TY - JOUR

T1 - Are Personal Budgets a Financially Sound Reform Option for the German Long-Term Care Insurance?

AU - Arntz, Melanie

AU - Thomsen, Stephan L.

PY - 2010

Y1 - 2010

N2 - In a long-run social experiment, personal budgets have been tested as an alternative home care program of the German long-term care insurance (LTCI). By granting the monetary value of inkind services in cash, personal budgets are considered to enable customized home care arrangements, thereby avoiding costly nursing home care and thus saving LTCI spending. However, personal budgets also compete with the already existing and less generous cash option of the LTCI. Any transition from the receipt of cash benefits to personal budgets thus challenges the view of personal budgets as a cost savings device, unless personal budgets sufficiently reduce the use of costly nursing home care to balance these extra costs. This paper therefore contrasts the short-term costs of implementing personal budgets with potential cost savings if personal budgets enhance the stability of home care and avoid costly nursing home care. For this purpose, the paper investigates the effects of personal budgets on the duration of home care until moving to a nursing home as well as the perceived stability of home care. Despite a positive effect of personal budgets on the stability of home care, LTCI spending is likely to increase in the short to medium run. In the long run, however, the expected transition to decreasing numbers of cash recipients favors the introduction of personal budgets.

AB - In a long-run social experiment, personal budgets have been tested as an alternative home care program of the German long-term care insurance (LTCI). By granting the monetary value of inkind services in cash, personal budgets are considered to enable customized home care arrangements, thereby avoiding costly nursing home care and thus saving LTCI spending. However, personal budgets also compete with the already existing and less generous cash option of the LTCI. Any transition from the receipt of cash benefits to personal budgets thus challenges the view of personal budgets as a cost savings device, unless personal budgets sufficiently reduce the use of costly nursing home care to balance these extra costs. This paper therefore contrasts the short-term costs of implementing personal budgets with potential cost savings if personal budgets enhance the stability of home care and avoid costly nursing home care. For this purpose, the paper investigates the effects of personal budgets on the duration of home care until moving to a nursing home as well as the perceived stability of home care. Despite a positive effect of personal budgets on the stability of home care, LTCI spending is likely to increase in the short to medium run. In the long run, however, the expected transition to decreasing numbers of cash recipients favors the introduction of personal budgets.

KW - Consumer-directed home care

KW - Long-term care

KW - Long-term care insurance

KW - Spending

UR - http://www.scopus.com/inward/record.url?scp=78349264975&partnerID=8YFLogxK

U2 - 10.1515/jbnst-2010-0402

DO - 10.1515/jbnst-2010-0402

M3 - Article

AN - SCOPUS:78349264975

VL - 230

SP - 378

EP - 402

JO - Jahrbucher fur Nationalokonomie und Statistik

JF - Jahrbucher fur Nationalokonomie und Statistik

SN - 0021-4027

IS - 4

ER -