With the increase of aging population, long‐term care insurance (LTCI) systems have become important for improving individuals' health. However, the effect of LTCI on health is unclear, especially in developing countries, owing to the lack of random policy shocks and comprehensive databases. This study investigates the Chinese LTCI pilot program, using four waves of the China Health and Retirement Longitudinal Study database (sample aged ≥45 years) from 2011 to 2018. The recent difference‐in‐differences approaches for staggered design, which are capable of dealing with the negative weights issue, are used to investigate changes in health status, measured by self‐rated health (SRH), (instrumental) activities of daily living, self‐rated depression, and cognition, in pilot and non‐pilot cities before and after LTCI implementation. Long‐term care insurance has a significant average effect on SRH improvement and a long‐term positive effect on cognition for middle‐aged and older populations. This study provides the first evaluation of LTCI policy on health outcomes using the recent difference‐in‐differences approaches. It provides evidence for the overall health improvement achieved through the LTCI and offers positive reinforcement and potential areas for improvement in establishing LTCI worldwide.