Preferences for in-kind and in-cash home care insurance

https://doi.org/10.1016/j.jhealeco.2022.102626Get rights and content
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Highlights

  • We measure willingness to pay (WTP) for different types of home care insurance.

  • Majority value in-kind and in-cash home care insurance above the actuarial premium.

  • WTP is heterogeneous and decreases on average with the amount of coverage.

  • For in-kind care, WTP varies with circumstances, preferences, and expectations.

  • In contrast, in-cash support is valued regardless of respondent characteristics.

Abstract

We study preferences for different types of home care insurance using a discrete choice experiment. We consider domestic, personal, and social care, a home care annuity, and a lump-sum for home adaptations. To understand variation in preferences, we relate willingness to pay to personal circumstances, preferences, and expectations. We find that the majority value in-kind and in-cash insurance above the actuarial premium. While most respondents value coverage for basic levels of support, we find diminishing marginal utility for higher levels of support. For in-kind care, willingness to pay is positively associated with respondent characteristics: being single, household income, home ownership, risk aversion, low bequest motives, expected length of home care use, expected expenditures when in need of care, and low expected availability of informal care. In contrast, in-cash support is valued regardless of respondent characteristics, possibly because its inherent flexibility. These results contribute to the design of insurance schemes for home care.

Keywords

Long-term care insurance
Home care
Willingness to pay
Discrete choice experiment
Saving motives
Health expectations

JEL classification

D14
I13
J14
J18

Cited by (0)

The authors thank the editor, Luigi Siciliani, and two anonymous referees for helpful comments, and Netspar for support. In addition, the authors are grateful to the comments and suggestions by Esther de Bekker-Grob, Raymond Montizaan, Bram Wouterse, Ceu Mateus, Erik French, Giacomo Pasini, Pascal St-Amour, and seminar and conference participants at the Ca’ Foscari University of Venice, Univerity of Groningen, Tilburg University, European Health Economics Association conference, International Health Conference, Lowlands Health Economic Study Group conference, and Netspar International Pension Workshop. Jochem de Bresser gratefully acknowledges financial support of the research programme Innovational Research Incentives Scheme Veni with project number 451-15-018, which is financed by the Netherlands Organisation for Scientific Research (NWO).