Safeguarding the Rural Vulnerable: How Long‐Term Care Insurance Reduces Poverty Vulnerability Among the Elderly in China

ABSTRACT

Driven by rapid population aging, declining family care, and a stark urban–rural pension gap, China's rural elderly households face a high risk of disability‐induced poverty. This study evaluates the net effect of China's pilot Long‐Term Care Insurance (LTCI) on this risk. Using 2011–2020 panel data from the China Health and Retirement Longitudinal Study (CHARLS), we employ a Propensity Score Matching (PSM) and Difference‐in‐Differences (PSM‐DID) model. The results show that LTCI significantly reduces poverty vulnerability among rural elderly households, a finding robust to various sensitivity checks, including a double machine learning (DML) approach. This effect operates by alleviating medical burdens, improving physical and psychological health, and relieving the dual constraints of intergenerational caregiving time and financial support. Heterogeneity analysis reveals that the policy's benefits are most pronounced for the most vulnerable groups, including those with lower income, advanced age, lower cognitive ability, poorer health, less education, and smaller household sizes, underscoring its role as a targeted safety net. China's experience demonstrates that LTCI is an effective institutional tool for mitigating rural poverty vulnerability, offering a valuable blueprint for other developing countries.