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dc.contributor.authorCremer, Helmuthen_US
dc.contributor.authorRoeder, Kerstinen_US
dc.date.accessioned2012-08-03en_US
dc.date.accessioned2012-08-20T10:37:57Z-
dc.date.available2012-08-20T10:37:57Z-
dc.date.issued2012en_US
dc.identifier.urihttp://hdl.handle.net/10419/61051-
dc.description.abstractThis paper examines whether myopia (misperception of the long-term care (LTC) risk) and private insurance market loading costs can justify social LTC insurance and/or the subsidization of private insurance. We use a two-period model wherein individuals differ in three unobservable characteristics: level of productivity, survival probability and degree of ignorance concerning the risk of LTC (the former two being perfectly positively correlated). The decentralization of a first-best allocation requires that LTC insurance premiums of the myopic agents are subsidized (at a Pigouvian rate) and/or that there is public provision of the appropriate level of LTC. The support for the considered LTC policy instruments is less strong in a second-best setting. When social LTC provision is restricted to zero, a myopic agent's tax on private LTC insurance premiums involves a tradeoff between paternalistic and redistributive (incentive) considerations and we may have a tax as well as a subsidy on private LTC insurance. Interestingly, savings (which goes untaxed in the first-best but plays the role of self-insurance in the second-best) is also subject to (positive or negative) taxation. Social LTC provision is never second-best optimal when private insurance markets are fair (irrespective of the degree of the proportion of myopic individuals and their degree of misperception). At the other extreme, when the loading factor in the private sector is sufficiently high, private coverage is completely crowded out by public provision. For intermediate levels of the loading factors, the solution relies on both types of insurance.en_US
dc.language.isoengen_US
dc.publisherCESifo Münchenen_US
dc.relation.ispartofseriesCESifo Working Paper: Public Finance 3843en_US
dc.subject.jelD91en_US
dc.subject.jelH21en_US
dc.subject.jelI13en_US
dc.subject.ddc330en_US
dc.subject.keywordlong-term careen_US
dc.subject.keywordmyopiaen_US
dc.subject.keywordoptimal taxationen_US
dc.subject.stwPflegeversicherungen_US
dc.subject.stwZeitpräferenzen_US
dc.subject.stwOptimale Besteuerungen_US
dc.subject.stwPrivatversicherungen_US
dc.subject.stwVersicherungsprämieen_US
dc.subject.stwSubventionen_US
dc.subject.stwTheorieen_US
dc.titleLong-term care policy, myopia and redistributionen_US
dc.typeWorking Paperen_US
dc.identifier.ppn72057918Xen_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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