China: Developing Solutions to Population Aging
China: Developing Solutions to Population Aging
Aging was not a prominent public policy or public health issue until recent years when the proportion of the aged population reached the level that dramatically affects economic development and social welfare.
For centuries, the family and kin system has functioned as the most important source of social support in China. Familism is rooted in the core of Confucian culture and provides a strong normative legitimacy for intergenerational ties. Intergenerational reciprocity, such as father-goodness and children-filial piety, is one of the behavioral principles in family relationships which entail a complex series of duties of children to their parents, including, but not limited to co-residence, food provision, instrumental and financial assistance, and emotional support. Throughout China's history, the emphasis on family has been very clear and it was the rationale for the government to essentially keep its hands off the family (Fowler, Gao, & Carlson, 2010). However, after the rise of Mao, the communist revolution tended to undermine the power of patriarchs in families, and the ensuing collectivization process and elimination of private property further reduced the economic motivation to maintain a large joint family (Davis & Harrell, 1993). In the wake of economic reform and industrialization in the last three decades, the motivation, time, and resources to care for aging parents and/or grandparents and the integrity of the traditional family structure are facing even more challenges (Guo, Aranda, & Silverstein, 2009). The "empty nest" family without any child nearby is becoming more prevalent with the graying of the population in China, particularly in rural areas, where urbanization is recognized as a way to pursue a better quality of life.
Elder care, traditionally provided at home by adult children, will become increasingly less feasible in the next few decades. Emerging in recent years, nursing homes (also called institutional elder homes) have been gaining acceptance by older people and their families as an alternative place to spend old age besides one's residence in the community (Wu et al., 2012). At the end of 2010, the country's nursing homes operated a total of 3.19 million beds, but the number of older people who were interested in a nursing home reached nearly 12 million, according to the National Committee on Aging (NCOA, 2012). In 2011, China's State Council issued a 5-year strategic plan to create a social welfare system for seniors who will be able to receive nursing subsidies and more community-based elder care services.
Despite the rapid development of nursing homes, the gap between market demand and nursing home supply is still daunting. The shortage of beds, coexistence of waiting lists and low occupancy rates, staffing shortages, and lack of quality management standards are major issues in the management of nursing homes (Zhang et al., 2010). Unlike nursing homes in the United States which depend upon Medicaid and Medicare and private insurance for funding, nursing homes in China rely heavily on out-of-pocket payments of monthly fees (Wu et al., 2012). For some nursing homes, comparatively low salaries, long working hours, and emotional stress result in high staff turnover (NCOA, 2012). According to a nursing home study in Shandong Province in 2011, the highest occupancy rate was 100%, although the lowest was only 20% partially because of institutional variations in prices, quality of care, environments, and locations (Wu et al., 2012). Due to the fact that the nursing home industry in China is still in its infancy, quality management and evaluation systems have not become part of the requirements or standards of nursing home administration. The staffing and quality profiles vary considerably among facilities (Feng et al., 2011; Zhang et al., 2010). As nursing homes are jointly administered by the Ministry of Health, the Ministry of Civil Affairs, and the NCOA, coordination of these agencies in designing a performance evaluation system is critical. Additionally, most of the nursing home practitioners are untrained in geriatric medicine. Development of geriatric education and training for physicians and nurses will become an urgent priority for long-term care.
In light of the low fertility rate and rapid aging of the population, there is much debate about the possible relaxation of the one-child policy. The growing number of women from the rest of China giving birth in Hong Kong hospitals in the past few years to circumvent the one-child policy has created a heated discussion of the family planning policy (USA Today, 2012). In fact, China's family planning policy is not a typical one-child policy anymore. It is reported that the Chinese government has adjusted its policies of family planning to include a series of exemptions while maintaining the low birth rate: (a) couples who are only children in their families can give birth to two children and (b) provinces, autonomous regions, and rural areas have specific lifting of policies. For example, in rural areas of most provinces, couples who have one girl can give birth to a second child (National Population and Family Planning Commission, 2012). It is estimated that these changes will significantly boost the total population and labor force by 2050.
