We study the design of public long-term care (LTC) insurance when the altruism of informal caregivers is uncertain. We consider non-linear policies where the LTC benefit depends on the level of informal care, which is assumed to be observable while children's altruism is not. The traditional topping up and opting out policies are special cases of ours. Both total and informal care should increase with the children's level of altruism. This obtains under full and asymmetric information. Social LTC, on the other hand, may be non-monotonic. Under asymmetric information, social LTC is lower than its full information level for the lowest level of altruism, while it is distorted upward for the higher level of altruism. This is explained by the need to provide incentives to highaltruism children. The implementing contract is always such that social care increases with formal care.
Long term care; uncertain altruism; private insurance; public insurance; topping up; opting out;
- H2: Taxation, Subsidies, and Revenue
- H5: National Government Expenditures and Related Policies
Helmuth Cremer et Chiara Canta, « Opting out and topping up reconsidered: Informal care under uncertain altruism », Canadian Journal of Economics, Toronto, vol. 54, n° 1, février 2021, p. 259–283.
Chiara Canta et Helmuth Cremer, « Opting out and topping up reconsidered: informal care under uncertain altruism », TSE Working Paper, n° 18-924, mai 2018, révision novembre 2019.
TSE Working Paper, n° 18-924, mai 2018, révision novembre 2019