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Family ties and the crowding out of long-term care insurance

Costa-Font, Joan (2010) Family ties and the crowding out of long-term care insurance. Oxford Review of Economic Policy, 26 (4). pp. 691-712. ISSN 0266-903X

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Abstract

Insurance for long-term care (LTC) has developed only moderately compared to other areas of welfare, which has been explained variously as the result of market failures, public misconceptions of the risk of LTC needs, and intergenerational contracts. This paper offers a cultural explanation for the limited LTC insurance development in Europe. It argues that family ties, by enhancing informal care-giving duties, inhibit individuals' expected (public and private) insurance coverage. The empirical analysis of the paper exploits cross-country and sub-group variability of a representative database of European Union member states, containing records on LTC coverage and family structure. Drawing upon two measures of familistic culture or family ties, we find a negative association between family ties and expected coverage of LTC for different sub-samples. These results are robust to a set of checks for different definitions of family ties and controls, and for a sub-sample of first- and second-generation migrants. Policy implications suggest that widespread expansion of LTC coverage might need to accommodate existing familistic cultural norms to avoid insurance crowding out.

Item Type: Article
Official URL: http://oxrep.oxfordjournals.org/
Additional Information: © 2010 Oxford Review of Economic Policy Ltd and Oxford University Press
Library of Congress subject classification: H Social Sciences > HN Social history and conditions. Social problems. Social reform
R Medicine > RA Public aspects of medicine
R Medicine > RT Nursing
Journal of Economic Literature Classification System: I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy; Regulation; Public Health
I - Health, Education, and Welfare > I3 - Welfare and Poverty > I38 - Government Policy; Provision and Effects of Welfare Programs
J - Labor and Demographic Economics > J1 - Demographic Economics > J13 - Fertility; Family Planning; Child Care; Children; Youth
J - Labor and Demographic Economics > J1 - Demographic Economics > J14 - Economics of the Elderly; Economics of the Handicapped
Sets: Departments > European Institute
Departments > Social Policy
Research centres and groups > LSE Health
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 16 May 2011 10:47
URL: http://eprints.lse.ac.uk/36178/

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