Dynamic Effects of Long-Term Care Insurance on Healthcare Expenditures: Evidence from South Korea

Abstract

Long-term care expenses pose a large financial risk to the elderly. In 2008, South Korea introduced a public long-term care insurance (LTCI) program for individuals older than 65. We study the dynamic effects of the LTCI on various healthcare expenditures. We find that after the implementation of the LTCI, average prescription drug and outpatient expenditures of the elderly increased. Dynamically, we observe that the growth in these expenditures moderates. We also find suggestive evidence that after the introduction of the LTCI, the elderly may utilize LTC hospitals instead of inpatient hospital services. These findings underscore the importance of understanding the long-term effects of LTCI on health and healthcare expenditures of the elderly and the need to account for interactions between LTC and other types of healthcare services in policy design.

Keywords:

• Long-term care insurance
• health expenditures
• health insurance
• aging

JEL Classifications:

• I18
• J11
• H51

Acknowledgments

We thank the editor and two anonymous referees for their helpful suggestions. All errors are our own.

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Additional information

Notes on contributors

Honsoo Kim

Dr. Honsoo Kim is a Research Fellow at the Government Employees Pension Service Research Institute in South Korea.

Soojin Kim

Dr. Soojin Kim is an Assistant Professor of Economics at Georgia State University.

Wonshik Kim

Dr. Wonshik Kim is a Visiting Scholar at the International Center for Public Policy in Georgia State University and an Emeritus Professor of Economics at Konkuk University in South Korea.

Kyung Hoon Yang

Dr. Kyung Hoon Yang is a retired Professor of Information Systems at the University of Wisconsin-La Crosse.