Hu Xiaoyi：Exploration for Establishment of Chinese-style Long-term Care Insurance System

The CISSE organizers want me to speak about the development trends of China’s endowment insurance during the 13th Five-Year-Plan period. This is really a great topic, so let me focus on one of the issues under this topic, namely, the “Exploration for the Establishment of a Long-term Care Insurance System” put forward in the 13th Five-Year Plan for Economic and Social Development. This is a forward-looking and practical scheme. Last June, the Ministry of Human Resources and Social Security of China issued a guideline for launching pilot areas of the long-term care insurance. Since then, all the pilot areas have been making active exploration. According to the preliminary-stage proper experience and challenges, there are 6 aspects worth in-depth studies:

First, the new insurance should mainly target disabled elders. Population aging has been and will be the greatest change in China’s social structure in the whole 21st century. Over the past 4 years, China’s aging rate has increased by 1.8%, and it will reach 18.5% (60 += 0.26 billion) and 11.93% (65 += 0.17 billion) by the end of the 13th Five-Year-Plan period. Degeneration of bodily functions, and weakening and even loss of the self-care ability among the aged is never an accident risk or a small probability event, but an inexorable law, and a large-scale phenomenon. Therefore, there have been brisk and urgent demands for long-term care and nursing, and elderly people should be the priority group of the long-term care insurance system. Of course, non-aged disabled people, including handicapped children also need long-term care. However, it is unwise to generalize the target population upon system design at the present stage. It was suggested in the Fifth Plenary Session of the 18th CPC Central Committee that the “Exploration for the Establishment of a Long-term Care Insurance System” should be put under the subject of “Positive Actions for Coping with Population Aging.” This clear orientation of goal should be firmly grasped in exploration and practices in all pilot areas.

Second, the systematization of the new insurance should be within the scope of social insurance. Initially, the International Social Security Association (ISSA) divided social security items into 9 categories (pension, medical care, and 7 allowances involving injury & disability, the bereaved, diseases, industrial injury, maternity, unemployment, and family), without the item of elderly care and nursing. In 1994, it was stipulated for the first time in the Labor Law of China that social insurance contains 5 basic systems involving pension, medical care, unemployment, industrial injury, and maternity. Now, the basic endowment insurance has covered urban and rural residents of the right age, and the basic medical insurance has realized nationwide coverage. These institutional arrangements have played an important role in guaranteeing senior citizens’ basic life and medical care, but this is far from enough to meet long-term care and nursing needs of increasing aged people under the background of population aging. The new needs integrate senior services with medical care, so that neither the current pension insurance nor the medical insurance can work out solely. Therefore, establishing a special system and adopting a new insurance item will be one of the best solutions. After World War II, Japan set up a social security system covering pension, medical care, etc. In 2000, the severe population aging prompted Japan to enact the “Nursing Care Insurance Law”, which has served as an independent insurance system. This is a good example with great reference value.

Third, the new system should strike a balance regarding future concrete operations. Disabled and semi-disabled elders need not only nursing services provided by a medical institution, but also home-based living care, so we should achieve a balance in this regard in system design and practices to correct the improper pattern of laying stress on nursing but neglecting care. Furthermore, temporary and long-term elderly care models are needed under different circumstances. Social insurance should lay emphasis on dissolving economic risks that are unbearable for individuals and families, and should highlight long-term needs. As for temporary needs, the corresponding economic responsibilities should be mainly assumed by individuals and families. Based on this, after sufficient practices and a comprehensive summary, I suggest officially naming the system “Long-term Care and Nursing Insurance,” which calls for both care and nursing.

Fourth, the mechanism design should promote the optimal configuration of resources. The socialist market economy system has been comprehensively established in China. Taking into consideration the experience of social insurance system reform and development, the new long-term insurance system should allow full play to the market mechanism and family’s functions, instead of being wholly undertaken by the government. Funds should be raised through multiple channels, including individuals and families. Service supply should be society-oriented with participation of all kinds of service organizations. Management and handling should be competitive, rather than being monopolized by public institutions. In this process, the government has 4 main responsibilities, including setting up a system framework with active efforts for its organization and implementation, making related rules and organizing formulation of relevant standards, providing financial support, and monitoring system operation and maintaining market orders. This guiding thought of multi-aspect input and comprehensive resource allocation should be confirmed at the beginning of system building, and should be embodied in concrete policy designs, including the policy of home care and nursing. The estimation of the ISSA shows that voluntary care and nursing services provided by women accounts for more than 10% of global GDPs combined. With the extensive issuance of social security cards (over 1 billion) and the accurate, accumulated records of rights and interests, we may consider giving “Elderly Care and Nursing Integral” to family members who have provided long-term care and nursing for their elders, which can offset their expenses when accepting elderly care in the future, or can be directly transformed into their pension or medical insurance interests. This scheme can also be conducive to covering the cash shortage of the government when providing nursing allowances. The concept on the equality of rights and duties should be publicized widely so as to avoid public misunderstanding or unrealistic expectations.

Fifth, the new system should be carried out step by step with several key points. Facing tens of millions of disabled elders, service resources are relatively limited. Therefore, the coverage of the long-term care insurance system should undergo a small-to-large process. A basic task of top priority is the formulation of 3 standards by professional institutions, including the disability grade evaluation standard, the nursing care demand identification standard, and the nursing care service quality evaluation standard, so as to balance supply and demand, and guarantee accurate orientation. Meantime, institutional financial supports (including government funds and capital investment) should be moderate, giving consideration to both people’s sense of gain and the rigidity characteristics of social welfare.

Sixth, a concerted effort should be made to implement the new system. The design, establishment and implementation of the long-term care insurance system will involve multiple disciplines, administrative departments, and social and economic resources. They have their own advantages respectively: some master medical care skills, some highlight family services, some are experienced in social insurance management, some are good at capital management, etc., although they are not without limitations. If each unit works separately, we will get half the results with twice the effort. It is imperative for related departments, and social and economic organizations, especially experts from various aspects, to reach a consensus and pull together to break limitations and pool all advantages to accelerate the implementation of the new system. At present, it is urgent to carry out specialized and standardized trainings among elderly care givers and nurses so as to cover the “Nursing Care Deficit” pointed out by the ISSA, meet the human resource demand in system implementation, and meanwhile boost the employment of women, who have natural advantages for care giving and nursing.