Long-Term Care

We examine whether long-term care (LTC) experience helps explain the low demand for long-term care insurance (LTCI). We test if expectations about future informal care receipt, expectations about inheritance receipt, and LTCI purchase decisions vary between individuals whose parents or in-laws have used LTC versus those who have not. We find parental use of a nursing home decreases expectations that one's children will provide informal care, consistent with the demonstration effect. Nursing home use by in-laws does not have the same impact, suggesting that individuals are responding to information gained about their own aging trajectory. Nursing home use by either a parent or in-law increases LTCI purchase probability by 0.8 percentage points, with no significant difference in response between parents' and in-laws' use. The estimated increase in purchase probability from experience with LTC is about half the previously estimated increase from tax policy-induced price decreases.

To examine the financial characteristics of residents in assisted living and independent living communities and to see how they currently pay for their care arrangements, we surveyed 2,617 residents in assisted living and independent living communities. We asked them how they pay for their current costs and verified their answers by examining self-reported information on their cost and income. Residents stated that they are largely paying for their community costs independently. Approximately one third of respondents reported using their assets and income to cover their current costs. The data supported the notion that individuals living in assisted living and independent living communities are largely mid- to high-income elderly. However, the cross-sectional analysis showed that length of time in the community was positively associated with paying for their expenses independently out of income, after controlling for many confounders including age, education, and lifetime earnings to try to rule out differential longevity and differential selection over time. Further longitudinal analysis is needed to understand the cause and the implications of the positive correlation between ability to pay one's bills out of income and the length of time in the community before conclusions about spend-down can be made.

We examine the physical and mental health effects of providing care to an elderly mother on the adult child caregiver. We address the endogeneity of the selection in and out of caregiving using an instrumental variable approach, using the death of the care recipient and sibling characteristics. We also carefully control for baseline health and work status of the adult child. We explore flexible specifications, such as Arellano–Bond estimation techniques. Continued caregiving over time increases depressive symptoms and decreases self-rated health for married women and married men. In addition, the increase in depressive symptoms is persistent for married women. While depressive symptoms for single men and women are not affected by continued caregiving, there is evidence of increased incidence of heart conditions for single men, and that these effects are persistent. Robustness checks indicate that these health changes can be directly attributable to caregiving behavior, and not due to a direct effect of the death of the mother. The initial onset of caregiving has modest immediate negative effects on depressive symptoms for married women and no immediate effects on physical health. Negative physical health effects emerge 2 years later, however, suggesting that there are delayed effects on health that would be missed with a short recall period. Initial caregiving does not affect health of married men. Published in 2009 by John Wiley & Sons, Ltd.