Policy Study Policy Issues and Challenges in Welfare Policies for Elderly Care December 31, 2020

Series No. 2020-06
December 31, 2020
- Summary
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With rapid aging, pubic expenditure on long-term care (LTC) is expected to increase significantly. The financial burden on LTC will be even greater as women’s active economic activities and weakening social norms of elderly care are expected to reduce informal care by families. However, currently projected LTC expenditures do not take into account the decline in informal care, and as such, is highly likely to be underestimated. This study examines the relationship between informal care and formal care for the elderly, and projects future LTC expenditure according to the change in informal care. Also, this study investigates the implicit costs of informal care, such as a decrease in the economic activity and quality of life of caregivers, and discusses policy directions to reduce these costs and support informal care.
The empirical results show that informal care by the children serves as a partial substitution to formal care, and this effect is more evident among those aged 75 or older. Given the estimated substitution effect between informal care and formal care, the reduction in informal care is expected to increase LTC expenditure by 17 to 19%. On the other hand, informal care is provided at the expense of family members. The results show that the provision of informal care decreases the labor force participation rate and increases the probability of retirement. Also, the provision of informal care has a negative effect on the quality of life of caregivers. The cost of informal care increases as the period of care is prolonged.
Informal care is important in that it can reduce government expenditures related to elderly care and help the elderly maintain their lives at home. However, we need to take into account the costs paid by caregivers. In this sense, the support for informal care needs to be strengthened. It is necessary to encourage the use of family leave and short-term care to provide temporary respite to caregivers, and to expand psychological counseling and treatment for them. Also, family care leave and work-hour reduction for family care should be promoted at work. In order to achieve sustainable and high-quality elderly care, it is important to make policy efforts to properly share the role of elderly care between the government and informal sector.
- Contents
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Preface
Executive Summary
Chapter 1 Introduction
Chapter 2 Overview of Elderly Care Systems
Section 1 Long-Term Care (LTC) Insurance System
Section 2 Elderly Care Services
Section 3 Integrated Community Care
Chapter 3 Current Status and Trends in Elderly Care Provision
Section 1 Cross-Sectional Analysis
Section 2 Cohort Analysis
Chapter 4 Substitution Between Informal and Formal Care
Section 1 Existing Literature
Section 2 Research Design
Section 3 Data
Section 4 Analysis Results
Section 5 Conclusion
Chapter 5 Costs of Informal Care
Section 1 Costs to Economic Activities
Section 2 Costs in Quality of Life Reduction
Section 3 Conclusion
Chapter 6 Projections of Informal Care and Long-Term Care Insurance Costs
Section 1 Cost Projection Methods
Section 2 Descriptive Statistics
Section 3 Cost Projection Results
Section 4 Conclusion
Chapter 7 Policy Directions for Improving Informal Care Support
Section 1 Existing Informal Care Support Policies
Section 2 Directions for Improving Informal Care Support Policies
Chapter 8 Conclusion
References
ABSTRACT
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