China’s population aging andhealth system reform
Xuejin Zuo
Shanghai Academy of Social Sciences“Well-being in Ageing Societies: Perspectives
from China, Germany and Japan”
CASS, Oct 23-25, 2013

China’s DemographicTransition
China’s dramatic fertility decline since the1970s and continued increase in life
expectancy lead to population aging.
 Elderly 65+ accounted for 8.9% of the total
population in 2010 Census, 9.2% in 2012.
Total size and age structure of thepopulation as reported by census
YearTotal(million)

Aged0-14(%)

Aged15-64(%)

65 andolder(%)

1953

594.35

36.28

59.31

4.41

1964

694.58

40.69

55.75

3.56

1982

1008.18

33.59

61.50

4.91

1990

1133.68

27.69

66.74

5.57

2000

1265.83

22.89

70.15

6.96

2010

1339.72

16.60

74.53

8.87



China’s elderly 65+ would account for,respectively, about 25%, 30% and 40%of the total population around the mid21 century as projected by the high,medium and low variants of UNProjections.

China’s actual (1950-2010) and projected(2010-2100) population changes

China’s actual and projected
population aging (1950-2100)

Epidemiologic TransitionPopulation aging and rapid change in lifestylewith higher incomes and improved living
standard over the past three decades of rapid
development have resulted in “epidemiologictransition” in both urban and rural areas.
 The major causes of death have shifted
toward increasing prevalence of noncommunicable diseases (NCDs).
A recent survey finds that 11.6 percentof Chinese adults (14.3% of urbanadults and 10.3% of rural adults) had
diabetes in 2010. By comparison, it was
only one percent in 1980.
 China’s morbidity of diabetes (11.6%)
was already higher than that of the USA(11.3%).
The changing lifestyle featured by highcalories (sugar, fat and salt) intake, thelack of physical laboring and exercisesand etc. are the major causes of suchhigh incidence of diabetes and otherNCDs.
 70% of the diabetes patients were notaware of their morbidity.
The epidemiologic transition indicates thecritical importance of preventive intervention
than the curative measures, which tend to be
more costly and less effective.
 But how to motivate the providers to engage
in preventive services remain a challenge tothe country’s health system.
Public health insurance funds are collected
and administered/ managed by localgovernments
 In the present there are three major social
health insurance programs: Social Health
Insurance for Urban Workers and Staff;
Social Health Insurance for Urban (nonworking) Residents, and New Cooperative
Medical Scheme (NCMS) for rural residents.
 Payment to the providers are in generalbased on “fee for services” (FFS).
Price distortion and motivation
to generate revenues
In the country’s health system, there havebeen a long-time practice of over-pricing ofdrugs and high-tech check-ups at the cost ofunder-pricing of labor services of medicalpersonnel.
 Hospitals have to derive most of theirrevenues from services provision and drugsales. The incomes of medical workers areclosely linked to the revenues of the hospitals.
Price distortion and mal-designed
financing lead to mal-practice such as
over-prescription of drugs, high-techcheck ups and other profitable services.

Drug cost account for over 50 percent of thetotal health expenditures in China, compared
to about 5-20 percent in developed countries
and about 15-40 percent in developingcountries.
 Over-pricing of high-tech medical tests leads
to over investment and over use of theseexpensive equipments. In Urumqi, the capitalof China’s northwestern province of Xinjiang,
There are more CT scanners in the city thanin the whole country of Belgium.
In the meantime, there has been a underprovision of physician/nursing services. The
poor services and the absence of accountable
institution to settle disputes between theproviders and patients have contributed tothe increasing tension between the twoparties.
 The lack of appropriate division of labor
among the primary, secondary and tertiary
hospitals result into inefficient use of healthresources.
Preventive intervention are more
efficient and of critical importance forhealthy and active aging.
 Under current system, however,providers have little incentive to do it.
 The health system reform should givehigh priority to preventive care.
Increased need for long-termcareOlder elderly 75+ are more likely toneed long-term care. The total cost on
long-term care will increase dramatically,
given the increase in both the numberof patients and the costs per patient.

The declining role of family
as care-giver
China’s baby boomer cohorts (born in1950s and 60s) will enter old-age in the
coming two decades, they have much
fewer children than their parents.
 An increasing number of older elderly
will live with only their spouses or live
alone (widowed).
Among the three tiers of the health carefacilities, the primary care facilities have more
externalities by the nature of “publicgoods”/“merit goods” of their services.
 By comparison, the services of the tertiaryhospitals tend to be “private goods”.
 The services of the secondary care facilities
are between the two.
Policy suggestions
The government should play a more
important role in the financing of the primaryand secondary providers.
 The government should motivate theprimary/secondary care providers to be moreengaged in preventive care.
 For instance, more weights should be given
to the work and outcomes of preventive
services in the evaluation of performance ofprimary health care providers.
Ask the insurees to choose one of theprimary health center for their services.
 Provide insurees with more incentives
to seek for health care at theprimary/secondary health facilities,
through measures such as lower
deductibles/co-payment.
Extend the preventive care to the nontraditional health care fields such as
promoting good practice in physical exercises(e.g., “Taichi boxing”).
 Highlight and duplicate the good practice ofprimary/secondary providers.
 Supplement the conventional payment
methods with “pay for performance” based on
the health indicators of the residents theprimary providers serve.
The tertiary hospitals can continue tobe financed by social insurance andother insurance programs.
 Eliminate gradually the price distortionin health sector, and consequently therelated mal-practice.
