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This paper theoretically and empirically analyzes the effects of the elderly’s physical health status on their need for care and the choice of care models in China.

Empirically, the estimation results of a large-sample randomized intervention trial with chronic obstructive pulmonary disease (COPD) patients through the difference-in-difference method indicated the following: (1) After the COPD intervention trial, the physical health status of the elderly in the treatment group improved significantly, the need for care was substantially reduced and the health improvement led to a 35.5% reduction in the probability of using elderly care. (2) The reduction in the need for care regarding the treatment group occurred mainly in social care. The probability of using social care decreased by 67.8% due to the elderly’s health improvement, while that of home care remained unchanged generally. (3) Further heterogeneity tests suggested that families with fewer potential internal resources for caregiving had a more pronounced decline in the need for social care.

Theoretically, these empirical results support the existence of the “pecking order” theory in the family’s choice of elderly care model, that is, families tend to employ all internal resources for caregiving before resorting to social care, resulting in a higher sensitivity of social care to health.

The main policy implication of this paper is that ex ante preventive health intervention policies can significantly alleviate the burden of care, especially social care, on families. And preventive health intervention policies are particularly effective in reducing the burden of the families with relatively few resources for informal internal care.