Working paper

Private, social and self insurance for longterm care: a political economy analysis

Philippe De Donder, and Pierre Pestieau

Abstract

We study the political determination of the level of social long-term care insurance when voters also choose private insurance and saving amounts. Agents di§er in income, probability of becoming dependent and of receiving family help. Social insurance redistributes across income and risk levels, while private insurance is actuarially fair. The income-to-risk 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.

Keywords

long-term care; social insurance; familism; crowding out; weak and strong prospects of family help; voting;

JEL codes

  • D72: Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
  • I13: Health Insurance, Public and Private
  • J14: Economics of the Elderly • Economics of the Handicapped • Non-Labor Market Discrimination

Replaced by

Philippe De Donder, and Pierre Pestieau, Private, social and self insurance for long-term care in the presence of family help, Journal of Public Economic Theory, vol. 19, n. 1, February 2017, pp. 18–37.

Reference

Philippe De Donder, and Pierre Pestieau, Private, social and self insurance for longterm care: a political economy analysis, TSE Working Paper, n. 11-305, December 2011, revised June 2014.

See also

Published in

TSE Working Paper, n. 11-305, December 2011, revised June 2014