Abstract

Most Chinese people still depend on family support for aged care in rural areas, due to inaccessibility of formal care service. Yet, the "One Child Policy", rapidly increasing life expectancy and the world’s largest migrant population (currently about 270 million) will in the next 20–30 years weaken the traditional family support for older people. A mechanism by the government should be established to support them urgently. While a lot of pilot projects for long term care have already experimented in urban rich areas, rural poor remain untouched. Local government neither has the motivation nor the financial resources to initiate such a policy. According to CHARLs Data (2011), for both physical functional ability (ADLs and IADLs) and mental health status (depression measured by CES-D), rural older adults are significantly worse off than that of urban older population, especially for the elderly under 80 years old.

We use CHARLs data (aged 60+) to estimate the time spent for informal long term care in rural China as the fundamental consideration for long term care compensation to these families (as the current ratios in the nursing homes in rural areas are very small, we tend to ignore the samples). In rural areas, the monthly total time of informal care for disabled old people (mean=142.71 hours) is statistically lower than that of urban aged (mean=195.27 hours) and the average household income for rural aged is 41% lower than that of urban old residents. The income disparity is larger among those with ADL limitations.

In line with developed countries’ experience on LTC, we design two financial mechanisms for rural China: first, we set up 0.5% of fiscal revenue as financial transfer amount by the central government in the next 5 years, gradually increasing to 2% in the next 20 years. Second, we model a social insurance contribution by adding a LTC element into Rural Medical Insurance program in the form of a contribution of RMB 10 per person per year to start with. We estimate the possible increase in the next 20 years. We then translate the caring time into money terms based on local net income respectively should family carers be no longer available (regression model would provide the probability of reduced children number and caring time). We use a regression model to test the effectiveness of the unit price of long term care service with the current family income structure. The paper aims to provide some financial aspect to the Chinese LTC design which few literatures have focused.

Slides