Long-term care insurance will cover the entire country by 2028, giving rise to a new trillion-yuan elderly care service market

Long-term care insurance is being rolled out nationwide, and the social security system’s “sixth insurance” has been put in place. With this, China’s social security system has finally filled the institutional gap for disability care.

On March 26, the State Council Information Office held a press conference on accelerating the establishment of a long-term care insurance system. Wang Wenjun, Deputy Director of the National Healthcare Security Administration, said at the briefing that the “Opinions on Accelerating the Establishment of a Long-Term Care Insurance System” released on March 25 (hereinafter referred to as the “Opinions”) clearly require that, over about three years, a long-term care insurance system basically suited to China’s basic national conditions should be established. This marks the transition of system building from localized pilots to nationwide rollout. By the end of 2028, the system is expected to be basically fully covered across the country.

The establishment of long-term care insurance is not only an institutional arrangement to address population aging, but also reflects a shift in social security—from “protecting survival” to “protecting dignity.” It enables people with disabilities to live with greater dignity in familiar home and community environments, and gives family members a chance to catch their breath amid heavy caregiving burdens.

Multiple experts interviewed by First Financial Daily said that unified premium rates, a benefits model centered on services and cash-equivalent payouts, a financing mechanism based on capacity to pay (contributions based on actual affordability), and a scientific, standardized management and operations mechanism are the core of the long-term care insurance system design. After the long-term care insurance fund “opens the gate,” the more than RMB 100 billion of stable annual payments will become the greatest certainty for the elderly care services industry, and will also help the industry move onto a standardized, healthy development track.

A Ten-Year Pilot Covering 308 Million People

The long-term care insurance system is a social insurance system that provides services or funding protection for the basic living assistance and medically related nursing care closely associated with people with disabilities. It is an important component of China’s social security system and a crucial part of implementing the national strategy of proactively addressing population aging.

Following the principle of “pilot first, then roll out,” the state organized two rounds of local pilots in 2016 and 2020 to conduct local explorations of the long-term care insurance system. According to data from the National Healthcare Security Administration, the pilot coverage areas expanded from 15 at the start of the 2016 rollout to 92 by the end of 2025, and the covered population has reached 308 million. Cumulative fund expenditures have also exceeded RMB 100 billion, providing nursing care service support for more than 3.3 million people with disabilities and easing family burdens.

Over a decade of piloting, long-term care insurance has grown from nothing to something, and from points to a full-scale rollout. Each pilot region has accumulated rich experience nationwide in areas such as financing mechanisms, benefit standards, and management models.

Wang Wenjun said the long-term care insurance pilots explored four things: first, exploring an urban-rural integrated institutional model, effectively improving the fairness and pooling capacity of the system; second, exploring a diversified shared financing mechanism, clarifying the financing responsibilities of institutions, individuals, the government, and society; third, exploring a scientific and reasonable benefit-determination mechanism. Pilot regions focused on key questions such as who is eligible for benefits, how benefits are received, and how much one can receive, and refined benefit protection policies one by one; fourth, exploring effective management and operations mechanisms to enhance standardization and regulation in management services.

In related research, Zheng Bingwen, Director of the World Social Security Research Center at the Chinese Academy of Social Sciences, said that one of the most important achievements of the long-term care insurance pilots was obtaining an important reference range for the long-term care insurance financing level—that is, the financing level for urban employees can be set at 0.3% of the medical insurance contribution base. This became the basis for setting a unified financing level nationwide.

Based on pilot experience, the National Healthcare Security Administration has successively issued 17 supporting documents, including measures for the assessment and management of disability levels, designated management of service institutions, a catalogue of service items, training and cultivation for long-term care aides, and other documents. This formed the institutional framework of long-term care insurance: “one main subject document plus 17 supporting policy measures.”

First Financial Daily learned from the National Healthcare Security Administration that after the Opinions were issued recently, provinces are stepping up efforts to develop and implement plans, and submit them for filing to the National Healthcare Security Administration and the Ministry of Finance. As of now, implementation plans from 11 provinces have been completed and filed.

