Benefit payment design and subjective well-being of the elderly: Evidence from China's long-term care insurance pilots

The topic of effectively safeguarding and enhancing the well-being of elderly individuals in their later years is receiving increasing attention from policymakers and scholars. In 2016, China launched a pilot program to establish long-term care insurance (LTCI), while the policies implemented by the pilot cities differ in the design of benefit payments. To examine the impact of variations in the benefit payment design of LTCI on the subjective well-being of disabled elderly individuals, this study adopts an augmented difference-in-differences method based on a nationally representative sample of 3,862 respondents from the China Health and Retirement Longitudinal Study (CHARLS, 2011–2018). We find that: Firstly, LTCI policy that solely provides formal care services actually leads to a significant decline in the subjective well-being of disabled elderly individuals, whereas policy designs that compensate for informal care can enhance their subjective well-being. Secondly, the design of LTCI has asymmetric effects on positive and negative aspects of subjective well-being, with varying impacts across different genders and populations residing in various areas differently. Finally, mechanism analysis reveals that the differential impact of LTCI benefit designs on the subjective well-being of disabled elderly individuals are realized through varying degrees of restriction on their autonomy to choose forms of welfare. This study provides empirical evidence for the differential policy effects arising from diverse LTCI design frameworks. It highlights the necessity of integrating informal care compensation into LTCI benefit arrangements and respecting the right of disabled older adults to make independent welfare choices, thereby further improving their subjective well-being.