Does Long-Term Care Insurance Drive Innovation? Empirical Evidence from China

China's Long-Term Care Insurance (LTCI) pilot program was introduced to address the growing demand for care services amid rapid population aging. While existing studies have primarily focused on individual- and household-level outcomes, less is known about the policy's broader market-level effects. This study examines whether and to what extent the implementation of LTCI promotes innovation in the older adult care market. Using panel data on care-related patent applications from 2010 to 2021, we apply a staggered difference-in-differences (DID) approach to estimate the causal impact. The results indicate that LTCI significantly increases the number of care-related patent applications in pilot cities, particularly the number of invention patents, which reflect more substantive innovation. Robustness checks using placebo tests and a combined propensity score matching and difference-in-differences (PSM-DID) approach confirm the reliability of the findings. These results suggest that, beyond its welfare function, LTCI can generate positive externalities by stimulating innovation and fostering the development of the care market for older adults.