According to the seventh national census of China, among the total population of 1.41 billion in 2020, 18.7% were aged 60 and above (Figure 1).¹ Over the last 20 years, with advances in medical and health management, life expectancy for Chinese at age 60 has risen from 18.4 more years to 21.1 years, among which the healthy life expectancy has increased from 14 more years to 15.9 years, while the compromised healthy life expectancy has expanded from 4.4 more years to 5.1 years (Figures 2).²

The growing number of elderly citizens and the prolonged life expectancy of elderly with disabilities has rendered disability care a concern of the Chinese government and the public.

Within traditional Chinese culture, it is considered the responsibility of the family to take care of disabled elderly people. However, with decades of rapid economic development, the traditional family structures have all but gone. Smaller family size, frequent mass migration movements, and the higher employment rate of women have made it challenging for families, especially children, to continue to look after their elderly relatives, resulting in greater demands for Long-Term Care (LTC) services.

This societal change in eldercare is facing many hurdles. The supply of LTC services is far from adequate. In 2021, there were 302,000 caregivers nationwide, compared to over 10 million disabled elderly people, producing a ratio between them close to 1:33.³ Furthermore, the limited income combined with a variety of chronic diseases experienced by many elderly people, have hindered the ability of many families to pay for LTC in addition to their elders’ medical expenses.

Consequently, home care of elderly people is currently the optimal mode in China for its cost-effectiveness and greater acceptability. Community-based care services can serve as important supplements by effectively coordinating resources within the community to provide occasional care services, instead of leaving elderly people at home alone while others are away at work or school.

This kind of home-based care, assisted by community and institutional services is the direction of the primary LTC scheme. Beijing’s 9064 scheme (90% home-based care + 6% community care + 4% institutional care) and Shanghai’s 9073 scheme (90% home-based care + 7% community care + 3% institutional care) are examples of this mode.

LTC Insurance

The pilot scheme of primary LTC Insurance (LTCI) in China was launched in 2012 as an independent insurance in the social security system. Features include:

• The primary LTCI funds adopted diversified financing routes, including individuals, employers, the government, and society. The contribution liabilities and methods for each entity were determined locally in line with the local economic level and allowed for a sustainable long-lasting operation of the funds. To extend the pilot scheme to more places and to boost its progress, most pilot regions transferred funds from the basic health insurance funds to serve as the initial funds of the scheme, and then promoted the diversified financing step by step.
• Similar to the basic health insurance system, the primary LTCI scheme aims at a full coverage of the population. However, before the diversified financing become realistic, the primary LTCI funds rely on the basic health insurance funds only. In most pilot cities, the scheme covered only insured employees of the basic health insurance, in order not to add too much burden to the basic health insurance funds.
• The disability assessment basis and criteria of the primary LTCI were initially individually determined by the pilot cities. Most cities adopted the Activities of Daily Living (ADLs) as the primary assessment indicators, and some cities included other indicators such as dementia and serious diseases based on local demographics and economic conditions. In August 2021, the state issued the “Assessment Criteria of Disability Levels for LTC”, adopting unified assessment indicators, implemental practices, and results interpretations.
  
  The national disability assessment indicators include three primary indicators, namely the ADLs, cognitive competence, perception and communicative competence, and 17 corresponding secondary indicators. The disability level is determined by the comprehensive assessment score. Disability assessment is mainly conducted by a third-party assessment agency under the supervision of the local government authorities.
• The benefit payment threshold of the primary LTCI varies by city. Most cities cover severe disability, and some cities also cover mild to moderate disability or dementia.
• The care services of the primary LTCI include living aid, rental of assistive devices, on-site visits and guidance, etc. Most pilot cities adopt the proportional payment mode with a payment limit. To encourage the utilization of home-based, on-site care and community care services, most cities have set a higher payment proportion for home care.

In 2021, 144.6 million people in China were insured by the primary LTCI and 1.087 million people received corresponding treatment, an increase of 33% and 30%, respectively, compared with 2020.⁴ With the rapid expansion of the primary LTCI, the scheme is constantly improving, in order to integrate the existing advanced age welfare system and the disability welfare system, to improve the supervision mechanism of disability assessment and care service quality management, and to build a system to prevent disability and its worsening.

Years of market cultivation have awakened demands for LTC services in China, resulting in potentially huge demands for the services. However, previous attempts to establish LTC-related commercial insurance focused more on endowment products and did not go further because of insufficient experience data, inconsistent criteria of disability assessment, and varying willingness to engage in LTCI.

After years of exploration, the primary LTCI has built up an almost complete set of frameworks including an institutional system, infrastructure, human resources, and regulatory mechanism, making a more standardized operation of LTC possible. It is a sound and practical way for commercial insurance to link up with the primary LTCI to enter the LTC market.

Based on reliable experience, commercial insurance is expected to further enrich the supply of LTC products, which will become an important complement to the elderly insurance market.

Summary

Years of market cultivation have awakened demands for LTC services in China, resulting in potentially huge demands for the services.

After years of exploration, the primary LTCI has built up an almost complete set of frameworks including an institutional system, infrastructure, human resources, and regulatory mechanism, making a more standardized operation of the LTC possible. It is a sound and practical way for commercial insurance to link up with the primary LTCI to enter the LTC market.

Endnotes

1. http://www.stats.gov.cn/tjsj/zxfb/202105/t20210510_1817176.html
2. https://www.who.int/data/gho/data/themes/mortality-and-global-health-estimates/ghe-life-expectancy-and-healthy-life-expectancy
3. http://www.nhsa.gov.cn/art/2022/6/8/art_7_8276.html
4. Ibid.

Endnotes last accessed 08.09.2022.