The impact of long-term care insurance on the health status and healthcare expenditure of older adults in China

Objective: Long-term care needs have grown with population aging. This study explores the relationships among health status, healthcare expenditure, and long-term care insurance (LTCI) among the older adults. Methods: Using data from the China Health and Retirement Longitudinal Study (CHARLS 2011, 2013, 2015, 2018, and 2020) and based on the demand model for healthcare services, this study employed the difference-in-difference (DID) method to assess how the implementation of LTCI contributed to the health status and healthcare expenditures of the older adults. The propensity score matching DID method (PSM-DID) and other tests were used to conduct further robustness checks. Results: The findings demonstrate a significant positive impact of LTCI on improving the health status and reducing healthcare expenditures in the elderly population. The PSM-DID indicates that LTCI can effectively improve the health status of the elderly population and reduce their healthcare spending. Conclusions: Based on the findings, the development of relevant policy frameworks for LTCI in China is recommended. These include consider the differences among the various pilot cities and social strata to allow policy adjustments and improvements in a timely, establish a dynamic and diversified long-term care insurance financing mechanism, encourage collaboration between medical institutions and elder care facilities, establish effective contact between LTCI and medical institutions, and use incentive policies such as tax relief to provide financial support and subsidies.