Pieter Bakx

Going Formal or Informal, Who Cares? The Influence of Public Long-Term Care Insurance

International differences in long-term care (LTC) use are well documented, but not well understood. Using comparable data from two countries with universal public LTC insurance, the Netherlands and Germany, we examine how institutional differences relate to differences in the choice for informal and formal LTC. Although the overall LTC utilization rate is similar in both countries, use of formal care is more prevalent in the Netherlands and informal care use in Germany. Decomposition of the between-country differences in formal and informal LTC use reveals that these differences are not chiefly the result of differences in population characteristics but mainly derive from differences in the effects of these characteristics that are associated with between-country institutional differences. These findings demonstrate that system features such as eligibility rules and coverage generosity and, indirectly, social preferences can influence the choice between formal and informal care. Less comprehensive coverage also has equity implications: for the poor, access to formal LTC is more difficult in Germany than in the Netherlands.

Explaining Declining Rates of Institutional LTC Use in the Netherlands: A Decomposition Approach

The use of long-term care (LTC) is changing rapidly. In the Netherlands, rates of institutional LTC use are falling, whereas homecare use is growing. Are these changes attributable to declining disability rates, or has LTC use given disability changed? And have institutionalization rates fallen regardless of disability level, or has LTC use become better tailored to needs? We answer these questions by explaining trends in LTC use for the Dutch 65+ population in the period 2000-2008 using a nonlinear variant of the Oaxaca-Blinder decomposition. We find that changes in LTC use are not due to shifts in the disability distribution but can almost entirely be traced back to changes in the way the system treats disability. Elderly with mild disability are more likely to be treated at home than before, whereas severely disabled individuals continue to receive institutional LTC. As a result, LTC use has become better tailored to the needs for such care. This finding suggests that policies that promote LTC in the community rather than in institutions can effectively mitigate the consequences of population aging on LTC spending.

Can Risk Adjustment Prevent Risk Selection in a Competitive Long-Term Care Insurance Market?

When public long-term care (LTC) insurance is provided by insurers, they typically lack incentives for purchasing cost-effective LTC. Providing insurers with appropriate incentives for efficiency without jeopardizing access for high-risk individuals requires, among other things, an adequate system of risk adjustment. While risk adjustment is now widely adopted in health insurance, it is unclear whether adequate risk adjustment is feasible for LTC because of its specific features. We examine the feasibility of risk adjustment for LTC insurance using a rich set of linked nationwide Dutch administrative data. Prior LTC use and demographic information are found to explain much of the variation, while prior health care expenditures are important in reducing predicted losses for subgroups of health care users. Nevertheless, incentives for risk selection against some easily identifiable subgroups persist. Moreover, using prior utilization and expenditure as risk adjusters dilutes incentives for efficiency, but using multiyear data may reduce this disadvantage.

The Influence of Spouse Ability to Provide Informal Care on Long-Term Care Use

Objective: Informal care substitutes for or postpones formal long-term care (LTC) use, especially in the Netherlands, where informal care supply affects eligibility for public LTC. The effect of potential informal care supply within the household has received less attention. We examine the role of spouse’s physical ability to provide informal care in explaining LTC use and transitions.Method: We used Dutch respondents from waves 1 and 2 of the Survey of Health, Ageing and Retirement in Europe. A mixed multinomial logit regression is used to model the choice between no LTC use, informal LTC use only, and formal LTC use. Transitions into formal care use are modeled with a logit regression.Results: Spouse ability affects LTC use but living alone remains important after controlling for spouse ability. Other important determinants of use are having a child , age, disability and health status. Transitions are explained by informal care supply and changes therein, health and disability and the respondent’s age. Discussion: Spouse ability to provide informal care reduces use of formal LTC, which implies that future compression of morbidity/disability and its impact would lower demand for LTC, directly and through increased spouse ability to provide informal care.

