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Functional disability with systematic trends and uncertainty: a comparison between China and the US

Published online by Cambridge University Press:  02 December 2021

Yu Fu ,
Michael Sherris  and
Mengyi Xu Open the ORCID record for Mengyi Xu [Opens in a new window]
Yu Fu
Affiliation:
National School of Development, Institute for Global Health and Development, Peking University, Beijing, China
Michael Sherris
Affiliation:
ARC Centre of Excellence in Population Ageing Research, UNSW Sydney, Kensington, Australia School of Risk and Actuarial Studies, UNSW Business School, Sydney, Australia
Mengyi Xu*
Affiliation:
ARC Centre of Excellence in Population Ageing Research, UNSW Sydney, Kensington, Australia Department of Statistics and Department of Mathematics, Purdue University, West Lafayette, IN 47907, USA
*
*Corresponding author. E-mail: xumy@purdue.edu
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Abstract

China and the US are two contrasting countries in terms of functional disability and long-term care. China is experiencing declining family support for long-term care and developing private long-term care insurance. The US has a more developed public aged care system and private long-term care insurance market than China. Changes in the demand for long-term care are driven by the levels, trends and uncertainty in mortality and functional disability. To understand the future potential demand for long-term care, we compare mortality and functional disability experiences in China and the US, using a multi-state latent factor intensity model with time trends and systematic uncertainty in transition rates. We estimate the model with the Chinese Longitudinal Healthy Longevity Survey (CLHLS) and the US Health and Retirement Study (HRS) data. The estimation results show that if trends continue, both countries will experience longevity improvement with morbidity compression and a declining proportion of the older population with functional disability. Although the elderly Chinese have a shorter estimated life expectancy, they are expected to spend a smaller proportion of their future lifetime functionally disabled than the elderly Americans. Systematic uncertainty is shown to be significant in future trends in disability rates and our model estimates higher uncertainty in trends for the Chinese elderly, especially for urban residents.

Keywords

Functional disabilityLife expectancySystematic trend and uncertaintyMulti-state latent factor intensity model
Type
Original Research Paper
Information
Annals of Actuarial Science , Volume 16 , Issue 2 , July 2022 , pp. 289 - 318
Copyright
© The Author(s), 2021. Published by Cambridge University Press on behalf of Institute and Faculty of Actuaries

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