Yu Fu, Michael Sherris and Mengyi Xu
Abstract: China and the U.S. are two contrasting countries in terms of functional disability and long-term care. China is experiencing declining family support for long-term care and developing private long-term care insurance. The U.S. has more developed public aged care and private long-term care insurance than China. Changes in the demand for long-term care are closely related to levels of and trends in mortality and functional disability. To understand future potential demand for long-term care, we compare mortality and functional disability experiences in both China and the U.S using multi-state latent factor intensity model to estimate time trends and systematic uncertainty in transition rates. The estimation results show that if trends continue, both countries will experience longevity improvement with morbidity compression and a declining proportion of the older population with a functional disability. Although the elderly Chinese have an estimated shorter life expectancy, they are expected to spend a smaller proportion of that future lifetime functionally disabled in contrast to the U.S. Systematic uncertainty is shown to be significant in future trends in disability rates and our model estimated higher uncertainty in trends for the Chinese elderly, especially for urban residents.
Keywords: Functional disability; life expectancy; systematic trend and uncertainty; multi-state latent factor intensity model