Little is known about the price sensitivity of demand for home care of the disabled elderly. We partially fill this knowledge gap by using administrative data on the beneficiaries of the main French home care subsidy program in a department and exploiting interindividual variation in provider prices. We address the potential endogeneity of prices by taking advantage of the unequal spatial coverage of providers and instrumenting price by the number of municipalities served by a provider. We estimate a price elasticity of around −0.4 that is significantly different from both 0 and −1. This less than proportionate response of consumption to price has implications for the efficiency and redistributive impact of variation in the level of copayments in home care subsidy schemes.

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Keywords censored regression, disabled elderly, home care, long-term care, price elasticity
JEL Truncated and Censored Models (jel C24), Consumer Economics: Empirical Analysis (jel D12), Government Policy; Regulation; Public Health (jel I18), Economics of the Elderly; Economics of the Handicapped (jel J14)
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Journal Health Economics
Roquebert, Q, & Tenand, M. (2017). Pay less, consume more? The price elasticity of home care for the disabled elderly in France. Health Economics, 26(79), 1162–1174. doi:10.1002/hec.3531