The
h Role
l off Genetics and
d Preferences
f
in Long-Term Care Decisions
Norma B. Coe
Center for Retirement Research at Boston College
Courtneyy Harold Van Houtven
Duke University Medical Center, Department of Veterans Affairs
AcademyHealth – Health Economics Interest Group Meeting
JJune 26, 2010
Background
LTC is one of the biggest uninsured risks facing the
elderly today (Brown and Finkelstein, 2007).
• Affects savings, bequests, and finances of elderly
and offspring
1
Background
Why modest LTC insurance take-up is of academic
and
d policy
l concern:
• Not too expensive
p
((Brown and Finkelstein, 2007)
7)
• Medicaid crowd-out (Brown et al., 2006)
• Public financing: 1% of GDP; expected to rise
• Recent passage off CLASS Act
2
Do People Have the Information?
Could be misperceptions about:
• What Medicare covers
• Actual costs of LTC
• Willingness of family to provide informal care
• “Costs”
Costs to family of providing informal care
3
Informal Care Providers Know
Informal care is the most common type of long-term care.
• 22 million households are estimated to provide
i f
informal
l care to a disabled
di bl d adult
d l over age 50
Adult
Ad
l children
hild
are the
h most common source in
i terms off
numbers, and may be increasing.
• Differential life expectancy
• Increased
I
d divorce
di
rates
t
• Aging baby boomers
4
How Does Information Impact
Future LTC Choices?
Does providing
D
idi informal
i f
l care change
h
the
h caregiver’s
i ’ own
future care needs or preferences?
Does providing informal care increase the take-up of
private
i
long-term
l
care insurance?
i
?
5
How Does Information Impact
Future LTC Choices?
Potential for implications:
p
• Demands for LTC arrangements
g
• Costs of LTC
• Who bears these costs?
6
What Information Is Learned?
PARENT
IN-LAW
ME
Genetics
Experience
Experience
p
SIBLINGS
Genetics
----
7
Measures
• Formal Care:
– What
h is the
h percent chance
h
that
h you will
ll have
h
to move to a nursing home in the next five
years??
9
Measures
• Informal Care:
– Suppose in the
h future,
f
you needed
d d help
h l with
h
basic personal care activities like eating or
d
dressing.
Do you have
h
relatives
l
or ffriends
d
who would be willing and able to help you
over a long
l
period
i d off time?
i ?
– Children/Children-in-law
10
Measures
• Informal Care:
– Did
d you spend
d a totall off 100 or more h
hours
(since previous wave interview month-year/in
the
h llast two years) h
helping
l
b
both
h
parents/mother/father with basic personal
activities like
lk d
dressing, eating, or b
bathing?
h ?
11
Estimation
LTCi , t  2    1A i, t   2 H i ,t   3 ICi ,t   4 X i ,t  i   t   i ,t
• LTC: Future long-term care preference
• A:
A ever provided
id d care to a parent
• H: ADL, IADL, cognition, chronic illness, health
worsened, used nursing home
p
number of children,,
• IC: alternative care options:
married
• X: risk aversion
aversion, full set of age dummies
• Individual and year fixed effects
13
Caregiving Patterns
Formal Care Informal Care
Sample
Sample
0 108
Probability of entering nursing home 0.108
0.556
Expect informal care from children
0.436
43
p
Anyy familyy informal care provided
0.304
Ever a caregiver
0.209
Own parent
0.133
l
In-law
0.293
Siblings
0 184
0.184
O
Own
parent
0.145
In-law
0.094
0
094
0.579
443
0.443
0.304
0.207
0.138
8
0.305
0 188
0.188
0.155
14
Results: Future Formal Care
I
Any family care
II
III
-0.0078
(0 0069)
(0.0069)
Respondent provides informal care
0.0008
(0.0089)
-0.0113
(0 0085)
(0.0085)
Sibling provides informal care
Parents receive informal care
-0.0221**
(0.0094)
-0.0096
(0 0095)
(0.0095)
In-laws receive informal care
-0.0189
(0.0121)
0.0249 **
(0 0126)
(0.0126)
-0.0222 *
(0.0115)
0.0017
(0 0119)
(0.0119)
Respondent provides care to parent
Respondent provides care to in-law
Sibling provides care to parent
Sibling provides care to in-law
Observations
R-squared
IV
17,088
0.59
17,088
0.59
17,088
0.59
17,088
0.59
15
Results: Future Informal Care
I
Any family care
II
III
-0.0001
(0 0155)
(0.0155)
Respondent provides informal care
0.0210
(0.0202)
0.0002
(0 0190)
(0.0190)
Sibling provides informal care
Parents receive informal care
0.0181
(0.0212)
-0.0087
(0 0210)
(0.0210)
In-laws receive informal care
0.0704 **
(0.0275)
-0.0192
(0 0282)
(0.0282)
-0.0039
(0.0258)
-0.0007
(0 0263)
(0.0263)
Respondent provides care to parent
Respondent provides care to in-law
Sibling provides care to parent
Sibling provides care to in-law
Observations
R-squared
IV
18,231
0.65
18,231
0.65
18,231
0.65
18,231
0.65
16
Do These Changes Lead to LTCI?
• “Not
Not including government programs
programs, do you
now have any long-term care insurance that
specifically covers nursing home care for a year
or more or any part of personal or medical care
in yyour home?”
LTCI i , t  2    1 Ai,t   2 NH i,t   3 ICi ,t   4 H i ,t   5 X i ,t   t   i ,t
• NH is the self-reported probability of entering a
nursing home in the next five years
• Healthy enough to get LTCI: No ADLs, IADLs
or stroke
17
Are the Expectations Right?
Self-reported
probability
b bilit
Actual NH
use
Difference
Student T-Test
(t t ti ti )
(t-statistic)
Respondent ever provides care to parent
R
Respondent
d t never provides
id care tto parentt
0.051
0.049
0.048
0.064
6
0.002
-0.015
8
8.27
Respondent ever provides care to in-law
R
Respondent
d t never provides
id care tto iin-law
l
0.055
0.049
0.033
0.064
6
0.022
-0.016
6
15.2
Sibling ever provides care to parent
Sibli never provides
Sibling
id care to
t parentt
0.049
0.050
0.051
0.063
6
-0.003
-0.013
4.66
66
Sibling ever provides care to in-law
Sibli never provides
Sibling
id care to
t in-law
i l
0.050
0.049
0.038
0.065
6
0.012
-0.015
11.64
6
19
What about Endogeneity?
Become a caregiver
Probabilityy of entering
g nursing
g home in
five years
0.0720
(0.0471)
Child p
provides care in future
Observations
Become a caregiver
0.0 85
0.0185
(0.0190)
1993
1880
21
Distribution of Probability of
Nursing Home Use
70%
Percent off Sample
60%
50%
40%
30%
20%
10%
0%
0
0
.1
01
0.1
.2
02
0.2
.3
03
0.3
.4
04
0.4
.5
05
0.5
.6
06
0.6
.7
07
0.7
.8
08
0.8
.9
09
0.9
1
Probability of Entering a Nursing Home in Next 5 years
Source: Authors
Authors’ tabulations of the 1998 wave of the Health and Retirement Study.
22