Demand-side strategies to deal with moral hazard in public insurance for long-term care

Moral hazard in public insurance for long-term care may be counteracted by strategies influencing supply or demand. Demand-side strategies may target the patient or the insurer. Various demand-side strategies and how they are implemented in four European countries (Germany, Belgium, Switzerland and the Netherlands) are described, highlighting the pros and cons of each strategy. Patient-oriented strategies to counteract moral hazard are used in all four countries but their impact on efficiency is unclear and crucially depends on their design. Strategies targeted at insurers are much less popular: Belgium and Switzerland have introduced elements of managed competition for some types of long-term care, as has the Netherlands in 2015. As only some elements of managed competition have been introduced, it is unclear whether it improves efficiency. Its effect will depend on the feasibility of setting appropriate financial incentives for insurers using risk equalization and the willingness of governments to provide insurers with instruments to manage long-term care.

Will you still need me, will you still feed me when I'm 64? The health impact of caregiving to one's spouse

Abstract Informal care may substitute for formal long‐term care that is often publicly funded or subsidized. The costs of informal caregiving are borne by the caregiver and may consist of worse health outcomes and, if the caregiver has not retired, worse labor market outcomes. We estimate the impact of providing informal care to ones partner on the caregivers health using data from the Survey of Health, Ageing, and Retirement in Europe. We use statistical matching to deal with selection bias and endogeneity. We find that in the short run caregiving has a substantial effect on the health of caregivers and, for female caregivers, on their health care use. These effects should be taken into account when comparing the costs and benefits of formal and informal care provision. The health effects may, however, be short‐lived, as we do not find any evidence that they persist after 4 or 7 years.

A cost-effectiveness threshold based on the marginal returns of cardiovascular hospital spending

Abstract Traditionally, threshold levels of cost‐effectiveness have been derived from willingness‐to‐pay studies, indicating the consumption value of health (v‐thresholds). However, it has been argued that v‐thresholds need to be supplemented by so‐called k‐thresholds, which are based on the marginal returns to health care. The objective of this research is to estimate a k‐threshold based on the marginal returns to cardiovascular disease (CVD) hospital care in the Netherlands. To estimate a k‐threshold for hospital care on CVD, we proceed in two steps: First, we estimate the impact of hospital spending on mortality using a Bayesian regression modelling framework, using data on CVD mortality and CVD hospital spending by age and gender for the period 1994–2010. Second, we use life tables in combination with quality of life data to convert these estimates into a k‐threshold expressed in euros per quality‐adjusted life year gained. Our base case estimate resulted in an estimate of 41,000 per quality‐adjusted life year gained. In our sensitivity analyses, we illustrated how the incorporation of prior evidence into the estimation pushes estimates downwards. We conclude that our base case estimate of the k‐threshold may serve as a benchmark value for decision making in the Netherlands as well as for future research regarding k‐thresholds.

Can universal access and competition in long-term care insurance be combined?

In countries with a public long-term care (LTC) insurance scheme administered by multiple non-competing insurers, these insurers typically lack incentives for purchasing cost-effective LTC because they are not at risk for LTC expenses. Plans to introduce these incentives by allowing competition among risk bearing LTC insurers are likely to jeopardize universal access. Combining universal access and competition among risk bearing LTC-insurers requires an adequate system of risk adjustment. While risk adjustment is now widely adopted in health insurance, LTC-specific features cause uncertainty about the feasibility of risk adjustment for LTC insurance. We examine the feasibility of appropriate risk adjustment in LTC insurance by using a rich set of linked nationwide Dutch administrative data. As expected, prior LTC use and demographic information are found to explain much of the variation in individual LTC expenses. However, we find that prior health care expenditures are also important in reducing predicted losses for subgroups of health care users. Nevertheless, incentives for risk selection against some easily identifiable subgroups persist. Moreover, using prior utilization and expenditure as risk adjusters reduces incentives for efficiency, creating a trade-off between equity and efficiency. To ease this trade-off, data on individuals’ underlying needs for LTC are required.