The Success, Problems And Policy On The Development of China’s Retirement Service
Time: 2018 Feb 28 06:30:36

China's aging population is accelerating, and old-age services have become the basic public services of an aging society. During the "Twelfth Five-Year Plan" period, China's old-age service has made remarkable achievements. The system framework, goals and tasks of the aged care service have gradually become well-denined, and the service level has been greatly improved. The "Thirteenth Five-Year Plan" period is not only a platform period for the Chinese elderly population to reach its peak, but also an important window for dealing with aging. At such a critical point, we must carefully examine the problem and explore a viable path for the development of future aged care services from a forward-looking perspective.

 

 

Notable Achievements

 

Standing on the occasion of the "Twelfth Five-Year Plan", compared with the previous five years, the reform and development achievements of China's old-age care service industry are remarkable especially in regard to following aspects:

 

The number of old-age care services and facilities has increased significantly

 

According to civil statistics, there were 38,800 social service agencies providing accommodation in 2010 with 320.8 million beds averaging 17.8 beds per 1,000 elderly people. By September 2015, the number of these indicators had expanded to a greater extent of 4.67 million agencies, 654.9 million beds, and 32.3 beds respectively. The financial input from the central to local governments for the construction of old-age care institutions and facilities has continued to increase, and the number of public old-age care institutions and various types of old-age care facilities has increased significantly. At the same time, in the construction of old-age care service institutions, social capital has become more and more active. At present, the number of social care institutions has reached 13,700, and the contribution to institutional growth has been increasing.


 

 

The Continuous Strive of Old-age Care Service Policy

 

The revision of the 2013 Law on the "Protection of the Rights and Interests of the Elderly" will raise consensus and practice of the development of the old-age care service to the law for a long time, making this law an important institutional basis for the development of the concerned services. At the same time, governments at all levels and related functional departments have launched a series of pragmatic policies and reform initiatives. It involves not only the establishment of old-age care institutions, the reform of public elderly care institutions, but also the comprehensive reform and development of the elderly care industry in encouraging and guiding direct social participation. The density and measures implemented in the five-year pension service policy are unprecedented.

 

The Basic Formation of A Responsible Framework Shared By All Parties

 

Clarifying the responsibility among the government, market, society and family is the basic premise of the development of old-age care services. After years of exploration, we realized that the government is centrally responsible for the development of old-age care services because the government is the representative of public power, and the market is the core mechanism for realizing the efficient allocation of social resources at this stage, making it obvious for members of society and families to be involved in the process. This way, the relevant parties would realize their respective roles and responsibility in identifying the type of services to be offered but not a "one size fits all" approach. Old-age care services are ultimately a cause of government, market, society and family participation.

Compared with the concept of “socialization of elderly care services” in the first five years of the 21st century, there has clearly been a qualitative leap in the understanding of the responsibilities of all parties during the “Twelfth Five-Year Plan” period. The government clearly recognized its own responsibility boundaries in forming a more distinctive commissioning structure of all parties.

 

Social Investment Shifts From Spectators To Effective Actions

 

Compared with the previous five years, the current social capital is generally optimistic about the high return of the elderly care service industry. The investment of social capital in the field of old-age care services is increasing, and the old-age consumer market has basically formed. At the same time, having the retirement/old-age care real estate market taken the lead, the investment structure of products and services for the elderly became more prominent than ever.

 

 

The Road Map For The Development of Old-age Care Services Becomes Distinct

 

As early as the "Eleventh Five-Year Plan" period, according to Chinese traditional culture, the thought that the old-age care should be on home-based basis has always occupied the mainstream discourse status. However, the family's security is becoming less functional while the aging rate is accelerating. The facilities are far from meeting the reliable standard. A prominent achievement in the development of old-age care services during the “Twelfth Five-Year Plan” period is to further expand the connotation of home-based care for the elderly, and propose the goal of establishing a social retirement service system based on “home-based, community-based, and institutional- supported”. The complete statement of this system was written in the newly revised law on the


 

"Protection of the Rights and Interests of the Elderly", and was listed as the development goal of the old-age care service in 2020 in the form of State Council Document (No. 35 [2013] of the General Office of the State Council). Guided by this outline, the key areas for the development of elderly care services and the policy measures that are appropriate for the concerned group of people have become more precise and targeted. The used to be “iceberg” that restricts the financing and land use for the development of old-age care services started to thaw out following formation of the various measures and policies. In general, with the continuous exploration of  the “Twelfth Five-Year Plan”,  the goal of China’s old-age care service development and  policy orientation appears to be clearer, having the service system constantly enhanced, thus building a solid foundation in enabling China to cope with the more severe ageing problems that correlates with  old-age care services in the short coming future.

