Research on the optimization of financing scheme of long-term care insurance in China based on system dynamics simulation

The financing sustainability of long-term care insurance: an example from Nanning, China

Objective

With accelerated population aging in China, older adult services and long-term care for people with disabilities are becoming serious problems. Currently, mobilizing and allocating social resources, establishing reasonable financing mechanisms to address the growing demand for long-term care for those with disabilities, and ensuring the sustainable operation of long-term care insurance financing mechanism are vital.

Methods

Taking Nanning, China, as an example, based on the Nanning Statistical Yearbook and relevant policy documents of government departments such as the medical care and security department, we use the PADIS-INT model and the International Labour Organization financing model(ILO Model) to estimate the contribution levels of Nanning's residents' long-term care insurance for the years of 2025, 2030, and 2035, and analyze the feasibility of the government's and rural and urban residents' individual contribution burden.

Results

The average annual contribution amount of long-term care insurance for urban and rural residents will increase from 108.80 yuan in 2025 to 202.71 yuan in 2035. According to the sharing method, in which the government and individuals each bear 50% of the financing responsibility for long-term care insurance, the proportion of the government's financial responsibility for the cost of long-term care insurance for urban and rural residents to the current year"s financial income will be 0.34, 0.42, and 0.50% in 2025, 2030, and 2035, respectively, and the amount of money that can be used by individual urban and rural residents to pay premiums from 2025 to 2035 will range from 10.7 to 16 thousand yuan.

Conclusion

The finding shows that both the government and urban and rural residents can afford to pay future long-term care insurance costs; however, the long-term care insurance contributions of individual urban and rural residents in Nanning remain high. Hence, the Nanning municipal government should improve the awareness and participation rate of urban and rural residents in long-term care insurance; scientifically measure the financing level of long-term care insurance; establish a multichannel, scientifically reasonable, and dynamically adjusted long-term care insurance financing mechanism; and maintain the sustainable operation of the financing mechanism of long-term care insurance in Nanning.

Research on the income and expenditure forecast of long-term care insurance fund in Shihezi City based on community care

Objective

This study forecasts the income and expenditures of the long-term care insurance fund, provides a basis for formulating the raising standard of the long-term care insurance fund, and explores the measures to improve the pilot work of long-term care insurance.

Methods

By using the exponential smoothing and ARIMA models to forecast the income and expenditure of the old-age care insurance fund in 2022, the problems existing in the operation of the long-term care insurance fund are discussed.

Results

In 2022, the income of the old-age insurance fund was 28.8934 million yuan, and the fund compensation expenditure was 28.4070 million yuan, with a slight balance of the fund. The highest relative errors of income and expenditure forecast models are -2.03% and - 2.76%, respectively. According to the results of fund expenditure, the annual financing standard should be 132.93 yuan/person, and the individual financing standard should be 66.47 yuan/person.

Conclusion

Through the integration of personal payment, welfare, sports lottery public welfare income, social donations, and other ways, we can gradually establish a multi-channel risk-sharing financing. We will appropriately raise the standard for individual financing and the annual contribution standard for individuals from 50 yuan to 66.47 yuan. This will promote sustainable development of long-term insurance system.

Life expectancy, long-term care demand and dynamic financing mechanism simulation: an empirical study of Zhejiang Pilot, China

BACKGROUND

China has piloted Long-Term Care Insurance (LTCI) to address increasing care demand. However, many cities neglected adjusting LTCI premiums since the pilot, risking the long-term sustainability of LTCI. Therefore, using Zhejiang Province as a case, this study simulated mortality-adjusted long-term care demand and the balance of LTCI funds through dynamic financing mechanism under diverse life expectancy and disability scenarios.

METHODS

Three-parameter log-quadratic model was used to estimate the mortality from 1990 to 2020. Mortality with predicted interval from 2020 to 2080 was projected by Lee-Carter method extended with rotation. Cohort-component projection model was used to simulate the number of older population with different degrees of disability. Disability data of the older people is sourced from China Health and Retirement Longitudinal Study 2018. The balance of LTCI fund was simulated by dynamic financing actuarial model.

RESULTS

Life expectancy of Zhejiang for male (female) is from 80.46 (84.66) years in 2020 to 89.39 [86.61, 91.74] (91.24 [88.90, 93.25]) years in 2080. The number of long-term care demand with severe disability in Zhejiang demonstrates an increasing trend from 285 [276, 295] thousand in 2023 to 1027 [634, 1657] thousand in 2080 under predicted mean of life expectancy. LTCI fund in Zhejiang will become accumulated surplus from 2024 to 2080 when annual premium growth rate is 5.25% [4.20%, 6.25%] under various disability scenarios, which is much higher than the annual growth of unit cost of long-term care services (2.25%). The accumulated balance of LTCI fund is sensitive with life expectancy.

CONCLUSIONS

Dynamic growth of LTCI premium is essential in dealing with current deficit around 2050 and realizing Zhejiang's LTCI sustainability in the long-run. The importance of dynamic monitoring disability and mortality information is emphasized to respond immediately to the increase of premiums. LTCI should strike a balance between expanding coverage and controlling financing scale. This study provides implications for developing countries to establish or pilot LTCI schemes.