As a developing country, the GDP per capita of China is still relatively low ($4,428 in 2007–2011; World Bank, 2011b). In recent decades, China has paid much attention to the improvement of its old-age pension and medical insurance systems and built the largest social welfare and safety net in its history. In 2010, 194 million urban employees (60% of urban employed workers) participated in Urban Employees Basic Pension Insurance and 63 million retirees benefited from the system (NBSC, 2011). In contrast, only eight million people (1% of the rural population) contributed to the Basic Rural Pension Insurance and five million were beneficiaries in 2008 (Banister et al., 2010). By the end of 2011, more than 60% of the counties were covered by the pension program (NBSC, 2011). The plan based on the government report released at the 11th National People's Congress in March 2012 is to achieve full old-age pension coverage for rural residents and nonworking urban residents. In addition, by modernizing the rural cooperative medical insurance system and urban public health insurance developed in the 1970s, China has established Basic Medical Care Insurance for urban residents and New Rural Cooperative Medical Care Insurance for rural residents in recent years. By 2011, more than 430 million urban residents and more than 830 million rural residents had become beneficiaries, which represent 90% of the total population (China Daily, 2011b).
With the recent announcement of the investment of pension funds of Guangdong Province into the capital market as the nation's first attempt at a program similar to the U.S. 401K pension savings program, discussions about the management of the $300 billion pension fund have soared (Reuters, 2012). Pension reform and phased retirement are all prudent considerations to address population aging and its resultant demographic shift.
China's rapid economic growth has resulted primarily from the economic reforms in the past three decades, but it has also been supported by a large, cheap, and productive labor force. There have been concerns that population aging may imperil or slow the pace of economic growth in China. This issue is important because China's economy determines the country's prosperity and has been a driver of world economic growth. Population aging may affect the economy through the following venues: (a) labor costs may rise while productivity hardly increases, (b) old-age insurance may bear a greater financial burden because the period of benefit payment will be prolonged and the number of pension beneficiaries will be increased, (c) cost of elder care and medical insurance will increase due to longevity and increased the prevalence of chronic diseases, and (d) international investment capital may flow to other countries whose prices, productivity and, therefore, returns are higher.
Public Policy Issues Regarding Aging in China
Aging was not a prominent public policy or public health issue until recent years when the proportion of the aged population reached the level that dramatically affects economic development and social welfare.
Elder Care Provided by Families
For centuries, the family and kin system has functioned as the most important source of social support in China. Familism is rooted in the core of Confucian culture and provides a strong normative legitimacy for intergenerational ties. Intergenerational reciprocity, such as father-goodness and children-filial piety, is one of the behavioral principles in family relationships which entail a complex series of duties of children to their parents, including, but not limited to co-residence, food provision, instrumental and financial assistance, and emotional support. Throughout China's history, the emphasis on family has been very clear and it was the rationale for the government to essentially keep its hands off the family (Fowler, Gao, & Carlson, 2010). However, after the rise of Mao, the communist revolution tended to undermine the power of patriarchs in families, and the ensuing collectivization process and elimination of private property further reduced the economic motivation to maintain a large joint family (Davis & Harrell, 1993). In the wake of economic reform and industrialization in the last three decades, the motivation, time, and resources to care for aging parents and/or grandparents and the integrity of the traditional family structure are facing even more challenges (Guo, Aranda, & Silverstein, 2009). The "empty nest" family without any child nearby is becoming more prevalent with the graying of the population in China, particularly in rural areas, where urbanization is recognized as a way to pursue a better quality of life.
Elder Care Provided by Institutions
Elder care, traditionally provided at home by adult children, will become increasingly less feasible in the next few decades. Emerging in recent years, nursing homes (also called institutional elder homes) have been gaining acceptance by older people and their families as an alternative place to spend old age besides one's residence in the community (Wu et al., 2012). At the end of 2010, the country's nursing homes operated a total of 3.19 million beds, but the number of older people who were interested in a nursing home reached nearly 12 million, according to the National Committee on Aging (NCOA, 2012). In 2011, China's State Council issued a 5-year strategic plan to create a social welfare system for seniors who will be able to receive nursing subsidies and more community-based elder care services.