 

Issues That Should Be Monitored

 

The problem of China's ageing issue has drawn attention from the whole society where the society correspondingly took relevant action in forming the necessary policies to counter it. This process is still at its early stage, though the development of the “12th Five-Year” elderly care service has taken a big step forward, the contradiction of the policy and its practicality, however, still has to be seriously reviewed.

 

Over Pessimistic On Judgment of   Population Ageing Situation And Being Exaggerated On Demand For Elderly Care Services

 

According to international standards, China entered the ageing society in 1999, and the ageing of the population has triggered changes in the entire Chinese society. Amongst them, many people suffer from ageing phobias. Rational analysis suggests that, although the arrival of an aging population has had a profound impact on all aspects of China's economy and society, it also shows that the development of society has led to continuous improvement of people's health and the extension of human life, thus contributing to the human capital contribution cycle which is in line with the laws of nature. The market consumption statistics reveals that more than 200 million elderly people in China do not need old-age care services. The core connotation of the old-age care service is to provide extensive care services for the elderly that would include life care, nursing, spiritual comfort, and more. Others such as cleaning, meal preparations and etc are not closed to be considered as the true meaning of old-age care service yet. The younger and healthy elderly people do not really need the services from professional institutions but not those who are old, disabled and demented. According to existing figures, the total number of these elderly people does not exceed 40 million.

 

When we develop old- age care services, we often confuse the effective needs and potential needs, which leads to an exaggeration of the demand for the services. This is undoubtedly also related to the pessimistic statements and comments over the issues of the ageing population.

 

 

Insufficient Demand of Effective Elderly Care Services And Poor Supply Side-Policies

 

 

In recent years, the policy orientation of encouraging social capital to invest in elderly care services has been exceptionally clear, such as preferential protection of land supply, tax incentives, and financial subsidies. These policies are meant for suppliers (side-policies), and the directionality is very clear. It is to guide the market supply of old-age care services for potential suppliers.


But the effectiveness of public policy often does not depend on the good will of policy makers. The reality shows that the sensitivity of the society to the supply side-policy is not high and positively responded. It seems that currently on one hand, the benefit of the policy are not enough to generate sufficient stimulus, while on the other hand, it should be related to the insufficient demand for the concerned service in China at this stage. In other words, China has not yet formed a sizable scale market for old-age care service. The formation of a market starts from a source of demand, which will then generate supply. Under the influence of the price mechanism, the demand and supply will realize the market resource allocation in the process of becoming more balanced.

The growth of the “service” being the product of the industry is still in the development stage.

Basically, the potential buyer's ability to pay is limited while on the other hand, the service required is in lack of supply, and in addition to the current supplies thatare beyond the affordability of the ordinary people, the stimulating effect doesn’t really work under such a situation. At this stage in China, nursing care is the prime service needed with great demand. Therefore, supportive policies should be more targeted in this direction, highlighting supply guidance and focusing on strengthening the purchasing power of the elderly

 

 

The Deviated Objective of Public Pension & Elderly Care Institutions

 

