Social Security's "Sixth Insurance" Fully Promoted, No Uniform Step Forward

Securities Times Reporter Deng Xiong Ying

Long-term care insurance, referred to as the “sixth insurance” of social security, has reached a critical point in its institutional development.

Recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the “Opinions on Accelerating the Establishment of a Long-term Care Insurance System” (hereinafter referred to as the “Opinions”), marking a new stage in the nationwide promotion of the long-term care insurance system in China from local pilot programs.

Zhou Jin, a partner at Tianzhi International Financial Consulting, stated that with the accelerating trend of population aging, the group of disabled and semi-disabled elderly is growing larger, and the market demand for long-term care is becoming increasingly significant. The “Opinions” are a major institutional arrangement to improve the social security system in response to this trend.

System Coverage for All, Without Urban-Rural Distinction

China launched pilot programs for the long-term care insurance system in 2016. By the end of 2025, the pilot coverage has expanded to 92 regions, covering 308 million insured individuals, with cumulative fund expenditures exceeding 100 billion yuan, providing care service support for over 3.3 million disabled individuals and alleviating the burden of family care.

Wang Wenjun, deputy director of the National Healthcare Security Administration, stated at a press conference held by the State Council Information Office that based on the summary of previous pilot experiences, the “Opinions” require the establishment of a long-term care insurance system that adapts to China’s basic national conditions within about three years. This marks a significant shift from local pilots to nationwide implementation.

According to the requirements of the “Opinions,” the construction of long-term care insurance must adhere to five principles: First, it must cover all, with all employees and urban and rural residents participating in long-term care insurance; second, it must coordinate urban and rural areas, with no distinction between urban and rural within the same planning area, allowing insured individuals from both rural and urban areas to reimburse expenses and enjoy benefits from the same fund pool; third, it must be fair and unified, maintaining consistency in terms of beneficiaries, assessment standards, contribution rates, and service items across different planning areas to promote relative balance in contribution responsibilities and benefit levels; fourth, it must be safe and standardized, focusing on the management of the system’s operation and improving the quality of service behaviors to ensure the safe operation of the fund; fifth, it must be sustainable, adhering to the principle of doing what is feasible within available resources, determining benefit levels scientifically and reasonably, ensuring the system’s implementation and fund sustainability, and effectively safeguarding the bottom line of people’s livelihoods.

Wang Wenjun stated that establishing a long-term care insurance system is a major institutional arrangement to address the urgent needs of the public and to improve the social security system. Overall, long-term care insurance “protects” the dignity of disabled individuals, “solves” the care difficulties faced by families, and “enhances” the driving force for social development.

Preliminary statistics indicate that since the pilot program began in 2016, long-term care insurance has attracted over 60 billion yuan in social capital into related industries.

Initial Phase Focus on Severely Disabled Individuals

The benefit guarantee of long-term care insurance is one of the most concerning issues for the public. According to the “Opinions,” insured individuals who pay contributions as required and have a long-term disability (generally over six months) may enjoy related benefits after applying and being assessed.

Zhang Xifan, head of the Benefits Guarantee Department of the National Healthcare Security Administration, stated at a press conference held by the State Council Information Office that all insured individuals who meet the conditions for benefit eligibility after undergoing disability level assessments will be able to access corresponding care services and receive reimbursements. According to current assessment standards, disabilities are divided into three levels: mild, moderate, and severe. In the initial phase of the system, the focus will be on severely disabled individuals, who are in greatest need and whose families bear the heaviest care burdens, primarily those who are bedridden, unable to care for themselves, and require assistance from others.

Zhang Xifan stated that as economic development and benefit levels improve in the future, the national level will conduct unified research to expand coverage to include moderately disabled individuals.

Zhang Xifan also emphasized that to ensure fairness in benefits and fund security, all regions will “use the same standard” in disability level assessments, employing a nationally unified assessment standard. “No matter which planning area, the assessment standard remains the same. This approach aims to minimize human interference as much as possible, ensuring that every penny is spent on those who truly need it.”

It was introduced that the long-term care insurance fund is primarily used to cover the costs of basic long-term care services that meet the stipulated requirements and, in principle, will not directly provide cash to disabled individuals.

The fundraising mechanism is the foundation for the sustainable operation of the long-term care insurance system. The “Opinions” propose establishing a diversified fundraising mechanism that aligns with the level of economic development, matches the burden capacity of various parties, and coordinates with sustainability requirements, adhering to the principle of matching income with expenditure and achieving fiscal balance to ensure stable fundraising, independent operation, and actuarial balance. According to the “Opinions,” the long-term care insurance rate is uniformly controlled at around 0.3%.

“Based on past pilot experiences and the fund surplus situations in pilot areas, a rate level of around 0.3% can currently support the stable operation of the long-term care insurance system,” said Zhu Minglai, a professor in the Department of Insurance at Nankai University. The document also mentions that “as the economy develops and the system improves, the national level will conduct unified research to gradually expand the scope of coverage and dynamically adjust rates based on fund expenditure needs.” This dynamic rate adjustment mechanism aligns with the laws of social and economic development and is a common practice in the operation of long-term care insurance internationally.

No One-Size-Fits-All Approach

It is worth mentioning that the long-term care insurance system is entering an accelerated promotion phase, but there will be no one-size-fits-all approach or “blanket policies” in the pace of reform.

The “Opinions” propose that after thorough assessments, targeted guidance will be provided for different cities to advance reforms in steps and batches. For cities that have the conditions, reforms will be advanced steadily and orderly; for those that do not currently meet the conditions, the necessary groundwork will be laid, and implementation will be initiated according to procedures at the appropriate time. Cities that have previously conducted pilot programs for long-term care insurance must adjust and improve their policies in accordance with the “Opinions” and achieve a smooth transition over approximately three years.

From the perspective of coordinating urban and rural planning, regions can start establishing long-term care insurance systems by initially covering employees, retirees, and flexible workers, gradually including unemployed urban and rural residents within the scope of protection.

Wang Wenjun stated that at the planning level, it can start from city-level planning or explore provincial-level planning based on local actual conditions. In terms of reform pace, each province can determine the specific progression based on actual conditions, advancing reforms in steps and batches, allowing cities with conditions to take the lead while others can solidify conditions before implementation. “Overall, there will be no one-size-fits-all approach or ‘blanket policies.’ In terms of coverage, it can start from the employee population and gradually extend to urban and rural residents, or both employees and urban and rural residents can be included in the scope of the system simultaneously.”

Zhu Minglai indicated that there are currently significant differences in fundraising levels, service systems, and other aspects across regions. Therefore, the “Opinions” set a three-year smooth transition period, fully considering the actual conditions in various regions and allowing ample adjustment space for policy implementation.

The supply of long-term care services is the basis for the effective functioning of the long-term care insurance system. To ensure that insured individuals receive higher quality, more efficient, standardized, and accessible long-term care services, Huang Xinyu, director of the Medical Service Management Department of the National Healthcare Security Administration, stated that efforts will focus on advancing work from three aspects: more standardization, greater equality, and increased intelligence, including proper management of designated service points to promote more standardized long-term care services; unifying service items to promote greater equality in services; and strengthening guidance and cultivation to promote increased intelligence in services.

(Edited by: Zhang Xiaobo)

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