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Insurance coverage, long-term care utilization, and health outcomes

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Abstract

How does the generosity of social insurance coverage affect the demand for healthcare and health outcomes of elderly people? This paper presents an examination of the effects of insurance coverage on long-term care (LTC) utilization and its health consequences using administrative data of the public long-term care insurance (LTCI) system in Japan. In LTCI, a recipient’s health score determines their insurance coverage limit, and thresholds of the score generate discontinuous changes in the level of coverage limits. I implement a regression discontinuity design and find that coverage expansion increases recipients’ LTC utilization considerably irrespective of their health status. When more generous insurance coverage is available, recipients with low care needs increase day care and rehabilitation services, whereas those with high care needs increase home care services. Moreover, using more LTC has little effect on health outcomes such as the health score and the entry into nursing homes. Together, these results suggest that generous LTCI coverage can induce excessive LTC utilization without having health benefits.

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Data availability

This study uses proprietary data including claims data and care-needs certification data of the public long-term care insurance in Japan obtained from the municipal office of Chiba city. I conducted this study under the supervision of Professor Yasuki Kobayashi, Graduate School of Medicine, University of Tokyo. Researchers wishing to replicate the results will need to obtain permission to use the datasets from Chiba city and Professor Kobayashi.

Notes

  1. For simplicity, the exchange rate of 100 JPY = 1USD is used throughout this paper.

  2. Ministry of Finance. URL: https://www5.cao.go.jp/keizai-shimon/kaigi/special/reform/wg1/291108/shiryou1-8.pdf (Japanese).

  3. Designated diseases include terminal cancer, rheumatoid arthritis, ALS, ossification of posterior longitudinal ligament, osteoporosis, dementia, Parkinson’s disease, spinocerebellar degeneration, spinal canal stenosis, progeria syndrome, multiple system atrophy, diabetes, cerebrovascular disease, arteriosclerosis obliterans, chronic obstructive lung disease, and osteoarthritis.

  4. 4 In 2017, first-insured recipients account for 96.4% of all recipients. URL:https://www.mhlw.go.jp/topics/kaigo/osirase/jigyo/m17/1712.html (Japanese).

  5. A family member or guardian can also apply for the care-needs certification on behalf of the recipients.

  6. Long-term care under the Support level is designed to help recipients accomplish everyday activities independently. For example, if a recipient has a lack of hand mobility, then the caretaker’s role is to design a method for housework that the recipient can perform independently.

  7. The 20% coinsurance, introduced into 2015, applies to individuals with total annual income of more than 1.6 million JPY (16 K USD); that of first-insured family members is greater than 3.46 million JPY (34.6 K USD), or 2.8 million (28 K USD) for a single-person household.

  8. Recipients are classified into Care level 1 if both of the following requirements are satisfied: (1) it is difficult for the recipient to understand how to use care prevention services appropriately because of mental disability; (2) the physical and mental condition of the recipient is likely to worsen in a short period.

  9. According to the Long-Term Insurance Act, a care manager is defined as an expert who has specialized knowledge about LTC who helps recipients draw up the best care plan based on their needs, in coordination with LTC providers and the municipal government.

  10. Recipients are reclassified into different care-needs levels if necessary. In principle, the first care-needs certification is valid for a half year. The following certification is valid for 1 year.

  11. We omit all nursing home resident recipients including those who use institutional care such as community care in the facility.

  12. Because some recipients were allocated into different care-needs levels for several care-needs certifications, the sum of recipients for each care-needs level is not equal to the number of total recipients in the first column.

  13. An adjustment must be made to reflect service utilization accurately because the number of units of day care service might be higher at upper care-needs levels because of the higher price of these services. To address this point, day care service units are normalized using a price of Care level 1 as a baseline. Hereinafter, the measure of LTC utilization refers to these adjusted data. Effects of day care price changes on LTC utilization are assumed to be negligible because price changes across care-needs levels are fairly small (approx. 10%).

  14. Both sides of the threshold use the same parametric specification.

  15. 15 Ministry of Health, Labor and Welfare. URL: https://www.mhlw.go.jp/topics/kaigo/kentou/15kourei/sankou3.html (Japanese).

  16. 16 Ministry of Health, Labor and Welfare. URL: https://www.mhlw.go.jp/topics/kaigo/kentou/15kourei/sankou3.html (Japanese).

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Acknowledgement

I am grateful to Toshiaki Iizuka and Yasuki Kobayashi for their guidance and support throughout this project. I thank the municipal office of Chiba City for providing access to data. I thank Daisuke Adachi, Joseph Doyle, Jin Feng, Rong Fu, Konan Hara, Takuya Ishihara, Yoko Ibuka, Yuki Ito, Kyogo Kanazawa, Keisuke Kawata, Haruko Noguchi, Seojung Oh, Hiroki Saruya, Motohiro Sato, Hitoshi Shigeoka, Reo Takaku, Yuta Toyama, and Kohei Yata for thoughtful discussions and comments. I also thank the participants of numerous seminars and workshops for helpful comments. All errors are my own.

Funding

The author Masaki Takahashi has received funding from the Japan Society of Promotion of Science and Institute of Health Economics and Policy.

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  1. Hitotsubashi Institute for Advanced Study, Hitotsubashi University, 2-1 Naka, Kunitachi, Tokyo, 186-8601, Japan

    Masaki Takahashi

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Appendix

Appendix

See Tables 8, 9, 10.

Table 8 Density test
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Table 9 Covariates balance tests
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Table 10 First-stage estimates for the health effects of long-term care utilization
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Takahashi, M. Insurance coverage, long-term care utilization, and health outcomes. Eur J Health Econ 24, 1383–1397 (2023). https://doi.org/10.1007/s10198-022-01550-x

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