Assessing the implications of long term care policies in italy: a microsimulation approach

Abstract

This paper projects the characteristics of the long-term disabled in Italy and the evolution of total public expenditure for long-term care over the next four decades. The future dynamics of ltc expenditure in Italy is of particular relevance for two reasons: the limited and insufficient level of public expenditure currently targeted to the disabled, and the perspective, in the next few decades, of one of the most rapid ageing processes in the world.
The analysis is carried out using a dynamic microsimulation model that estimates the
evolution of the social and economic structure of the Italian population. A disability module is built under two different hypotheses about the process generating the probability of being disabled: a pure ageing scenario where the probability of becoming disabled is fixed for each age, and an alternative scenario where the risk of disability is endogenous to changes in life expectancy and in other characteristics of the population. After the projection of the future structure of the pool of the disabled population, the paper studies the dynamics of public ltc expenditure.