Does Long-Term Care Insurance Improve Health and Shift Healthcare Utilization? Evidence from China's Pilot Program

China introduced long-term care insurance (LTCI) pilot programs in 2016 to address the growing care needs of an aging population and the increasing number of disabled older adults. While LTCI is expected to improve health and reduce the financial burden of care, its broader impacts on healthcare utilization remain unclear.

Using four waves of the China Health and Retirement Longitudinal Study (CHARLS) from 2011 to 2018, this study examines the health and economic effects of LTCI using a difference-in-differences approach. The analysis focuses on middle-aged and older adults with functional disabilities in 15 pilot cities that implemented LTCI between 2016 and 2017, compared with individuals in non-pilot cities.

The results show that LTCI is associated with improvements in self-reported health and memory function. In addition, LTCI is associated with reductions in inpatient visits and associated medical expenditures and an increase in outpatient visits, suggesting a shift in healthcare utilization from inpatient to outpatient services.

These findings from pilot cities and observational longitudinal survey data suggest that LTCI may contribute to improved health outcomes. The results provide new empirical evidence on the broader impacts of LTCI and offer policy implications for countries facing rapid population aging.