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Preparing for population ageing: estimating the cost of formal aged care in China

Aged care support

Mi H., Fan XD., Lu B., Cai LM and Piggott J.

China, in common with many other countries in Asia, will confront rapidly increasing demand for formal Long-term Care (LTC) over coming decades. This paper uses a unique regional monthly database on utilization of comprehensive care in Qingdao, China, to estimate transition probabilities and compute duration of care, using Markov chain simulations. Duration of care estimates are then combined with price per unit of care to calculate the total cost of care for the disabled elderly. Results show that the transition probabilities from institutional care to home care are ten times higher than those in the opposite direction; the average support duration in the plan is about 53 months, including both home and institutional care, when admitted at the age of 60, and 44 months if admitted at the age of 85, with costs ranging from RMB 40-120,000 per recipient. The cost analysis suggests that this provision model is an affordable comprehensive care model for elderly Chinese.

Key words: Long-term care, China, Mortality, Markov Chain Model

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