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2012 Conference Presentation

Markets/regulationPolicy Italy

6 September 2012

The reform of the Italian cash-for-care system in times of economic recession. An example of evidence-based users’

Cristiano Gori, London School of Economics, United Kingdom
Carlos Chiatti, , United Kingdom
Mirko Di Rosa, , United Kingdom


Background. The Italian long-term care sector is characterized by a very low provision of care services and by the greater availability of cash-for-care benefits. The most common measure to support dependent older people is the indennità di accompagnamento, a cash allowance which is granted to all older people in need, is not means-tested, and provides the same amount regardless of users’ level of dependency. In 2008, 12.5% of older people received the indennità, which can be used to purchase care services and to directly employ care workers, with no regulation as to how the benefit is spent. In 2009, the total expenditure for the indennità was €12.4 billion. Last July 2011, the Ministry of Economy and Finance Giulio Tremonti presented to the Parliament a bill for the reform of the Italian Welfare, suggesting inter alia the introduction of means-tested requirements for the indennità. This measure was hypothesized to contribute to a budget saving of €4 billion in 2012, 16 billion in 2013 and 20 billion in 2014.

Objective. The paper has three objectives: (1) estimate the real savings for the State in case of a means-tested indennità. (2) describe the characteristics of those citizens that will no longer receive the indennità after such reform; (3) analyze alternative reforms of the indennità, not entailing the introduction of means-tested requirements.

Data and methods. First, using official data from the Italian National Institute of Pension and micro data on families income and wealth from a large panel surveyed by the Bank of Italy, we elaborated two possible scenarios. In order to stratify families according to wealth, we used the ISEE (“indicator of equivalent economic status”), the most common instrument used in Italy to evaluate socio-economic conditions of those citizens applying for public services and benefits. The Indicator calculates a comparable measure of wealth by combining income and wealth of citizens using a weighted formula. In a second step, a cluster-analysis was used to describe the families loosing the indennità. Finally, using a comparative approach we described alternatives reforms of the Italian indennità, looking at the characteristics of the cash-for-care schemes in the other EU Countries.

Results. The micro-simulation showed that, using ISEE threshold equal to € 40,000, the saving for the State after reforming the indennità could be €506 million in 2012, 1 billion in 2013 and 1.5 billion in 2014. In case of a lower threshold (€ 30,000), savings could increase up to €735 million in 2012, 1.471 billion in 2013 and 2.205 billion in 2014. The cluster analysis showed that the social costs of such reform could be very high, since among those users loosing the indennità there are many middle-class families with insufficient income to fund care at standard prices without the support of the indennità. The comparative analysis suggested that in the main EU Countries cash-for-care policies are not usually means-tested. Conversely, the Italian indennità is the only measure providing the same amount of money regardless to users’ needs.

Policy implications. The present work provided a sound and evidence-based reference for lobbying organizations criticizing the bill. After harsh criticisms from the Third Sector and users organizations, last December 2011, the newly established Italian Government decided to withdraw the bill.


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