A microeconomic analysis of the impact of estate recovery for long-term care

France’s personalized autonomy allowance (APA) was created in 2002 to address the problem of caring for dependents. The allowance is in the form of a payment of a portion of the expense of personal and homecare services (“copayment”). This allowance is universal and is available to anyone over the age of 60. Eligibility and the amount allocated to eligible persons depends on the level of dependency, and the amount of expense remaining to be paid is based on income.

The generosity of the social security system has, however, been called into question by the growing number of dependent persons in France (due to longer life expectancy) and the anticipated influx of baby boomers into the ranks of the elderly. Society has to make strategic choices regarding the types of care (institutionalization or homecare) and how they are funded (increase in social security deductions, premium assistance for private insurance policies). Lawmakers in France have chosen to extend assistance to dependent seniors for their homecare expenses, which very few other countries offer. The APA shows the nation’s willingness to support homecare for seniors. This fact may have interesting social implications because it implies increased involvement by the family entourage in the provision of care on a daily basis. Nevertheless, this allowance has proven costly to the national budget (EUR 5 billion).