Library Header Image
LSE Research Online LSE Library Services

Crowding out of long-term care insurance: evidence from European expectations data

Costa-Font, Joan ORCID: 0000-0001-7174-7919 and Courbage, Christophe (2015) Crowding out of long-term care insurance: evidence from European expectations data. Health Economics, 24. pp. 74-88. ISSN 1057-9230

PDF - Accepted Version
Download (817kB) | Preview

Identification Number: 10.1002/hec.3148


Long-term care (LTC) is the largest insurable risk that old-age individuals face in most western societies. However, the demand for LTC insurance is still ostensibly small in comparison to the financial risk. One explanation that has received limited support is that expectations of either ‘public sector funding’ and ‘family support’ crowd out individual incentives to seek insurance. This paper aims to investigate further the above mentioned motivational crowding out hypothesis by developing a theoretical model and by drawing on an innovative empirical analysis of representative European survey data containing records on individual expectations of LTC funding sources (including private insurance, social insurance and the family). The theoretical model predicts that, when informal care is treated as exogenously determined, expectations of both state support and informal care can potentially crowd out LTC insurance expectations, while this is not necessarily the case when informal care is endogenous to insurance, as happens when intra-family moral hazard is integrated in the insurance decision. Evidence from expectations data suggest evidence consistent with the presence of family crowding out, but no evidence of public sector crowding out, except for the cohort of individuals older than 55.

Item Type: Article
Official URL:
Additional Information: © 2015 John Wiley & Sons, Ltd.
Divisions: Social Policy
Centre for Economic Performance
Subjects: R Medicine > RA Public aspects of medicine
Date Deposited: 05 Jan 2015 10:09
Last Modified: 12 Jun 2024 05:24
Funders: Foundation Brocher

Actions (login required)

View Item View Item


Downloads per month over past year

View more statistics