The impact of health insurance on informal care: Evidence from China's urban-rural basic health insurance consolidation

Abstract

This paper examines the interaction between health insurance and informal care, two critical inputs into elderly health. Exploiting variations in timing and cities of the gradual implementation of China's consolidation of urban-rural basic health insurance that largely benefits rural residents, we find that insurance consolidation significantly increases both the likelihood and intensity of informal care received by the elderly. The positive effects are particularly salient among the older, less healthy, low-income, and educated elderly who tend to be more responsive to enhanced insurance benefits. We provide suggestive evidence that the increased care burden is primarily taken on by children. Moreover, we test two potential mechanisms through which insurance consolidation may increase informal care received by the elderly. Our findings suggest that enhanced insurance is positively associated with increased health care utilization by informal care recipients and improved health status of caregivers, both of which may contribute to the observed increase in informal care. These results offer an additional explanation for the growing demand for informal care in the rapidly aging society.