Public Policy Bulletin (7th Issue - December 2023)

4 Follow Us on Social Media (852) 3469 2721 The Hong Kong University of Science and Technology c/o Division of Public Policy (PPOL) Room 4611, Academic Building, Clear Water Bay, Kowloon, Hong Kong Alex Jingwei HE is Associate Professor in the Division of Public Policy at HKUST. He served previously as Associate Head of the Department of Asian and Policy Studies at EdUHK. Prof. He specializes in public policy analysis, health policy and governance, and comparative social policy, with a particular focus on East Asia. He has published extensively in these areas and was ranked among the top 2% of the world's most-cited scientists in public administration and political science (as measured by his single-year impact in 2021), and in 2020 his research was rated ‘outstanding’ (with four stars) by the international expert panel at UGC's RAE. As a policy scholar, Prof. He is actively engaged in policy advocacy. to absorb LTC expenses with retirement savings. The bequest motive was not a statistically significant factor in explaining purchase interest. The empirical results indicate diminished importance of the bequest motive when compared with what previous studies (including those carried out in Chinese settings) have found. While earlier studies have found this motive to be a significant factor in senior financial planning, the results of this study suggest otherwise. Some major changes in family values, individualism, and independence are shaping the financial planning behaviors of middle-aged adults in Hong Kong. Recommendations Calling for sound real-world actuarial analysis Many post-industrialized societies like Hong Kong have been experiencing major changes in societal values, family structure, and intergenerational relations; the value of self-reliance and the preference for formal care are evidently on the rise, and such changes have provided profitable opportunities for the development of LTCI. This survey study was based on a discrete choice experiment built on actuarial projections; several important assumptions were made when performing the actuarial analysis that may not fully hold; and the hypothetical plans that the study presented to respondents were illustrative in nature and may not necessarily reflect what an actual launched product would look like in the real LTCI market. As a result, a sound real-world actuarial analysis is required to meet basic principles associated with commercial insurance, and insurance product design should consider socioeconomic and cultural dynamics. Calling for public education programs and information campaigns Although the literature does not suggest an especially bright prospect for private LTCI even in free-market economies, middle-aged individuals surveyed for this study seem receptive to LTCI, as the response rate was as high as 60%. Given their lack of familiarity with the LTCI market (even though most demonstrated a basic level of financial literacy) and habitual adherence to conventional ways of financing LTC costs such as savings and assets, however, the majority of these better-off middle-aged Hong Kong residents seem to believe that their LTC needs can be met by hiring domestic helpers and providing self-insurance, limiting their interest in LTCI. As a result, public education is necessary to inform members of high-income, superaging societies about LTCI. On the other hand, although the LTCI paradox may result in part from the intrinsic characteristics of insurance plans themselves (such as the high premium cost in the hypothetical package), demandside issues are responsible to a larger extent for the underdevelopment of the LTCI market: low awareness of LTC costs, short-sightedness, and habitual adherence to out-of-pocket payments of LTC costs from savings or assets (instead of subscribing to prepaid insurance plans that offer fairly generous packages, even in a society like Hong Kong, with a highly developed finance industry and wide coverage of commercial insurance). Lack of familiarity with LTCI and concerns about commercial insurers will likely discourage consumer acceptance. Education and information campaigns could clear away these hindrances on the way to understanding and accepting LTCI. Main Reference He, Alex Jingwei, et al. "Willingness to Purchase Hypothetical Private LongTerm Care Insurance Plans in a Super-ageing Society: Evidence from Hong Kong." Journal of Aging & Social Policy (2023): 1-26. Contact Us Public Policy BULLETIN Private Long-Term Care Insurance in a Super-aging Society: A Purchase Motivation Study in Hong Kong