Around the world, societies are aging at a rapid pace. The demographic transition and the challenges surrounding elderly care are defining issues of our time. Aging populations strain public finances and existing models of social support, affect economic growth, and change disease patterns and prevalence. Many countries, therefore, contemplate policy changes to their retirement, pensions, and health care systems. China, which faces a fast-growing trend of aging cohorts, is no exception.
To alleviate the pressure of elderly care on public finances, the Chinese government has been considering raising retirement ages and corresponding changes in social health insurance and pension policy. A new study now helps evaluate such retirement reforms and provides evidence to inform policy in China and elsewhere by probing the effects of retirement on health care utilization.
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The study’s co-authors, including Karen Eggleston, director of the Asia Health Policy Program at APARC, leverage administrative data from medical claims for over 80,000 insured adults in a megacity in eastern China to explore the effect of retirement on outpatient and inpatient care utilization. In this case, urban employee insurance beneficiaries receive a reduced patient cost-sharing rate upon retirement. By focusing on a relatively well-insured population with comprehensive administrative data on insurance plan design and overall resource use at retirement, the study provides new evidence about mechanisms such as the reduced out-of-pocket price of health care, the opportunity cost of time, and the interaction of these demand-side factors with supply-side incentives. Eggleston and her colleagues report on their findings in the journal Health Economics.
In this relatively well-insured population, annual health care utilization significantly increases primarily because of more intensive use of outpatient care at retirement. This increase in outpatient care stems from a decline in the patient cost-sharing rate, the reduced time constraints upon retirement, and the interaction of these factors with supply-side incentives such as prescribing antibiotics. There is no evidence of change in inpatient care at retirement.
The economics of medical expenditure growth and its interaction with population aging is of considerable policy importance for countries in all income groups. “Our findings may provide useful evidence as one consideration for policymakers in other cities in China and elsewhere looking to increase insurance benefits and control medical spending for burgeoning elderly populations.