LONG-TERM CARE: ECONOMIC ISSUES AND POLICY SOLUTIONS Developments in Health Economics and Public Policy VOLUMES Series Editors Peter Zweifel, University o/Zurich, Switzerland H.E. Frech ill, University o/California, Santa Barbara, US.A. The titles published in this series are listed at the end a/this volume. LONG-TERM CARE: ECONOMIC ISSUES AND POLICY SOLUTIONS Edited by Roland Eisen Johann Wolfgang Goethe-Universităt, Frankfurt am Main Frank A. Sioan Duke University Durham, North Carolina ~. SPRINGER SC"IENCE +BUSINESS MEDIA, LLC Library of Congress Cataloging-in-Publication Data A C.I.P. Catalogue record for this book is avaiIabIe from the Library of Congress. ISBN 978-1-4613-6834-2 ISBN 978-1-4615-4096-0 (eBook) DOI 10.1007/978-1-4615-4096-0 Copyright ~ 1996 by Springer Science+Business Media New York OriginalIy published by Kluwer Academic Publishers in 1996 Softcover reprint of the hardcover 1s t edition 1996 AlI rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, mechanical, photo-copying, recording, or otherwise, without the prior written permission of the pubIisher, Springer Science+Business Media, LLC. Printed on acid-free paper Contents Contributing Authors and Participants ............................................................ vii Introduction Roland Eisen and Frank A. Sloan .................................................................. . Part One: International Comparisons l. An International Comparison of Trends in Disability-Free Life Expectancy Emmanuelle Cambois and Jean-Marie Robine ........ ............ ................... 11 2. Possibilities and Problems in a Cross-Country Comparative Analysis of Long-Term Care Systems Trond O. Edvartsen ........................ .......... ............ ....... ....... ....... ............... 25 Part Two: Empirical Research into the Demand and Provision of Long-Term Care Services 3. Effects of Strategic Behavior and Public Subsidies on Families' Savings and Long-Term Care Decisions Frank A. Sloan, Thomas J. Boerger and Gabriel Picone .... ..................... 45 4. Women's Role in the Provision of Long-Term Care, Financial Incentives, and the Future Financing of Long-Term Care Sandra Nocera and Peter Zweifel............................................................. 79 5. Determinants of Institutionalization in Old Age Thomas Klein ............................................................................................ 103 6. The Impact of the Community Long-Term Care Insurance Law on Services for the Elderly in Israel Denise Naon ..... ....... .............. ............ ....... ........ ......... ..... .............. ........... 115 7. The Effect of Public Provision of Home Care on Living and Care Arrangements: Evidence from the Channeling Experiment Peter Kemper and Liliana E. Pezzin ........................................................ 125 v vi CONTENTS Part Three: Germany - A Model for Dealing with the Problems of Long-Term Care? 8. Social Protection for Dependence in Old Age: The Case of Germany Bernd Schulte ........................................................................................... 149 9. Determining the Long-Term Care Needs ofIndividuals Living in Private Households: Results from a Survey Ulrich Schneekloth .................................................................................. 171 10. The Long-Term Costs of Public Long-Term Care Insurance in Germany. Some Guesstimates Winfried Schmahl and Heinz Rothgang .. .......... ................ ....................... 181 Part Four: Theoretical Issues and Policy Recommendations 11. Long-Term Care Insurance and Trust Saving in a Two-Generation Model Peter Zweifel and Wolfram Striiwe .......................................................... 225 12. Long-Term Care - An Inter- and Intragenerational Decision Model Roland Eisen and Hans-Christian Mager .... ................ ...................... ..... 251 13. The Assessment and the Regulation of Quality in Long-Term Care Gabriele Johne ....................... ............ ..... ................. ....... ....... ................. 285 14. Almost Optimal Social Insurance for Long-Term Care Mark V. Pauly .......................................................................................... 307 Subject Index .................................................................................................. 