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Effect of public long-term care insurance on consumption, medical care demand, and welfare

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  • Ariizumi, Hideki

Abstract

Many governments allocate public funds to individuals who need long-term care (LTC) services as a result of chronic illnesses and functional problems. In this paper, I investigate the effects of two common eligibility criteria of LTC programs: means-tested and health-based programs. I find that publicly provided health-based LTC crowds out the medical spending among low health individuals. Furthermore, means-tested programs lead to higher initial spending on medical care and consumption goods among middle-wealth individuals. The welfare implications of these programs also depend critically upon the individuals' initial wealth and health status. Interestingly, it is possible for health-based programs to be less costly than means-tested programs.

Suggested Citation

  • Ariizumi, Hideki, 2008. "Effect of public long-term care insurance on consumption, medical care demand, and welfare," Journal of Health Economics, Elsevier, vol. 27(6), pages 1423-1435, December.
    • Handle: RePEc:eee:jhecon:v:27:y:2008:i:6:p:1423-1435
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    1. Charles Yuji Horioka & Emin Gahramanov & Xueli Tang, 2025. "On the impact of long-term care insurance on the behavior of parents and children: theory and evidence on Japan," Review of Economics of the Household, Springer, vol. 23(4), pages 1155-1187, December.
    2. Lin, Lin & He, Min & Nie, Peng, 2025. "Direct and spillover effects of long-term care insurance on Chinese elderly frailty," The Journal of the Economics of Ageing, Elsevier, vol. 31(C).
    3. Charles Yuji Horioka & Emin Gahramanov & Xueli Tang, 2024. "The Nexus between Long-term Care Insurance, Formal Care, Informal Care, and Bequests: The Case of Japan," ISER Discussion Paper 1250, Institute of Social and Economic Research, The University of Osaka.
    4. Pengfei Sheng & Tingting Yang & Tengfei Zhang, 2021. "The Unmet Medical Demand among China’s Urban Residents," IJERPH, MDPI, vol. 18(21), pages 1-13, November.
    5. 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).
    6. Shen, Zhiyang & Wu, Haitao & Bai, Kaixuan & Hao, Yu, 2022. "Integrating economic, environmental and societal performance within the productivity measurement," Technological Forecasting and Social Change, Elsevier, vol. 176(C).
    7. Han, Xiao & Liu, Zining & Zheng, Wei, 2025. "Does public long-term care insurance affect spousal labor supply? Evidence from China," Economic Modelling, Elsevier, vol. 153(C).
    8. Yang, Tianli & Zhao, Zhong, 2025. "Long-term care insurance policy and the development of elderly care enterprises in China," China Economic Review, Elsevier, vol. 94(PB).
    9. Zhu, Ge & Wang, Li & Xuejun, Wang, 2025. "Expensive famine: Early hunger experience and diabetes treatment burden," Economics & Human Biology, Elsevier, vol. 58(C).
    10. Lorenz Gschwent & Bjorn Hammarfelt & Martin Karlsson & Mathias Kifmann, 2024. "The Rise of Health Economics: Transforming the Landscape of Economic Research," Papers 2410.06313, arXiv.org.
    11. Kim, Hoolda & Mitra, Sophie, 2022. "The Economic and Health Effects of Long-Term Care Insurance: New Evidence from Korea," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).

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