The Opinions require that regions should not advance in lockstep or apply a one-size-fits-all approach. Reform should be advanced in steps and batches. Regions with the necessary conditions may launch first; regions without conditions may start with employees and gradually expand coverage to residents.

What’s New About the “Sixth Insurance” in Social Security

With long-term care insurance rolling out nationwide, China’s social security system is gradually entering the era of “six insurances and one fund.”

Long-term care insurance, aimed at solving the long-term caregiving difficulties of people with disabilities, compared with the five traditional insurance categories—pension, medical, unemployment, work-related injury, and maternity—has many new breakthroughs in its institutional design.

Wang Wenjun said long-term care insurance adheres to five principles: universal coverage, urban-rural integration, fairness and uniformity, safety and standardization, and sustainability.

Dai Weidong, a professor at Zhejiang University of Finance and Economics, told First Financial Daily that long-term care insurance is a “new-born” system. It has no historical baggage, and can be implemented all at once, designed according to new rules. Unlike basic pension insurance and medical insurance, it does not continue the old dual structure dividing urban and rural areas. Instead, it provides unified coverage for both urban employees and urban-rural residents. This is a major step forward.

Specifically, the system requires that all employees and residents participate in long-term care insurance. Within the same pooling region, it does not distinguish between urban and rural areas. Regardless of whether insured persons come from rural areas or from cities, they reimburse expenses and receive benefits from the same funding pool.

Start by Protecting People with Severe Disabilities

The establishment of long-term care insurance means a shift from relying on family informal caregiving for people with disabilities to building a formal institutional system led by the government with shared responsibilities. This system clarifies the boundaries of responsibilities among the state, society, and individuals through the establishment of a scientific financing mechanism. It also ensures that public resources serve precisely the groups most in need through a unified disability assessment mechanism.

The Opinions propose implementing fair and appropriate benefit protections. They comprehensively consider factors such as the level of economic development, the ability of funds to support, and the people’s basic needs for protection. They should start at a low level, do their best, and act within their means. They should rationally determine the eligible protection targets, service items, and benefit standards, and ensure the basic bottom line of people’s livelihoods.

Zhang Xifan, head of the Benefits and Protection Department of the National Healthcare Security Administration, said that any insured person who has passed a disability level assessment and meets the conditions for receiving benefits can receive corresponding nursing care services and get reimbursed. At the initial stage of the system, the protected targets are people with severe disabilities whose needs are most urgent and whose families bear the heaviest burden—mainly those who are bedridden long-term, cannot take care of themselves in daily life, and need others to provide care. In the future, as economic development and the level of protection improve, the national level will conduct unified research on expanding coverage to people with moderate disabilities as well.

Dai Weidong said the “gatekeeper” of long-term care insurance is the assessment of disability levels. Whether the person is an elderly adult, a young or middle-aged person, or a child—so long as they have diseases, injuries, or disabilities, and after professional assessment reach the prescribed disability level, they can become beneficiaries. Of course, due to population aging, older people are the main group, but younger people can also become disabled due to accidents or rare diseases and are covered as well.

Unlike basic medical insurance, long-term care insurance reimbursement does not set a deductible threshold. The annual maximum reimbursement limit of the fund must not exceed 50% of the prior year’s per capita disposable income of urban and rural residents in the pooling region.

Currently, there are mainly three types of places that provide long-term care services for people with disabilities, and insured persons can choose independently. If they choose home-based care, personnel are sent by designated institutions to provide services at the person’s home. If they choose community care such as designated day care centers, they can conveniently receive non-full-day services nearby. If they choose to live in designated institutions and receive institutional care, the institution provides full-day services.

Zhang Xifan said that because most elderly people want “to receive care for aging without leaving home,” the Opinions encourage the use of home-based care and community care, and tilt funding payments accordingly, so that older people can get services and protection at home and right at their doorstep.

