Long-Term Care Insurance and Health Inequality: Evidence From China

Abstract

This study examined the relationship between the Chinese Long-Term Care Insurance (LTCI) programme and health inequality among older adults in China and explored potential explanatory factors. Overall, the LTCI was found to improve the health of Chinese older adults. However, it was also associated with widening health inequality among older residents across income classes and between urban and rural areas. The mechanism analysis found that LTCI significantly reduced out-of-pocket medical costs for high-income older adults and urban residents, while its effects on the low- and middle-income older adults and rural residents were not significant. The heterogeneous effects of LTCI on out-of-pocket medical costs for different groups contribute to widening health inequalities across income classes and between urban and rural areas. Further analyses showed that in the low- and middle-income and rural resident groups, out-of-pocket medical costs were significantly reduced only for individuals covered by LTCI who reported access to formal care services. This implies that formal care accessibility is critical, and additional analyses affirmed that the LTCI programme was associated with widened inequalities in formal care accessibility across income classes and between urban and rural areas. The current LTCI programme appears to exacerbate disparities in access to formal care, undermining its effectiveness for low- and middle-income and rural older adults. This finding calls for efforts to optimise the implementation of the LTCI programme including allocating care resources to address inequalities.