Many studies analyzing the relationship between formal and informal care have provided mixed results, with some concluding that these two types of care are complements and others concluding that they are substitutes. This study examined the effect of informal care on the use of two types of formal home care: skilled nursing care and unskilled paid domestic help; and analyzed whether the relationship between formal and informal care differs according to the level of disability of the elderly person. Informal care was found to decrease or substitute unskilled formal home care use, while it complements skilled formal home care. The substitution effect vanishes for elderly suffering from heavy disability. This study highlighted the complexity of the relationship between formal and informal care. Any policy encouraging informal care to decrease long-term care expenditures should take into account the potentially limiting role of informal care.

Background: Ageing of the population in Canada will undoubtedly have important effects on the demand for long-term care service with a growing proportion of elderly in the population seeking long term care services. One suggested solution for reducing the growth in long-term care expenditures is to encourage the use of informal care. Informal caregivers have always been a major source of care for the frail elderly and it is thought that informal care is less costly than more formal care arrangements. However, many past studies analyzing the relationship between formal and informal care provide mixed results, with some concluding that they are substitutes and other concluding they are complements to each other. This study further examined the effect of informal care provided by children on the use of formal home care of the elderly. Two components of formal home care were examined in order to assess effects of informal care: 1) skilled formal home care (nursing care); and 2) unskilled formal home care (paid domestic help). In addition, this study analyzed whether the relationship between formal and informal care differs according to the level of disability of the elderly person concerned.

Methods: The data was obtained from a European multi-disciplinary survey in 2004, which included 7,329 people aged 65 years and older from nine European countries. Two types of formal home care were analyzed: nursing care, which comprised nursing and personal care provided by professionals, and paid domestic help, which consists of professional or paid home help in carrying out tasks such as doing housework or shopping for groceries. The respondents were asked to report the number of weeks and the average number of hours per week they received either skilled or unskilled formal home care during the 12 months preceding the survey. The measure of home care utilization was expressed as the average number of hours received per month. Findings: Informal care was found to decrease or substitute for unskilled formal home care, while it is a complement for skilled formal home care. The relationship between formal and informal care is sensitive to the needs of the elderly. More specifically, the substitution effect vanishes for the elderly suffering from significant disability.

Conclusions: This study highlighted the complexity of the relationship between formal and informal care. One common recommendation to limit the expected increase in long-term care expenditures is to encourage informal care provided by families, as an alternative for more costly formal care. The effectiveness of such policies depends on the degree of substitutability between informal and formal care. This study suggested that informal care is an effective substitute for long-term care as long as the needs of the elderly are low and require unskilled. Any policy encouraging informal care to decrease long-term care expenditures should take into account the potentially limiting role of informal care where the elderly report greater disability or where they need skilled care.

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