| IntroductionCompared with other countries, China’s aged tendency of population has sixcharacteristics of a huge elderly population, the rapid development of the aging,uneven regional development, urban and rural upside down significantly, the numberof female elderly population than that of male, and aging ahead of modernization. Inthe context of China’s aged tendency of population, China’s current pension, healthcare and other issues for the elderly have been more focused, but long-term care forthe elderly has not attracted sufficient attention, given less concern. This extrudes thatChina has not yet rose long-term care insurance issue to the level of national policiesand laws, and social insurance system has covered only five statutory insurance of thebasic pension insurance, basic medical insurance, employment injury insurance,unemployment insurance, and maternity insurance, and long-term care insurance hasnot been included in the social insurance system, and even in the field of commercialinsurance the development of long-term care insurance has still been in theexploratory stage, lacking government supporting policies. Based on the abovebackground, this paper investigates the problem of long-term care insurance supply,which possesses a strong practical significance in solving the problem of the lack oflong-term care security in China’s aging society.1. Relevant Literature Review of Long-term Care Insurance SupplyFrom the domestic literature review, in the current domestic academic circlesresearch on long-term care insurance supply related issues is in its infancy, in that theexisting research literature are mostly concentrated in the policy recommendations toestablish long-term care insurance system, and the long-term care insurance papersand monographs are lacking, meanwhile compared qualitative research is relativelymore, but quantitative research is relatively less, and there is little systematic andin-depth research. From the foreign literature review, although long-term careinsurance has not been developed for a long time abroad, but after all, long-term care insurance has been accumulated a certain amount of practical experience, and foreignscholars have carried out research on much richer contents compared with domesticscholars. Foreign scholars, to the issues related to long-term care insurance supply,have been away from the qualitative research on simple concept, relationship and etc.,and entered quantitative empirical research into the specific practices, and in manyresearch fields have some theoretical value and practical significance.Overall, the research literatures at home and abroad give the author a number ofimportant and useful insights: First, in the modern industrial society, long-term carehas gradually developed into a social security content, the government should bearsome responsibility, and the government should be committed to establish and nurturelong-term care insurance supply policy environment to solve the basic guaranteeproblem of national long-term care. Second, long-term care insurance constitutes anorganic whole by the two markets of commercial insurance market and socialinsurance market, we must properly handle the relationship between the two markets,and two markets should converge to the coordinated development, to avoid long-termcare social insurance market’s negative "crowding out" on commercial insurancemarket. Third, long-term care insurance system must be designed to combine thecountry’s national conditions, and the mode is designed to meet the long-term careinsurance industry characteristics and social attributes. Fourth, long-term careinsurance mode has its own particular background, causes and characteristics, and it isworthwhile for us to learn from the overseas development experience of long-termcare insurance, and to introspect from the related lessons.2. Basic Theoretical Explanation of Long-term Care Insurance SupplyLong-term care risk probability is closely related to the human age structurechanges, and the older the human is, the greater the disability risk is due to illness,accidents and other reasons. Long-term care risk incidence has typical thick-taildistribution characteristics compared with the normal distribution, the long-term carerisk incidence with a thicker tail and sharp peak. Because long-term care issuesmainly take place in the field of elderly population, the study population age structurecan be roughly estimated the degree of polymerization of long-term care risk in the society. The position and role of three solutions to elderly long-term care issues ofpersonal care, home care and social care in the long history of human is different.The nature of long-term care insurance is the distribution relationship oflong-term care insurance, which is the insurance contract relationship’s basis, andwhatever the long-term care insurance is in social insurance nature or in commercialnature, long-term care insurance is no more than a specific form in realizing long-termcare insurance distribution relationship. Long-term care insurance belongs to socialsecurity products, and does not belong to the scope of public goods for not havingnon-competitive and non-exclusive characteristics of public goods. The theoreticalbasis of the redistribution of income is mainly from welfare economic research results,such as additive social welfare function, maximal and minimum social welfarefunction, and Pareto social welfare function.The operation mechanism of the long-term care insurance is mainly researched inclassification from three different mechanisms of the life-cycle hypothesis,intra-generational income transfers and the intergenerational income transfer. The lifecycle hypothesis provides a theoretical basis for the study of the risk-incomesmoothing of individuals in the life cycle. Intra-generational income transfers in therole of the law of large numbers make the uncertainty individuals facing the risk toconvert into the certainty the collective facing the risk, to realize greater personalutility maximization. Overlapping Generations Model breaks the limitation of the lifecycle hypothesis, which is not involved the relationship between the two generations,to realize