Aging, Pensions and Long-term Care: What, Why, Who, How? Comment on "Financing Long-term Care: Lessons From Japan"

Evaluating the long-term care insurance policy from medical expenses and health security equity perspective: evidence from China

Background

Since the national long-term care (LTCI) policy pilot in 2016 of China, the LTCI policy has had significant impact on the residents in the pilot area.

Methods

From the perspective of medical expenses and health security equity, this study selects tracking survey data from the CHARLS database in 2013, 2015, and 2018 and empirically investigates the effect of LTCI policy pilot by using differences-in-differences method (DID). Moreover, this study measures the economic distribution and health equity of the treated and untreated groups using the concentration and Theil indices.

Results

The results showed that group heterogeneity of medical expenses and health level of elderly in the treatment group were narrowing. Moreover, the policy results showed that the LTCI policy pilot significantly affects the outpatient, hospital expenses, and length of stay of elders. Residence registration, income level, and basic medical insurance play a significant regulatory role. Additionally, LTCI policy pilot significantly improved the overall health of the elderly.

Conclusions

The measurement results of inequality show that the policy increases the income of low-income people, lowers the inequality level of outpatient and inpatient reimbursement, and reduces the concentration index of ADL disability and serious diseases. However, the inequality of serious diseases is becoming higher. Based on this, this paper provides several suggestions on optimizing the pilot policy of LTCI.

Cost-Free LTC Model Incorporated into Private Pension Schemes

Long-term care coverage is not integrated into an individual’s retirement strategy. It is an additional public health service that is not considered into private pension funds. Nevertheless, this coverage is not sufficient due to the problems of financial sustainability of the public pension systems. However, there are large sums in pension plans dedicated to paying retirement pensions that can be transformed into support for long-term care coverage. This paper develops a mechanism of pension transformation through the different mortality of the beneficiary when becoming a dependent beneficiary. This mechanism allows the beneficiary to convert their pension to LTC support at their own choice, without increasing the cost of the private pension scheme. The proposed model provides consistency in the pension that a retiree receives and adapts it to a retiree’s life expectancy: the retiree receives a higher pension when he/she needs it most.