Abstract:

This paper uses hospitalization data of disabled applicants in Chengdu, a pilot city of long–term care insurance, to examine the catering effect and health effect of cash–subsidized long–term care insurance. We find that: (1) The dynamic DID estimation results show that cash–subsidized long–term care insurance has a catering effect before application, that is, the disabled increase their possibility of receiving cash subsidies through low-cost excessive hospitalization before applying. (2) The further constructed dynamic DDD model indicates that the health effect reduces the hospitalization rate of the disabled by 5.8 percentage points, and the total monthly hospitalization cost by 52.3%. (3) Heterogeneity analysis finds that the health effect is more pronounced among disabled groups with home care providers, lower levels of disability, and lower income levels. Our results test the shortcomings and advantages of cash–subsidized long-term care insurance, providing empirical evidence for improving the design of long–term care insurance benefits in China.

Key words:

ageing, the disabled, hospitalization cost, dynamic DDD