China and the U.S. 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 U.S. has more developed public aged
care and private long-term care insurance than in China. Changes in the demand for longterm care are closely related to levels of and trends in mortality and functional disability.
To understand future potential demand for long-term care, we compare mortality and
functional disability experiences in both China and the U.S. using a multi-state latent
factor intensity model to estimate time trends and systematic uncertainty in transition
rates. 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 a functional disability. Although the elderly Chinese have an estimated
shorter life expectancy, they are expected to spend a smaller proportion of that future
lifetime functionally disabled in contrast to the U.S. 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.