TY  - JOUR
AU  - Feinstein,Jonathan S.
AU  - Keating,Edward G.
TI  - An Economic Analysis of Life Care
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4155
PY  - 1992
Y2  - September 1992
UR  - http://www.nber.org/papers/w4155
L1  - http://www.nber.org/papers/w4155.pdf
N1  - Author contact info:
Jonathan Feinstein
Yale School of Management
Box 20-8200
New Haven, CT 06520-8200
Tel: 203/432-5978
Fax: 203/432-6974
E-Mail: jonathan.feinstein@yale.edu
AB  - Life care communities offer long term care to the elderly in the context of a residential community. Residents move into a life care community while still relatively young (though typically past age 65), initially occupying an independent living unit situated in a living complex similar to a retirement community. Later, when a resident requires more intensive care, she moves to an on-site nursing facility. We present an economic analysis of the life care industry. Our model includes a detailed specification of elderly couples' utility, a description of elderly morbidity and mortality experiences, and a formulation of the life care contract. Using extensive computer simulations we show that life care offers two main advantages to elderly as compared with stand-alone nursing homes: (i) reduced mobility costs and nearness to spouse and friends when sick; and (ii) insurance, linked to a rebate paid to the couple's heirs. We also investigate regulation of life care and the effects stemming from the risk of operator bankruptcy.
ER  -