D ISTRIBUTION OBJECT AND DISTRIBUTION CONTENT

Distribution object refers to the beneficiaries of the social LTCI system. On the basis of Gilbert’s universal selection theory, an analysis is made from the perspectives of demand,

protection of rights and interests, and living conditions of the elderly. Inspired by the de- sign of care insurance in Germany, China should follow the principle of "care insurance adheres to medical insurance". However, China as the world’s most populous country, is in an underdeveloped stage of economy. The Germany’s LTCI model should not be di- rectly copied. Considering the situations such as low level of economic development, huge urban-rural disparities, regional disparities and wide income disparities among staffs in different industries, it is impossible for everyone to enjoy social LTCI at the first stage.

Meanwhile, distribution content is the core challenge of LTCI. As a final target, China’s social LTCI should mainly provide basic care services, which aim to compensating the heavy loss of daily living abilities, including short-term care after discharge, life care for those with heavy chronic diseases, etc., correlating to the basic care in Germany. How- ever, similar to the situation of distribution object, this should be implemented step by step starting from medical care services as compensation. Otherwise there may be conse- quences of haste. The establishment of a social LTCI model suitable for China should be carried out in three steps [240].

THE FIRST STEP: STARTING FROM COMMERCIALLTCI

The first step is to adopt a commercial LTCI model. In the developed urban areas in China, commercial insurance can be initialized and applied for high-income industries and urban workers to reduce the risk of their long-term elderly care. As for rural areas, apart from poor economic conditions, since the families from villages usually have more than two children, the task of elderly care seems less urgent than in urban areas. Secondly, because of the large base number of the elderly population and the rich customer groups, coupled with the rising medical and nursing costs for the elderly with chronic diseases, it poses an eco- nomic threat to the lives of the elderly and increases their desire to buy commercial LTCI. In addition, because of the lower foundation of China’s economy, the situation of "getting old before rich" has imposed great economic pressure on the Chinese government, which can not be totally relied on to solve the problem of long-term care challenges for the elderly. Moreover, the demand for long-term care for the elderly is complex, and the difference of people’s income level also determines that the content of care insurance should be di- versified. The flexible policy design of commercial LTCI can better meet this requirement. Under the current economic situation in China, developing commercial LTCI should be the

best choice.

Specifically, commercial LTCI should be developed for middle-class families and above in economically developed urban areas. However, it must be noted that adopting this model may result in many low-income families not being secured. Individual consumers, who are in disadvantage position of information asymmetry, usually prefer to choose non- profit insurance providers because they think that the non-profit insurance providers, namely the government, will earn less profit than the profitable insurance providers [241]. There- fore, after a period of time, commercial LTCI should gradually transit to the combination of commercial and basic social LTCI. Commercial LTCI acts as a supplementary mode of basic social LTCI.

THE SECOND STEP: COMBINATION OF SOCIALLTCIAND COMMERCIALLTCI

The second step is to combine social basic LTCI with commercial LTCI, which mainly fo- cuses on medical care compensation. At this stage, the existing basic medical insurance conditions can be used to establish a social LTCI system, which mainly focuses on medical care compensation. It is only responsible for the compensation of medical cost of long- term care, excluding the cost of daily care. The cost of daily care and the uncovered part of basic long-term care can be compensated by purchasing commercial insurance. The specific coverage of commercial insurance should include all the insured persons who par- ticipate in the basic medical insurance, as well as the elderly people who have no source of livelihood and no support, the low-income people and the families who have lost their children.

Through this step, not only the needs of long-term medical care insurance of most peo- ple can be guaranteed, but also the needs of rich people for high-level long-term care ser- vices can be met by purchasing commercial insurance, and the burden of government will not be excessive. At the same time, as the first phase of commercial LTCI has been fully developed, it has given the necessary and favorable conditions for its rapid and full inte- gration with basic long-term medical care insurance.

THE THIRD STEP: SOCIALLTCIINCHINA

Third, the government implements a compulsory national LTCI model, including long- term medical care insurance and daily care insurance. Residents participating in medical

insurance should take part in LTCI. The policy of remission and exemption shall be imple- mented for those who meet the requirements and can not afford to pay insurance premi- ums. Participants under 65 years old can only be compensated by LTCI if they either have severe disabilities, or suffer from specific diseases, when the cost of long-term care arises.

Meanwhile, in developed areas such as the east, care services should be provided as a major role, and cash payments should be prohibited, because the income level of the el- derly is relatively high there. In the west and other less developed areas, cash payment should be the mainstay. In addition, learning from the principle in prioritizing rehabilita- tion of Germany should be advocated and more importance to prevention and rehabilita- tion should be attached, to thoroughly change the current situation of China’s medical and health system, which emphasizes treatment rather than prevention.