Home Care or Institution Care? It Depends

Zeyuan Chen, Southwest University of Finance and Economics
Xiang Ma, Southwestern University of Finance and Economics

The proportion of elderly individuals in the global population has risen in the last 20 years, leading to an increased need for long-term care. It is essential for policymakers to comprehend the health outcomes of various care options. At present, it is not known which type of care is more beneficial for the health of the elderly. To address this gap, we utilized the introduction of Long-Term Care Insurance (LTCI) in City X of China as a policy shock to compare the health outcomes of two care types (Home Care and Institution Care). We apply survival models and instrumental variable model. The distance to institutions with LTCI agreements was employed as an instrumental variable to predict the choice of institutional care. After analyzing administrative data of all LTCI applicants in City X from July 2017 to June 2020, our findings show that those who initially choose home care have a higher survival rate. But for individuals who initially selected institutional care, choosing institutional care after receiving LTCI reduces 6-month mortality by 9.1%. Moreover, the negative effect on death rate is prominent among those who initially stayed in nursing hospitals. Our results suggest self-selection in the original place of care.

Keywords: Mortality and Longevity, Population Ageing

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