``Honor thy father and thy mother or not: uncertain family aid and the design of social long term care insurance

DOI10.1007/S00355-020-01260-4MaRDI QIDQ826628zbMATH OpenOpenAlexFDO

Authors Chiara Canta, Helmuth Cremer, Firouz Gahvari

Publication date 6 January 2021

Published in Social Choice and Welfare (Search for Journal in Brave)

Full work available at URL https://doi.org/10.1007/s00355-020-01260-4

zbMATH Keywords

long-term care insuranceprivate insurancepublic insurance policies

Mathematics Subject Classification ID

Actuarial mathematics (91G05)

Review text

The paper focuses on long-term care insurance programs when informal care/family assistance is uncertain. The starting point is the observation that private insurance markets, although fair from an actuarial point of view, do not meet altruism default. The analysis is set in three scenarios, each corresponding to a specific public program: (1) a topping-up scheme, (2) an opting-out scheme, and (3) an opting-out-cum-transfer scheme (which is a combination of the two above). The central question is which contract, and under what circumstances, would do better than private insurance. The crowding out implications of each policy, both at the intensive and extensive margin, are also considered. The study compares the three types of policies with private insurance; however, none of them is fully effective against altruism default. Different crowding-out implications for the informal care that children provide, in relation to each contractual scheme, are in detail. The results of this analysis are based on a social welfare function that depends solely on the parents' utility; then the utility of the grown-up children in the social welfare function is also taken into account. Appendix contains technical details and proofs.

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Cites work

• Public Provision of Private Goods as a Redistributive Device in an Optimum Income Tax Model

Cited in

(10)

• The political choice of social long term care transfers when family gives time and money
• Long-term care insurance and bequests as instruments for shaping intergenerational relationships
• Fair long-term care insurance
• Long-term care and capital accumulation: the impact of the state, the market and the family
• Do siblings free-ride in ``being there for parents?
• Evaluating long-term-care policy options, taking the family seriously
• An equilibrium analysis of the long-term care insurance market
• Two-sided intergenerational moral hazard, long-term care insurance, and nursing home use
• On the effects of public subsidies for severe and mild dependency on long-term care insurance
• Innovation in long-term care insurance: joint contracts for mitigating relational moral hazard

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