Work

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

Year: 2025

Type: article

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.

Source: The International Journal of Health Planning and Management

DOI: 10.1002/hpm.3933

Authors: Yu Yan, Michael G. Faure

Institutions: Xiamen University, Maastricht University, Erasmus University Rotterdam

Language: English

Topic: Healthcare Systems and Reforms

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Good health and well-being

Open Access status: bronze

Funder: Humanities and Social Sciences Youth Foundation, Ministry of Education of the People's Republic of China