The impact of reducing formal care benefits on caregivers' well-being: evidence from Japan

This study examines the impact of reducing formal care benefits on the well-being of informal caregivers, contributing to the ongoing discourse about establishing sustainable and adequate levels of formal care. We utilize a reform introduced in Japan's public long-term care insurance system, which curtailed formal care benefits for a group of recipients with low care needs. Employing a difference-in-difference approach with fixed effects on a nationally representative sample of coresident informal caregivers, we explore both the overall and temporal effects of this reform. Our findings reveal that the reform had an adverse impact on caregivers' physical well-being, leading to diminished mobility and stability. The impact on caregivers' mental well-being was less clear, reflecting a competing influence of stress and the psychological rewards associated with caregiving. The decline in physical well-being endured over time, while the effects on mental well-being were transient. Additionally, female caregivers exhibited greater vulnerability compared to their male counterparts, experiencing more significant deterioration in both physical and mental well-being. Alarmingly, the reform also negatively influenced the well-being of care recipients, suggesting that reducing formal care benefits does not yield positive outcomes for either caregivers or recipients. This study underscores the necessity of accounting for caregivers' well-being when evaluating the cost-effectiveness of reducing formal care benefits and advocates for policies aimed at safeguarding female caregivers from health and financial challenges.