Can Private Insurers Stimulate the Function of Public Long-Term Care Insurance? Insights From China

Yu Yan*, M.G. Faure

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

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Abstract

In many countries, including China, private insurers are increasingly involved in public long-term care insurance (LTCI) to stimulate its functioning. Our article examines this novel approach from an economic perspective. We then use this framework to evaluate the risk differentiation and control practices of China's 15 LTCI pilots. Using these practical cases, we find that the private insurers' strategies for risk differentiation and control of adverse selection should be restricted, as they may contradict the public policy goals of solidarity and equal access to long-term care. Conversely, the strategies to address moral hazard, particularly in case of small risks and when carefully designed, could better reconcile the public policy goal with the economic goals of cost reduction and providing incentives to avoid overutilisation. Overall, a better strategy may enable private insurers to efficiently utilise their risk management capacity, without severely undermining the public aims of LTCI.
Original languageEnglish
Pages (from-to)923-934
Number of pages12
JournalInternational Journal of Health Planning and Management
Volume40
Issue number4
Early online date31 Mar 2025
DOIs
Publication statusE-pub ahead of print - 31 Mar 2025

Keywords

  • adverse selection
  • China
  • economic analysis of insurance
  • long‐term care insurance
  • moral hazard

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