Association for Public Policy Analysis & Management

We examine the effect of the government-subsidized long-term care on health care utilization, health outcomes, informal care, and living arrangement of the elderly using a regression discontinuity design. The Korean government legislated the law that obligates Korean citizens to join the national long-term care insurance and started to subsidize long-term care service (home care and institutional care) since 2008. Our identification strategy exploits the fact that eligibility for the long-term care insurance is determined by the approval score (which is based on the examined health status of the elderly) being higher than a certain threshold. We find that the medical expenditure and days in hospital covered by the national health insurance decrease for the patients who are eligible for long-term care subsidy. The results imply that long-term care insurance leads the elderly to utilize less medical services, without affecting mortality. There is also an increased propensity for the eligible elderly to live independently.