Study Reveals Long-Term Care Insurance Reduces Hospital Costs and Improves Care

Long-term care insurance can help reduce hospitalization costs and improve care for people with disabilities, according to a new study published in Frontiers in Public Health.

“The current research is rather fragmented, especially the lack of systematic exploration of the relationship between long-term care needs and hospitalization costs, which limits the development of long-term care insurance practice,” explained Tiantian Che, School of Public Administration, Dongbei University of Finance and Economics in Dalian, China, and coauthors.

Researchers analyzed data from the China Health and Retirement Longitudinal Study in 2015 and 2018 to examine how long-term care needs impact hospitalization costs and the role of long-term care insurance. The study, which focused on 11 pilot cities implementing long-term care insurance, provides valuable insights into addressing the challenges of an aging population and rising healthcare costs.

Greater long-term care needs led to increased hospitalization costs of 5%. This is likely due to "social hospitalization," where people with disabilities stay in hospitals to receive care when other options are unavailable or inadequate. This issue has become increasingly pressing due to China’s rapidly aging population, with over 280 million people aged 60 and above by the end of 2022.

However, the implementation of long-term care insurance helped counteract this effect. The insurance provides subsidies for home care and professional care services, allowing people with disabilities to receive care outside hospitals. This reduced unnecessary hospitalizations and overall costs.

The study revealed that long-term care insurance works through multiple mechanisms. It encourages family members to provide care at home by offering financial compensation. It also enables people with disabilities to access professional care institutions. Both options can meet higher-level needs of individuals that hospitals may not adequately address, such as social and emotional support.

Based on their findings, the researchers recommend several policy changes. They suggest expanding long-term care insurance coverage to include preventative measures and wider care needs. They also advise developing appropriate payment levels and exploring different payment methods to maximize benefits. Prioritizing subsidies for home care services could help control hospitalization costs while effectively meeting care needs.

“Long-term care needs increased hospitalization costs by positively affecting the number of hospitalizations, and long-term care insurance reduces hospitalization costs,” the authors concluded. “The specific path of action makes long-term care insurance reduce hospitalization costs by negatively regulating the number of hospitalizations,” they added.

Reference
Che T, Li J, Li J, Chen X, Liao Z. Long-term care needs and hospitalization costs with long-term care insurance: a mixed-sectional study. Front Public Health. 2024;12:1226884. doi:10.3389/fpubh.2024.1226884