EuHEA Seminar Series spring 2021
EuHEA seminar series, every Thursday at 14:00.
Presenting May 20th
Ricardo Rodrigues: From each according to means, to each according to needs? Distributional effects of abolishing asset-based payments for residential care in Austria
Chair: Pedro Pita Barros
Discussant: Bram Wouterse
The seminars are for free.
Objectives: As in other European countries, users of residential care in Austria were required to contribute to the costs of residential care based on both their income and assets. This asset-based out-of-pocket payment (OPP) for residential care – denominated Pflegeregress – was abolished in 2018. There is currently no empirical evidence on the distributional effect of this measure across income groups. This study thus aims to answer the following research questions: how was Pflegeregress distributed across different income and home ownership groups before 2018 and what were the distributional consequences of its abolishment?
Methods: The study uses a matched administrative (residential care users and mortality tables) and survey (SHARE, wave 6 for Austria) dataset on which a purposely built micro-simulation model was applied. The micro-simulation model estimates the annual OPPs for residential care borne by individuals 65+ for a reference year (2015). The distributional impact is assessed through a series of measures, including Concentration Indices (CI) and Curves (CC) and OPPs adjusted for need.
Results: The findings from the micro-simulation model show that in absolute value, users from the upper income quintile paid the highest total OPPs. However, asset-based OPPs (i.e. Pflegeregress) represented both a higher share of total OPPs paid and a higher proportion of the financial resources of lower income users, with a large share of the Pflegeregress financed through housing assets of home owners. The CC show that the 20% poorest individuals accounted for 25% of the estimated Pflegeregress paid in 2015. This is in contrast with the majority of higher-income individuals who could cover residential care fees from their income alone, without resorting to assets. Adjusting for need shows that this distribution was very much driven by the concentration of residential care in less affluent individuals. The abolishment of the asset-based OPPs for residential care in Austria thus benefited mostly those in the lower income quintiles.
Discussion: The Pflegeregress fell disproportionately on low-income residential care users, which means that the regressive nature of Pflegeregress made this group the largest beneficiary of its abolishment. Given how the distribution of asset-based OPPs was influenced by residential care use and duration – both concentrated on less affluent individuals – it is questionable whether asset-based OPPs in residential care are able to target payments to wealthier individuals. Other financing options such as earmarked inheritance taxes or social insurance schemes that decouple financing from use could be alternatives to circumvent the adverse distributional effects of asset-based OPPs. Our findings show the relevance of considering the distributional implications of different financing options for care.
More about: Ricardo Rodrigues
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In response to the cancellation of the in-person EuHEA 2020 conference in Oslo, the EuHEA Seminar Series was launched with the joint efforts of Oslo’s scientific committee, EuHEA and countries’ representatives. Invitation of seminar speakers was initially guided by review scores for papers submitted to the EuHEA 2020 conference in Oslo. The web-based seminars provided a venue for bringing together the Health Economics community for sharing and discussing research. Following the success of the virtual seminar series in fall 2020, seminars will continue in 2021.