1. Long term care, wealth and housing
Marija Bočkarjova
Lexmy van den Boogaard
Johan J. Polder
Jan Rouwendal
VU University Amsterdam
Department of Spatial Economics
Tilburg University
TS Social and Behavioral Sciences
Tranzo, Scientific center for care and welfare
Tinbergen Institute
International Pension Workshop
Amsterdam, January 2015

2. Outline Motivation & Background Data and methods
Distribution of health costs, wealth and housing
Modelling of LTC use and expenditures
Conclusions & implications

3. Research background
This research “Home equity and the demand for and cost of long term care” is financed by the NETSPAR small vision grants
How does (housing) wealth relate to the need and use of long term care (LTC) among the elderly ?
What is the simultaneous distribution of LTC costs and (housing) wealth among the elderly and to what extent will co-payments dependent on housing wealth cause liquidity problems?
Can admission to a nursing home (or home for the elderly) be postponed by using home equity for financing care at home?
Is there a market for new financial products for paying LTC using housing wealth? Would such products raise social welfare?

4. Motivation
Health care costs show a tremendous increase relative to GDP growth
c.a. 12% of GDP in the Netherlands, 2012
High proportion of health costs are due to LTC costs in NL
twice the OECD average at 3.7% of GDP
broad coverage of LTC
relatively low co-payments
Further rise in LTC costs among the elderly due to ageing
65+ make now 16% of population, to rise up to 26% in 2040
increasing share of very old cohort
Inability to sustain persistently rising LTC costs by governments in the long term

5. Focus Changing institutional context of health care provision in NL
Changing legislation (WMO + WLZ will replace AWBZ as of 2015)
Changing actors / roles in health care giving
(Expected) consequences:
Increasing co-payments for LTC (based on household wealth)
Increasing extramuralisation of care
We focus on two central aspects of this policy change:
the housing situation of elderly people
wealth distribution of elderly people in connection to their use and expenditure of LTC

6. Data and methods

7. The Data Micro-data available from CBS
the Dutch Housing Survey (WoON 2009)
Dutch households aged 55+ plus
housing characteristics and health (ADL/HDL indicators)
Municipal Registrations (2009)
Demographic
Central Adm. Office (CAK) and Care Assessment Centre (CIZ)
the long-term care use and amount ( )
Tax Office (2009)
wealth
N = 29,128

8. Methods Descriptive statistics Econometric analysis
Simultaneous distribution of wealth, home equity and LTC
Econometric analysis
2 part models
IV models and 2pm with control function

9. Results

10. Sample statistics

11. Sample statistics: LTC
a N=4,623 for the full sample b N=4,079 for the full sample c N=1,601 for the full sample

12. Sample statistics: LTC
The eligibility for LTC is assessed by the Care Assessment Centre (CIZ) and is based on national standardized indication procedures.
a N=4,623 for the full sample b N=4,079 for the full sample c N=1,601 for the full sample

13. Sample statistics: LTC
The eligibility for LTC is assessed by the Care Assessment Centre (CIZ) and is based on national standardized indication procedures.
ZZV: Non-institutionalized care includes :
- Personal Care (PV), - Nursing (VP), - Individual Assistance (BGI).
a N=4,623 for the full sample b N=4,079 for the full sample c N=1,601 for the full sample

14. Sample statistics: LTC
The eligibility for LTC is assessed by the Care Assessment Centre (CIZ) and is based on national standardized indication procedures.
ZZV: Non-institutionalized care includes Personal Care (PV), Nursing (VP) and Individual Assistance (BGI).
ZMV: Institutionalised care is provided in: - Nursing Homes (VV), - Disabled Care (GHZ), - Mental Health Care (GGZ).
a N=4,623 for the full sample b N=4,079 for the full sample c N=1,601 for the full sample

15. Cross-tabs wealth & LTC

16. Cross-tabs wealth & LTC
Raw sample mean LTC costs (formal and informal care)
Are higher for persons without wealth
Are higher for renters compared to home owners

17. Cross-tabs wealth & LTC (conditional means)

18. Cross-tabs wealth & LTC (conditional means)
Higher LTC costs are due to:
Higher incidence rate
Higher average costs for renters and individuals without wealth among the users of care

19. Simultaneous distribution of
WEALTH & LTC costs
Mean LTC costs decrease as household wealth increases

20. Simultaneous distribution of residual hsh wealth & LTC (raw means)

21. Simultaneous distribution of residual hsh wealth & LTC (raw means)

22. Simultaneous distribution of residual hsh wealth & LTC (raw means)

23. Simultaneous distribution of
HOME EQUITY & LTC costs
No clear-cut pattern between mean LTC costs and the amount of home equity

24. Simultaneous distr. of home equity & LTC (raw means)

25. Simultaneous distribution of wealth & LTC (raw means)

26. Simultaneous distr. of home equity& LTC

27. Preliminary results
Particularly high average LTC costs are found among individuals without residual (financial) wealth as well as without home equity (renters).
This is due to
High incidence rate
High average expenditure per LTC user

28. WEALTH, HOUSING & LTC costs
Econometric analysis
WEALTH, HOUSING & LTC costs
The effect of wealth and housing variables remains after controlling for demographic and health characteristics

29. LTC UTILISATION

30. LTC EXPENDITURE

31. Conclusions and Implications

32. Conclusions Raw sample mean LTC costs (formal and informal care)
Are higher for persons without wealth
Are higher for renters compared to home owners
Higher LTC costs are due to:
Higher incidence rate
Higher average costs for renters and individuals without wealth among the users of care
Mean LTC costs decrease as household wealth increases
No clear-cut pattern between mean LTC costs and the amount of home equity

33. Conclusions Controlling for demographic and health characteristics…
… the effect of financial & housing wealth remains negative for the formal care use and expenditure;
… the effect of living in an elderly dwelling is increases both the probability and the amount of formal and informal care.
Endogeneity remains a problem, however…

34. Implications
(Increasing) co-payments for LTC care do not seem to be justified…
… on the basis of residual (financial) wealth because individuals with lower wealth, who are most intensive LTC users, will be affected the most
… on the basis of housing wealth (home equity) because it will only affect home owners, who are least intensive LTC users
The effect of elderly dwelling on LTC seems to reflect self- selection

35. Thank you!