Assessing the role of long-term care insurance in shaping living arrangements of older adults: evidence from China.

Abstract

The establishment of long-term care insurance (LTCI) has become one of the key measures adopted by countries worldwide to address growing care needs associated with population aging. While existing studies focus on LTCI's impact on medical expenditures and healthcare utilization, its effects on living arrangements of older adults, a core component of long-term care, remain underexplored in China. Living arrangements reflect both well-being of older adults and their approaches to aging. This study examines the effects of China's LTCI pilots on living arrangements of older adults. Using three-wave panel data from the Chinese Longitudinal Healthy Longevity Survey (CLHLS), we analyze the rollout of LTCI pilots across different cities from 2014 to 2021, employing a time-varying difference-in-differences (DID) approach. Our findings indicate that LTCI significantly increases the likelihood of older adults living alone or only with their spouse and decreases their preference for living with adult children. We provide two explanations for the observed effects: LTCI facilitates aging in place through the provision of home and community-based services and enhances older adults' health by reducing the incidence of severe illnesses. The effects of LTCI are shaped by policy design, specifically reimbursement structures. These findings offer valuable insights for developing a universal LTCI system in China and other developing countries.