Duke/Beijing Day 4 – Long Term Care insurance and China’s Elderly

If you are just joining our blog community – this entry is the firth part of my continuing coverage of Duke University’s two week Global Health certificate course at Peking University.  For more background – Day 1, Day 2, Day 3.  For an article I wrote related to Day 2 activities, called  Moral Hazard and Chinese Insurance, go here.

Donald Taylor wraps up his lecture on long term care insurance by contrasting the United States system – fragmented and inadequate – with that of Germany and Japan, countries that  have managed to cover large swaths of their respective populations while keeping costs surprisingly low.  He employs a particularly telling description of long term care insurance in the United States;

“In the USA and the UK the government’s have defined long term care insurance as something you get after you pay for your care and run out of money.  Germany and Japan have taken a different approach.”

Perhaps owing to the daunting threat that China’s rapidly aging population poses to the countries economic and political resources, today students were more determined to not be distracted by their shyness with the English language.  By contrast to the first three days when every other sentence would cause several dozen faces to turn down for several minutes in order to translate words and comprehend even the smallest stray thoughts, today their rubber-keyed palm translators typed in rhythm with the lectures more technical words and wisely let some of the smaller asides go without further thought.   I want to believe that this mood reflects a strong sense of urgency to solve ‘their part’, the healthcare part, of a population problem that is the source of everything China currently is and is not.

Long term care insurance is the central component of the critically important policy question – what  is to be done with China’s elderly?  For these students, it is fourth only to the gargantuan, three part problem of  designing, funding and executing universal health coverage.

China is officially classified as an aging country.  Its seniors aged 65 and over are estimated to make up 7.7% of the general population for a raw number total of 102 million individuals (source: CIA factbook 2005).  By 2050 they are expected to make up nearly a third of the population.

To get an even better sense for the size of these numbers, it is helpful to look at China’s estimated population distribution in 2010 and 2050 (Source: US Census Bureau 2003).

China Population Pyramid for 2010

Predicted age and sex distribution for the year 2010: 

China Population Pyramid for 2050

Predicted age and sex distribution for the year 2010:

Roughly counted, if present population trends continue, China will have nearly 500 million seniors, people 65 years and over, in 2050.  Of equally important note is that the number of working age adults in the 25 to 64 year category – those able to realistically support  aging parents and family members, and pay for health insurance – will significantly decrease as a percentage of the population.

Looking at these pyramid graphs it is helpful to think of  them as an actual building, and, for the sake of illustrating the situation thus far described,  take the base of it to start at the 25-29 line.  In 2010, this base could reasonably be expected to hold up the levels ‘weight’ distribution above.  But, by 2050, the pyramid starts to look like it is pointing downwards. If a building were actually constructed to those specifications using only stones (again, for the sake of example) then it might wobble.  That metaphorical ‘wobble’ represents growing instability in society.

An American like Donald Taylor is in some ways the best person to be teaching this course. In 2050, America’s population distribution will be similar to China’s – top heavy with seniors -  although the actual population numbers will be much, much smaller.  More importantly, America has institutionalized Medicare, a system in which young are required to pay for the old, and consequently a system which is at the mercy of population ratios.  In order for the system to work, the number of people putting funds into the system (people of working age) has to be much less than the number of people taking out of the system (seniors and those with disabilities).

Faced with the real possibility that a system which represents 14% of GDP spending will break at the seams, America serves as the perfect illustration of where poor decisions early on in the creation of a healthcare system can lead.  The fact that America’s population distribution in 2050 is so similar to China’s only much smaller, serves to dramatically underscore the point.

[The notes from this discussion are too long to be posted here.  They may be published in some form later.]