331 Contributing Authors and Participants Prof. Dr. Norbert Andel Prof. Dr. Roland Eisen Johann Wolfgang Goethe-Universitat Johann Wolfgang Goethe-Universitat Frankfurt am Main Frankfurt am Main Institut flir offentliche Wirtschaft, Geld Institut flir Konjunktur, Wachstum und und Wiihrung Verteilung Professur flir Finanzwissenschaft Professur flir Wirtschafts- und D-60054 Frankfurt am Main Sozialpolitik D-60054 Frankfurt am Main Andreas Besche Eckhard Ha8Ier Verband der privaten Allianz Lebensversicherungs AG Krankenversicherung e. V. ReinsburgerstraBe 19 Bayenthalgiirtel 26 D-70178 Stuttgart D-50968 K51n Prof. Dr. Richard Hauser Prof. Dr. Friedrich Breyer Johann Wolfgang Goethe-Universitat Fakultat flir Wirtschaftswissenschaften Frankfurt am Main und Statistik Institut flir Konjunktur, Wachstum und UniversitatsstraBe 10 Verteilung D-78434 Konstanz Professur flir Sozialpolitik D-60054 Frankfurt am Main Emmanuelle Cam bois Thomas J. Hoerger Equipe INSERM Demographie et Sante Center for Health Policy Research and Centre Val d' Aurelle Education Pare Euromedicine 125 Old Chemistry Building F-34094 Montpellier Cedex 5 Durham NC 277 08 Gabriele Johne Prof. Dr. Diether Doring Universitat Trier Akademie der Arbeit in der Universitat Zentrum flir Arbeit und Soziales Frankfurt am Main D-54286 Trier Mertonstr. 30 D-60054 Frankfurt am Main Ph. D. Peter Kemper Department of Health & Human Trond O. Edvartsen Services Johann Wolfgang Goethe-Universitat Agency for Health Care Policy and Frankfurt am Main Research PflEG-Projekt 2101 East Jefferson Street D-60054 Frankfurt am Main Rockville MD 20852 vii viii CONTRIBUTING AUTHORS AND PARTICIPANTS Prof. Dr. Thomas Klein Liliana E. Pezzin Universitiit Heidelberg Department of Health & Human Institut flir Soziologie Services Sandgasse 9 Agency for Health Care Policy and D-69117 Heidelberg Research 2101 East Jefferson Street Tom J. Laetz Rockville MD 20852 US General Accounting Office Ernst Schwendler StraBe 5 Gabriel Picone D-60320 Frankfurt am Main Center for Health Policy Research and Education Prof. Dr. Leonard Miinner 125 Old Chemistry Building Universitiit Gottingen Durham NC 277 08 Abteilung flir Versicherungswissenschaft Prof. Jean Marie Robine Platz der Gottinger Sieben 3 Equipe INSERM Demographie et Sante D-37073 Gottingen Centre Val d' Aurelle Parc Euromedicine Hans-Christian Mager F-34094 Montpellier Cedex 5 Johann Wolfgang Goethe-Universitiit Frankfurt am Main PtlEG-Projekt Dr. Heinz Rothgang D-60054 Frankfurt am Main Universitiit Bremen Zentrum flir Sozialpolitik Denise Naon Parkallee 39 Brookdale Institute of Gerontology D-28209 Bremen and Adult Human Development in Israel Prof. Dr. Win fried Schmiihl .r.D.C. Hill Universitiit Bremen IL-Jerusalem 91130 Zentrum flir Sozialpolitik Parkallee 39 Sandra Nocera D-28209 Bremen Universitat ZUrich Institut flir Empirische Ulrich Schneekloth Wi rtschaftsforschung Infratest Sozialforschung Bi UmlisalpstraBe 10 Landsberger StraBe 338 CH-8006 ZUrich D-80687 MUnchen Prof. Dr. Mark V. Pauly The Wharton School of the University Dr. Bernd Schulte of Pennsylvania Max-Planck Institut flir auslandisches Health Care Systems Department und interantionales Sozialrecht 3641 Locust Walk LeopoldstraBe 24 Philadelphia PA 19104-6218 D-80802 MUnchen CONTRIBUTING AUTHORS AND PARTICIPANTS ix Prof. Dr. Frank A. Sloan Prof. Dr. Gert Wagner Duke University Ruhr-Universitat Bochum Center for Health Policy Research and Lehrstuhl flir Sozialpolitik und Education offentliche Wirtschaft 125 Old Chemistry Building D-447S0 Bochum Durham NC 277 OS Prof. Dr. Peter Zweifel Wolfram Striiwe Universitat Ziirich Universitat Ziirich Institut fiir Empirische Institut flir Empirische Wirtschaftsforschung Wirtschaftsforschung BliimlisalpstraBe 10 BliimlisalpstraBe 10 CH-S006 Ziirich CH-S006 Ziirich Dr. Karl-Heinz Wunner Stiirzelhofer Weg I D-9051S Altdorf INTRODUCTION In the long run, demographic trends and developments in family structure are expected to lead to a higher proportion of old and very old people in the popula- tion. These trends will likely cause an increased proportion of the national income being devoted to long-term care (LTC) services. In May 1994 both the German Bundestag (House of Representatives) and Bundesrat (Senate) passed the Bill on social LTC insurance. Taking into account almost 25 years of profound discussion, the solution adopted was astonishing for most of the interested community. The bill is limited in the main to issues of short-run financing; the material issues relating to the infrastructure of commu- nity services, their quality, and regarding nursing homes, were postponed. How- ever, the debate was not closed, and has been revolving around future problems. Given this background, the International Workshop "Alternatives for Ensur- ing Long-Term Care", held from August 28, to September 1, 1994 in Frankfurt (Main) was devoted to the following objectives: • to provide a detailed analysis of the arrangements and institutions designed to protect the disabled and dependent elderly people in various countries, and to try to evaluate their respective merits, e.g. in coping with the trends men- tioned above. • to discuss the projections of future costs of protection called forth in favor of dependent elderly, to assess the impact of improvements in disability-free life expectancy on the future cost of care and choices between informal and formal care.