Out-of-pocket payments for nursing home residents: Balancing financial protection with incentives for efficient use

Implementing a cap on lifetime out-of-pocket payments could improve financial protection for individuals with high care needs in nursing homes.

This research article, published by VoxEU, discusses the importance of designing out-of-pocket payments for nursing home care to balance the goals of protecting older individuals against excessive costs and limiting public spending on care, drawing on a study of a Dutch reform. It explores how co-payments influence nursing home admissions and financial risk, finding evidence of moral hazard and suggesting potential improvements such as capping lifetime out-of-pocket payments to enhance financial protection while maintaining efficiency in the long-term care system.