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Public long-term care insurance and consumption of elderly households: Evidence from China

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  • Liu, Hong
  • Ma, Jinqiu
  • Zhao, Liqiu

Abstract

This study investigates the impact of long-term care insurance (LTCI) on the non-health consumption of elderly households. By exploiting a quasi-experiment on the public LTCI pilot program in China, we identify the effect of LTCI using a triple-difference approach. Using longitudinal data from the China Health and Retirement Longitudinal Study, we find that LTCI has led to an increase in the non-health consumption of elderly households by 15.7%, mostly observed in households having no older members with need for long-term care (LTC). Further evidence suggests that the effects are stronger for households with higher expected LTC risks, less wealth or family insurance, and covered by more generous schemes. Finally, LTCI increases the expectation of using formal LTC when disabled and subjective longevity expectations for older adults having no need for LTC. Overall, these findings offer empirical support for the role of LTCI in mitigating precautionary savings against LTC risks.

Suggested Citation

  • Liu, Hong & Ma, Jinqiu & Zhao, Liqiu, 2023. "Public long-term care insurance and consumption of elderly households: Evidence from China," Journal of Health Economics, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:jhecon:v:90:y:2023:i:c:s016762962300036x
    DOI: 10.1016/j.jhealeco.2023.102759
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    More about this item

    Keywords

    Public long-term care insurance; Non-health consumption; Precautionary saving; Long-term care risks; China;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • D10 - Microeconomics - - Household Behavior - - - General
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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