the risk loss sharing in a broader field.Long-term care insurance security coefficient is mainly based on Cobb-Douglasproduction function as theoretical basis, and introduce social security coefficientanalysis framework to further discuss the long-term care insurance supply boundary.Studies shows that long-term care insurance is an integral part of pension security, andthe analysis of long-term care supply boundary should be combined with long-termcare insurance demand and pension security supply boundary to discuss, to ensure thatthe expenditure of pension security in a sustainable operation state.3. Experience Inspection from Other Countries of the Long-term Care Insurance SupplyFrom the perspective of public-private partnership worldwide, according to threedimensions of whether to provide government subsidies, whether to executecompulsory legal business, and whether to incorporated into social basic medicalinsurance, long-term care security system model can be divided into the followingfour types: one model is private, non-subsidized, and voluntary commercial insurance,as represented by the United States; one model is private, partly-subsidized,compulsory commercial insurance, as represented by on behalf the Netherlands; onemodel is public, partly-subsidized, and separately statutory long-term care socialinsurance system, as represented by Israel, Germany, Japan, and Korea; one model ispublic long-term care allowance system at state expense, as represented by the UnitedKingdom, and Australia. For the differences lie from national conditions and cultures,and despite national strategies to solve their long-term care issues are not the same,,the main idea among established formal security modes includes several models ofgovernment welfare (or relief), social insurance, commercial insurance, and personalsavings. Compared with other modes, the income redistribution effect of the insurancemode is significant, and therefore the insurance mode becomes a mainstream mode tosolve the problem of long-term care security.Long-term care insurance model in each nation currently are facing long-termcare costs rising pressure, resulting in long-term care expense faster than long-termcare financing income, and long-term care insurance mode faces a payment crisis.The reasons that cause long-term care insurance mode’s payment crisis can be dividedinto internal systematic causes and external systematic causes. The internal systematicreasons include the financing standards, the payment standards, the managementmodes, the operational efficiency, and the security coverage, etc. in the system design,and the conditions from nation to nation are not consistent. The external systematiccauses include the aging population and scientific and technological progress, etc.,and an aging population and the progress of science and technology are commonproblems each nation needs to face, and are also the most important two reasonsaffecting the long-term care insurance mode. Through the analysis of typical cases, which are the United States, as a representative nation to emphasize on thedevelopment of long-term care commercial insurance market, and the Germany, as arepresentative nation to emphasize on the development of long-term care socialinsurance market, in the world, and concludes six important revelation-the accuratepositioning relationship of the government and the market is a premise to ensure thescientific system design, the persistent financing mechanism establishment is a basisto ensure the smooth running system, the critical review and control of the insurancepayment conditions is an key to ensure system with an balance of payments, theadjustment mechanism coordinated with the index-linked is an essential condition toensure the system goals, and the focusing on the top-level design of the social securitysystem is a guarantee to ensure an effectively managed system.4. China’s Supply and Demand Relationship of Long-term Care InsuranceFirst, this paper uses the population projection model and the product actuarialmodel to dynamically estimate for the first time China’s2010-2050long-term careinsurance demands. The calculation results show:(1) For the absolute value of long-term care expenses, the long-term careexpenses in2010is199.921billion Yuan, remains high growth situation after2010,and the long-term care expenses in2050will reach11.26trillion Yuan,23.96trillionYuan and50.25trillion Yuan respectively according to low, medium and highstandards, which are56.34times,119.84times and251.36times of long-term careexpense in2010, with a very breathtaking growth;(2) For the relative value of long-term care expenses, the percentages oflong-term care costs in GDP from2010to2050keep a state of rising, with concretenumerical values respectively for0.50%in2010,1.04%in2020,1.77%in2030,2.82%in2040and3.99%in2050, explaining that the long-term care expenses to thewhole society with the economic burden become more and more serious.Second, this paper uses the population projection model and the product actuarialmodel to dynamically estimate for the first time China’s2010-2050long-term careinsurance supply. The calculation results show:(1) The government guarantee ability of long-term care insurance supply may be measured and calculated in accordance with three different specifications of low,medium and high caliber. Taking401.202billion Yuan that the government can usethe biggest public financial investment in2010as a benchmark, the biggest publicfinancial investment which the government can use by2050is:2.82trillion Yuan (lowestimate),6.01trillion Yuan (medium estimate), and12.6trillion Yuan (highestimate).