Reforming Consumer Directed Care in Germany: Opening the Door for a Moral Hazard?

This paper evaluates the extent of support of formal and informal caregivers for recipients of a professionally assisted consumer-directed program compared (Personal Budgets) to recipients of standard types of home care benets of the German long-term care insurance, i.e. agency services and cash payments. The evaluation makes use of a long-run social experiment at seven dierent sites in Germany with a random assignment into a treatment group receiving personal budgets and a control group of standard benet recipients. The results show that personal budgets yield better care outcomes compared to agency services. In contrast, personal budgets do not improve care outcomes compared to the much less generous cash payments.