The Impact of Long-Term Care Insurance Payment Modes on Healthcare Utilization and Expenditures Among Middle-Aged and Older Adults in China

Objectives: This study examines how different benefit payment modes under China’s long-term care insurance (LTCI) program influence healthcare utilization and medical expenditures among middle-aged and older adults. Specifically, it compares the effects of in-kind benefits and mixed benefits on healthcare service use and financial burden. Methods: This study uses data from the China Health and Retirement Longitudinal Study (CHARLS) from 2011 to 2018, focusing on middle-aged and older adults with functional limitations. Exploiting the staggered implementation of LTCI pilot programs across 14 cities, a difference-in-differences (DID) approach is employed to estimate the causal effects of different benefit payment modes on healthcare utilization and expenditures. Heterogeneity analyses are conducted to explore differences between rural and urban populations. Results: The results indicate that the in-kind benefit mode significantly reduces inpatient visits, total medical costs, and out-of-pocket expenditures. By contrast, the mixed benefit mode shows only a modest reduction observed mainly in outpatient visits. Heterogeneity analysis further reveals that in-kind benefits are particularly effective in reducing healthcare utilization and medical expenditures among rural residents, while urban residents experience higher reductions in out-of-pocket spending. Conclusions: These findings highlight the importance of benefit design in shaping the effectiveness of LTCI policies. Prioritizing service-based benefits may improve healthcare system efficiency and reduce financial burdens among older adults. The results provide policy-relevant insights for optimizing LTCI benefit design in China and other aging societies.