 06 May 2020 12:30
Last Modified: 30 Nov 2021 02:00
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