Agency Problem in Long Term Care Market

Abstract

Markets that involve incomplete information cause agency problems. In Japan, three years have passed since April 2000, when the long term care insurance system was implemented. The health insurance system and long term care insurance system make quasi-markets. Here, the author analyzed the long term care market by using the Principal-Agent theory.
We found that the agent for a person who needs long term care may not be one but many, including a care-manager or a medical doctor. In other words, a multi agent system may be preferable in long term care market.