Study On The Effect Of Low Pricing Policy For The State-Run Aged Care Institution

The price of many state-run Aged Care Institutions (ACIs) is lower than full cost. With the improvement of living standards and the old-age pensions, the real prices show downward trend. In this case, the government provides not only construction subsidy but also operational subsidy to state-run ACIs.We find in a case study on one state-run ACI that over75%old people broke the queue discipline (went through back door) in the hot competition for the low price beds. The old-age who worked in state organs before, or who are not sensitive to prices usually have a strong economic strength and a good collection of social resources, and are more likely to break the queue discipline. In result, the low income disabled old people who need subsidy most have to wait for a longer time.The low pricing policy on state-run ACIs should be reformed. The supply-side subsidy should be replaced by the demand-side subsidy. The price should be raised to compensate the full cost in the long run and anchored to market price of food and labor.