(2) The personal financing ability of long-term care insurance supply may beanalyzed according to the social pool account (the intergenerational exchange theory)and individual savings accounts (personal life cycle theory). Specific analysis isfollowed as:According to the social pool account, personal financing for the minimumboundary can be described as: the biggest long-term care public spending that thegovernment provides in2010can cover the long-term care insurance cost, so thatindividuals can even not make capital contribution for long-term care fund balance. In2020the biggest long-term care public spending that the government provides cancover the basic long-term care insurance cost with no finance surplus. From2020years as a starting point, the biggest long-term care public spending that thegovernment provides can not meet the national long-term care insurance needs, andfor this reason began to form a personal financing responsibility minimum boundary.From2020to2050, the personal financing minimum boundary from23.4-34billionYuan rapidly rises to8.4-37.7trillion Yuan, the percentage of personal financing inGDP from0.04%quickly rising to2.99%. In addition, from China’s Cobb-Douglasproduction function statistics result, China’s national labor share is53.57%, andcapital share is46.43%. According to the basic logic of labor share in China’sCobb-Douglas production function, we may assume that from2020to2050thepercentages of personal financing in labor compensation are as followed:0.07%in2020,1.44%in2030,3.40%in2040, and5.58%in2050. It is important to note thatthe above discussion of the personal financing minimum boundary implies anunderlying premise, which is the government public spending on long-term care istaken as a first payment order, and personal financing responsibilities is taken as a second payment order, and meanwhile all these may not be consistent with therealities. In fact, the follow-up for long-term care insurance supply path design istaken personal financing as the main sources of financing, and public spending is onlyused as the provision of premium financial subsidies. From this perspective point ofview, the discuss on personal financing minimum obligation boundary is of thetheoretical significance than practical significance, because the opposite can beinferred that in the early system this exemption from the personal financingresponsibilities, due to the rigidity of social welfare, will make the government faceincreasingly heavy pressure on public spending, and thus fall into the social welfaretrap.According to the practice of individual savings account, personal financingburden level can be described as: according to the simulation test for long-term careinsurance premium in this paper, selecting a35years old man’s insurance premiumrate to analyze, assuming that each year long-term care service fee of each long-termcare patients in cities and towns is equal to the average each year income ofon-the-job worker in national cities and towns(not private unit), and not consideringpersonal wage income growth and long-term care cost growth, according to the feepaid until60years each year, the corresponding insurance cost is accounted for3.09%of the wage income. Taken current China’s urban workers basic medical insurancefinancing source as the reference system, even if the long-term care insurancepremium subsidies the government providing are not taken into account, personalfinancing ability is also feasible in some degree.5. China’s Path Design of Long-term Care Insurance SupplyBased on the calculation results of long-term care insurance supply and demand,this paper for the first time raise a new idea to resolve the problem of nationallong-term care security, that is based on the product actuarial model to price insuranceproduct actuarial premium, to adopt " individual+government" simple financingmode, and to establish long-term care insurance national integration supply path. Thesystem is designed with specific details followed as:(1) For product design, according to "the long-term care insurance premium simulation test" results, it is based on product actuarial model to determine theinsurance products and provide insurance premium products.(2) For fund procurement, abandoning multiple traditional contribution model ofindividual, unit and the government, this paper adopts an "individual+government"simple contribution mode, individual financing not connecting with any benchmarksuch as salary, the government’s financing adopting regressive financial subsidies ratesystem. In the long run, if the external environment conditions have feasibility,"individual+government" simple financing mode can be used as a transitional systemarrangement, and ultimately to the "individual" single financing mode.(3) For reimbursement standards, this paper assumes that long-term care servicescompensation is equivalent to average income of non-agriculture workers, and set toplimit in this way, without setting the floor level.(4) For the operation mechanism, this paper innovate actively "public-privatecooperation", that is, setting up a "national long-term care insurance managementcenter", entrusting the national social security fund to invest, and entrustingcommercial insurance companies to handle business.(5) For the legal effect, this system adopts initially a design method of policyguidance and voluntary insure, and in the future this system may consider introducingcompulsory insurance style for basic sum assured. In addition, borrowing ideas fromprimary medical treatment insurance system practice experience, the long-term careinsurance system may consider to firstly introducing compulsory insurance style intown worker groups.Concluding RemarksThis paper uses the population projection model and the product actuarial modelto dynamically estimate for the first time China’s2010-2050long-term care insurancedemands and demonstrates the response to long-term care security in the context ofChina’s aging population has a necessity; this paper uses the population projectionmodel and the product actuarial model to dynamically estimate for the first timeChina’s2010-2050long-term care insurance supply and demonstrates long-term careinsurance financing mechanism in the context of China’s aging population is feasible; based on the analysis of the relationship of supply and demand of long-term careinsurance, this paper puts forward a new idea for the first time to solve the problem ofnational long-term care security in China–that is the establishment of long-term careinsurance national integration supply path, and demonstrates long-term care insurancenational integration supply path in the background of aging population is a bettersolution.
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