In Chengmai County, Hainan, First Financial Daily met Mr. Wang, who has been paraplegic for more than 20 years due to a car accident. Things like rolling over, bathing, and eating are extremely ordinary, but for more than 20 years, they have depended entirely on his wife caring for him without stepping away. For him, his wife quit her job, caring for him from age 40 to her 60s.

After Chengmai launched long-term care insurance, Mr. Wang became one of the first beneficiaries. After being recognized as having a severe Level 1 disability, he can receive 20 hours of professional nursing care each month. Each week, the nurse visits three times to help him roll over, wipe and bathe him, and massage him, and to push his wheelchair to the yard so he can enjoy the sunshine. The nurse also teaches family members, step by step, how to prevent pressure sores and how to use medication correctly.

“In the past more than 20 years, I’ve always been lying on the bed in the room. I haven’t gone out.” Now 66, Mr. Wang has a clear mind, only that his body can’t move. He told First Financial Daily that the biggest change long-term care insurance has brought him is that he can go out every week to the yard to take a look.

Injecting Certainty into the Elderly Care Industry

The Opinions also clearly state that the fund is mainly used to pay for long-term care service institutions and personnel that meet regulations for the costs incurred in providing basic long-term care services, and in principle it does not directly distribute cash to people with disabilities.

Zhu Minglai, Director of the Health Economics and Medical Security Research Center at Nankai University, told First Financial Daily that with services at the core, promoting industry specialization is the key feature of long-term care insurance benefits. In principle, the fund does not directly hand cash to people with disabilities. Instead, it pays for the nursing care services actually received by people with disabilities. This means insured persons receive professional services, and the fund pays the service institutions directly—not giving the money to individuals to use however they want.

In the past, the biggest pain point in elderly care services was “having needs but no payment.” Long-term care insurance provides stable and ongoing payers, unlocking market capacity for elderly care services.

Zhu Minglai believes that behind this design there is deeper consideration. Through the “purchase of services” approach, long-term care insurance can effectively promote the development of the nursing care service industry and enhance the capacity for professionalized services. Only when services become the core of payouts can the market be nurtured, professional institutions can grow, and service personnel can obtain a stable career development pathway.

Wang Wenjun said that for the industry, long-term care insurance means “pulling” demand. It can be said that the establishment of this system has spawned new business formats and new models, such as research, production, and leasing of assistive devices; disability level assessments; and participation by social forces in handling affairs, all of which can become new sources of economic growth. According to preliminary statistics, since the pilot began in 2016, long-term care insurance has pulled social capital investment into related industries of more than RMB 60 billion.

Long-term care insurance is an insurance type where service provision is the main focus. In pilot regions, the advantages of the long-term care insurance fund—large-scale purchases and timely payments—have driven the development of industries such as long-term care services and rehabilitation assistive device leasing from nothing to something and from small to large. While the stability of the system provides clear expectations for the market, it is also giving rise to a batch of new business formats and new models, promoting the simultaneous improvement of capacity and quality in related industries.

During the pilot period, the long-term care fund cumulatively purchased more than RMB 100 billion worth of nursing care services. Designated service institutions reached 12,000—ten times the level at the start of the pilot. The National Healthcare Security Administration estimates that after the system is fully rolled out, there will be RMB 100 billion-level funds entering the market every year. This will effectively reduce uncertainty in long-term care market operations and strengthen market entities’ confidence in continuing to invest capital.

Huang Xinyu, Director of the Pharmaceutical and Medical Services Administration Department of the National Healthcare Security Administration, said it is necessary to actively adapt to trends in artificial intelligence and big data, give full play to the long-term care insurance purchasing role, and actively explore promoting and applying intelligent services in long-term care scenarios. Next, the National Healthcare Security Administration will, together with changes in population conditions and the development of the system, explore the possibility of including intelligent long-term care-related services and supportive assistive devices within the payment scope of long-term care insurance, to better meet diverse service needs.

(This article is from First Financial Daily)