The Development of the Eldercare Industry in China: The Role of Public Long-Term Care Insurance

Abstract

The public long-term care insurance (LTCI) scheme has emerged as a key policy initiative to promote universal access to long-term care services in China. Drawing on panel data from 310 prefecture-level cities covering 2010–2019, this study used the Callaway and Sant’Anna difference-in-differences (CSDID) approach to estimate the effect of LTCI introduction on organisational entry in the eldercare industry and further examined heterogeneity in the estimated effects by organisational characteristics and policy design. Our findings showed that LTCI introduction was associated with an average increase of 1.50 newly registered eldercare-related organisations per 100,000 population. This finding remained robust across a series of alternative specifications and sensitivity analyses. The estimated effects tended to be larger among enterprises, organisations with registered capital of at least 1 million yuan, and those operating in business scopes closely related to the LTCI benefit package. LTCI was also associated with organisational entry in a broader range of eldercare-related activities, suggesting potential spillover effects across the industry. Regarding policy design, larger estimated effects were observed for schemes covering both employees and residents and for those providing in-kind services only. These findings suggest that LTCI may shape the development of the eldercare industry, while highlighting the importance of population coverage and benefit design in influencing its industrial effects.