New Study Examines Impact of Possible Home-Care Subsidy

A study released in February by CESIFO constructs a model to examine how a public home care subsidy for seniors would impact a family’s spending on in-home care and the decisions of the family overall when it comes to that care.

The study, titled “Fiscal Incidence when both Individual Welfare and Family Structure Matter: The Case of Subsidization of Home-Care for the Elderly,” looks into the way a public subsidy would impact the decisions a family makes when it comes to in-home care for seniors. Often, that care is provided by a family member, for which some states currently offer payment.

The model weighs the income of a caregiver versus the amount spent on in-home care, with one scenario finding that when an adult child caregiver earns more than $28 per hour, they begin to purchase formal care.

In the presence of a government subsidy, the adult caregiver eliminates the purchase of formal care, but will increase the level of informal care he or she provides.

View the study by CESIFO.