Author(s)

Xiaodong Cui

Corresponding Author

Xiaodong Cui

ABSTRACT

Long-term care security system is an inevitable choice to transfer long-term care risks in the context of aging. This study is aimed to provide a mathematic basis for the long-term care cost estimation. Based on the evaluation of the existing models, this paper establish multistate estimate model with piecewise constant transition probability matrices. Using the sample from the latest two waves of Chinese Longitudinal Healthy and Longevity Survey, we construct dynamic transition matrices based multistate Markov model, which avoid static assumptions limitations and the subjectivity of model specification in regression; Using transition intensity piecewise constant we forest the future transition matrix, which can solve Markov time homogeneity hypothesis; With actuarial theory and empirical life table data, the individual long term care costs are derived and calculated. The estimation method constructed in this paper has the advantage of theoretically relaxing the estimate hypothesis and improving the prediction accuracy, and at the same time, the gender and age characteristics of the measured results are consistent with the health theory.

KEYWORDS

Long-term care cost, State Transition Probability, multistate model, Markov process