Journal of Political Economy Vol. 133 No. 1 2025
Long-Term Care Insurance and the Family
Abstract
This paper examines whether informal care by family members influences the demand for long-term care insurance. Motivated by evidence that the availability of informal caregivers correlates with lower insurance demand and that informal care substitutes for formal care, I estimate a dynamic model of long-term care decisions between an elderly parent and her adult child. The availability of informal care lowers demand for insurance by 7 percentage points and suppresses Medicaid spending. A policy that provides equivalent cash benefits for informal care for such families can generate meaningful increases in insurance demand and family welfare and decreases in Medicaid spending.
- DOI
- 10.1086/732887
- Volume
- 133
- Issue
- 1
- Pages
- 1-52
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref