Policy Implications of the Demand for and Supply of Informal Long-term Care

This research has direct implications for policies aimed at increasing the welfare of the elderly and disabled who use long-term care. There are likely strong linkages between various policies that provide old-age support, e.g., Social Security, Medicare, Medicaid, and Supplemental Security Income (SSI). It is important to account for this interdependence when evaluating various reform proposals. Would more generous Medicare or Medicaid coverage of long-term care increase Social Security revenues and reduce future SSI spending by allowing would-be providers of informal care (usually adult children) to remain attached to the labor force instead of providing care? How are households likely to change their savings behavior in response to changes in their out-of-pocket costs of different types of long-term care? How would financial and time transfers between parents and children respond to changes in long-term care costs? The proposed research will address these questions and provide insights into how households and extended families are likely to respond to various policies and what the ultimate consequences of the policies will be for welfare.