Despite the rapid development of nursing homes, the gap between market demand and nursing home supply is still daunting. The shortage of beds, coexistence of waiting lists and low occupancy rates, staffing shortages, and lack of quality management standards are major issues in the management of nursing homes (Zhang et al., 2010). Unlike nursing homes in the United States which depend upon Medicaid and Medicare and private insurance for funding, nursing homes in China rely heavily on out-of-pocket payments of monthly fees (Wu et al., 2012). For some nursing homes, comparatively low salaries, long working hours, and emotional stress result in high staff turnover (NCOA, 2012). According to a nursing home study in Shandong Province in 2011, the highest occupancy rate was 100%, although the lowest was only 20% partially because of institutional variations in prices, quality of care, environments, and locations (Wu et al., 2012). Due to the fact that the nursing home industry in China is still in its infancy, quality management and evaluation systems have not become part of the requirements or standards of nursing home administration. The staffing and quality profiles vary considerably among facilities (Feng et al., 2011; Zhang et al., 2010). As nursing homes are jointly administered by the Ministry of Health, the Ministry of Civil Affairs, and the NCOA, coordination of these agencies in designing a performance evaluation system is critical. Additionally, most of the nursing home practitioners are untrained in geriatric medicine. Development of geriatric education and training for physicians and nurses will become an urgent priority for long-term care.
Family Planning Policy Relaxation
In light of the low fertility rate and rapid aging of the population, there is much debate about the possible relaxation of the one-child policy. The growing number of women from the rest of China giving birth in Hong Kong hospitals in the past few years to circumvent the one-child policy has created a heated discussion of the family planning policy (USA Today, 2012). In fact, China's family planning policy is not a typical one-child policy anymore. It is reported that the Chinese government has adjusted its policies of family planning to include a series of exemptions while maintaining the low birth rate: (a) couples who are only children in their families can give birth to two children and (b) provinces, autonomous regions, and rural areas have specific lifting of policies. For example, in rural areas of most provinces, couples who have one girl can give birth to a second child (National Population and Family Planning Commission, 2012). It is estimated that these changes will significantly boost the total population and labor force by 2050.
Social Security and Medical Insurance Systems
As a developing country, the GDP per capita of China is still relatively low ($4,428 in 2007–2011; World Bank, 2011b). In recent decades, China has paid much attention to the improvement of its old-age pension and medical insurance systems and built the largest social welfare and safety net in its history. In 2010, 194 million urban employees (60% of urban employed workers) participated in Urban Employees Basic Pension Insurance and 63 million retirees benefited from the system (NBSC, 2011). In contrast, only eight million people (1% of the rural population) contributed to the Basic Rural Pension Insurance and five million were beneficiaries in 2008 (Banister et al., 2010). By the end of 2011, more than 60% of the counties were covered by the pension program (NBSC, 2011). The plan based on the government report released at the 11th National People's Congress in March 2012 is to achieve full old-age pension coverage for rural residents and nonworking urban residents. In addition, by modernizing the rural cooperative medical insurance system and urban public health insurance developed in the 1970s, China has established Basic Medical Care Insurance for urban residents and New Rural Cooperative Medical Care Insurance for rural residents in recent years. By 2011, more than 430 million urban residents and more than 830 million rural residents had become beneficiaries, which represent 90% of the total population (China Daily, 2011b).
With the recent announcement of the investment of pension funds of Guangdong Province into the capital market as the nation's first attempt at a program similar to the U.S. 401K pension savings program, discussions about the management of the $300 billion pension fund have soared (Reuters, 2012). Pension reform and phased retirement are all prudent considerations to address population aging and its resultant demographic shift.
Aging and Economic Growth
China's rapid economic growth has resulted primarily from the economic reforms in the past three decades, but it has also been supported by a large, cheap, and productive labor force. There have been concerns that population aging may imperil or slow the pace of economic growth in China. This issue is important because China's economy determines the country's prosperity and has been a driver of world economic growth. Population aging may affect the economy through the following venues: (a) labor costs may rise while productivity hardly increases, (b) old-age insurance may bear a greater financial burden because the period of benefit payment will be prolonged and the number of pension beneficiaries will be increased, (c) cost of elder care and medical insurance will increase due to longevity and increased the prevalence of chronic diseases, and (d) international investment capital may flow to other countries whose prices, productivity and, therefore, returns are higher.
