Social Security's "Sixth Insurance" Fully Promoted, No Uniform Steps or One-Size-Fits-All Approach

Securities Times reporter Deng Xiong Ying

The long-term care insurance, known as the “sixth insurance” of social security, has reached a critical juncture in its institutional construction.

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 phase in the nationwide promotion of long-term care insurance in China from local pilot programs.

Zhou Jin, a partner at Tianzhi International Financial Consulting, stated that as the trend of population aging accelerates, the number of elderly individuals who are disabled or semi-disabled continues to grow, and the market demand for long-term care is becoming increasingly significant. The “Opinions” is a major institutional arrangement to improve the social security system in response to this trend.

Institutional Coverage for All, Without Distinction Between Urban and Rural

China launched the long-term care insurance pilot program in 2016. By the end of 2025, the pilot coverage has expanded to 92 regions, encompassing 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 summarizing the experiences of the previous pilot programs, the “Opinions” require that within about three years, a long-term care insurance system suitable for China’s basic national conditions be basically established. This marks a significant transition from local pilots to a nationwide rollout of the system.

According to the requirements of the “Opinions,” the construction of long-term care insurance must adhere to five principles: first, universal coverage, with all employees and urban and rural residents participating in long-term care insurance; second, urban-rural coordination, where within the same coordinated area, urban and rural participants are treated equally, reimbursing expenses and enjoying benefits from the same funding pool; third, fairness and uniformity, where different coordinated areas have consistent standards for beneficiaries, assessment criteria, contribution rates, and service items, promoting relative balance in contribution responsibilities and benefit levels among coordinated areas; fourth, safety and regulation, focusing on the management of institutional operations and the quality of service behaviors, ensuring the safety of fund operations; fifth, sustainability, emphasizing efforts based on capacity, scientifically determining benefit levels, ensuring the system is implementable and the fund sustainable, 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 populace and improve the social security system. Overall, long-term care insurance “protects” the dignity of disabled individuals, “solves” the family care challenges, and “enhances” the driving force for social development.

According to preliminary statistics, since the pilot began in 2016, long-term care insurance has driven social capital investment in related industries exceeding 60 billion yuan.

Initial Phase Guarantees for Severely Disabled Individuals

The benefit guarantees of long-term care insurance are one of the most concerned issues among the public. According to the “Opinions,” insured individuals who have paid contributions and have a long-term disability status (generally over six months), upon application and assessment, can enjoy relevant benefits as stipulated.

Zhang Xifan, head of the Benefit Guarantee Department of the National Healthcare Security Administration, stated at a press conference held by the State Council Information Office that any insured individuals who undergo disability level assessment and meet the conditions for benefits can enjoy corresponding care services and reimbursement. Based on the current assessment standards, disabilities are categorized into mild, moderate, and severe levels. In the initial phase of the system, the focus is on providing guarantees for the most urgent and heavily burdened severely disabled individuals, primarily those who are bedridden for extended periods, unable to care for themselves, and require assistance from others.

Zhang Xifan indicated that in the future, with economic development and improvements in benefit levels, the national level will study the possibility of expanding the coverage to include moderately disabled individuals.

Zhang Xifan also emphasized that to ensure fairness in benefits and the safety of funds, all regions will “use the same yardstick” in disability level assessments, employing a nationally unified assessment standard. “Regardless of which coordinated area, the assessment criteria are the same. This is to minimize interference from human factors and ensure that every penny is used for those who truly need it.”

It was introduced that the long-term care insurance fund is primarily used to pay for the costs of basic long-term care services that meet the regulations and, in principle, does not directly distribute cash to disabled individuals.

The funding mechanism is the foundation for the sustainable operation of the long-term care insurance system. The “Opinions” propose to establish a diversified funding mechanism that aligns with economic development levels, matches the burden capacities of various parties, and coordinates sustainability requirements, insisting on balancing income and expenditure to achieve stable fund collection, 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% is currently able to 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 economic development and system improvements progress, the national level will unify research to gradually expand the scope of beneficiaries and dynamically adjust rates based on fund expenditure needs.” This dynamic adjustment rate mechanism aligns with social and economic development laws and is a common practice in international long-term care insurance operations.

No One-Size-Fits-All Approach

It is worth mentioning that while the long-term care insurance system enters a phase of accelerated advancement, there will be no one-size-fits-all approach or uniform measures in the reform pace.

The “Opinions” propose that after thorough assessment, targeted guidance should be provided for different conditions in cities to promote reforms step by step. For cities that have the conditions, the advance should be steady and orderly; for those temporarily lacking conditions, foundational work must be solidified, and implementation should be initiated according to procedures at the appropriate time. Cities that previously conducted long-term care insurance system pilots should adjust and improve policies according to the “Opinions,” with a smooth transition over approximately three years.

From the perspective of urban-rural coordinated systems, localities can start establishing long-term care insurance systems by first covering employees, retirees, and flexible workers, gradually including unemployed urban and rural residents into the coverage.

Wang Wenjun stated that from the perspective of coordination levels, it can start from city-level coordination or explore provincial-level coordination based on local realities. In terms of the pace of advancement, each province can determine based on actual conditions, promoting reforms step by step, where cities with conditions can proceed first, while those lacking conditions can solidify their conditions before implementation. “Overall, there will be no one-size-fits-all approach or uniform measures. In terms of covered populations, it can begin with employee groups and gradually expand to include urban and rural residents, or simultaneously include both employee and urban-rural resident coverage.”

Zhu Minglai noted that there are significant disparities in funding levels and service systems across regions. As such, the “Opinions” set a three-year smooth transition period, fully considering the actual conditions of each region and allowing ample adjustment space for policy implementation.

The supply of long-term care services is the foundation for the long-term care insurance system to function effectively. To ensure that insured individuals receive higher quality, more efficient, standardized, and accessible long-term care services, Huang Xinyu, the head of the Medical Services Management Department of the National Healthcare Security Administration, stated that the focus will be on advancing related work from three aspects: more standardized, more equitable, and more intelligent, including effective designated management to promote more standardized long-term care services; unifying service items to promote more equitable service; and strengthening guidance and cultivation to promote more intelligent services.