The public pension institution is an important carrier for the government to perform the basic endowment service for the poor elderly. In 2014, there were 2.84 million registered old-age care institutions nationwide, of which 1.36 million were registered for public enterprises, accounting for 47.9% of the total. Among the elderly living in these institutions, the ratio of the “Three NO’s” (elderly with no labour ability, source of income, and dependent) and "Five guarantees" (of food, clothing, housing, medicare and burial expenses for the elderly) is 59%. The public pension institutions have established the purpose of setting up public institutions in the country, which is to provide elder care to the elders from low-income families, and elderly whom are covered with or without the "Five-guarantee”. At the same time, public pension institutions in some places are also open to the elders in the society, especially in the first-tier cities. Having queues are norms for public pension institutions as it is “difficult to get a bed space”. It is the basic responsibility of the government to accept the poor elderly without fee charges, but how should a fee-based pension service to the society be properly understood? It should be said that the purpose of setting up a public pension institution is a basic public services is to make pension service available to all members of the society, especially to the poor elderly; finally achieving the goal to make old-age service accessible to all in line with social equity. Public pension institutions to receive elderly people with good economic conditions. Without scientific and strict evaluation system, or by following the market rule of “available to whom can afford”, it will inevitably lead to unfair distribution of public welfare, thus creating social inequality. From this perspective, the objective of public pension institutions has somewhat been deviated.

 

The Lack of Exemplary Role of Public Pension/Elderly Care Institutions

 

Public pension institutions are public service organizations that are given special functions. Aside from securing a guarantee old-age care of the poor people, they should also set a good example to provide these services. This exemplary role not only sets a benchmark for learning for private organizations through the first-class service and management of public organizations, but more importantly, it solves the problem of “failure” in the provision of the old-age service market, and provides the society with services that the private organizations are unwilling to provide. The supply and demand docking plays a leading role. However, at this stage, public institutions have not only formed a rational division of labor with private institutions, but also formed homogenization competition with private institutions. The current society has a large demand for maintenance and care-type aged care services. The cost of providing such services is high, the risks are high, and medical resources need to be opened up, resulting in insufficient market supply. Public pension institutions should focus on these aspects and provide services, while setting a good example to society.

 

The Systemic Nature of The Pension/Elderly Care Service Policy Needs To Be Improved

 

In recent years, China's old-age service policy has been continuously enriched, and the institutional environment for promoting the development of old-age care has gradually improved. However, the old-age service policy is still scattered, fragmented, and lacking in systemicity. The timing, rhythm and logic behind the policy are unclear. The severe challenges of aging in the future and the huge demand for old-age services have determined that we must keep a clear understanding of the shortcomings existing in the development of old-age services and rationally identify some “misunderstandings”.

 

Future Path

 

At this point of the discussion, the next steps and paths for the development of old-age services become naturally clearer. It may be worthwhile to consider adjusting from the following aspects:

    

The function of public pension institutions must be accurately positioned

 

It should be clarified that under the conditions of market economy, it is impossible to adopt the system of financial payment and free supply for the old-age care service, and the market supply should be the essential point of the service. At this stage, it is necessary to further accurately locate the functions of public pension institutions: First, on the subject of “service for whom”, established pension institutions, especially public pension institutions, should aim at the poor and the elderly. Second, in terms of “services”, public pension institutions should provide services to the society that are not or cannot be provided by private pension institutions, such as nursing care services that are in short supply in the society. As for the development of old-age care services up till today, public institutions has clearly positioned as the underpinning old-age care of the poor elderly, , and the institutional arrangements are relatively mature. The problem lies mainly in the opening of services to the society. Most of the public pension institutions are misplaced, services are not urgently needed by the society, beds are vacant and resources are wasted. Public pension institutions should make full use of low-cost advantages and position services on service projects with high risks and high technical requirements, so as to effectively compensate for insufficient market supply or market failure.

 

 

Pragmatically Promote The Development of Medical Care Combined With Old-age Care Services

 

Recently, the General Office of the State Council forwarded the “Guiding Opinions on Promoting the Combination of Health Care and Old-age Care Services”, and for the first time, from the national level, it made clear arrangements for promoting the development of the combination of old-age care and medical care. The objectives and key tasks proposed in the "Opinions" are mainly setting principles and guidance. As for execution, the principles of classification and guidance should be adhered to with necessary measures to be further refined. For the old-age institutions and medical institutions within the system, administrative mechanisms can be used. Through planning, capital investment, and reform of the management system, it is possible to “strongly” achieve the “marriage” between pension and medical care. For a party to be of a public nature, or both parties are privately-owned, finding for ways to achieve synergy and cooperation should be the focus of the development of detailed measures, with the greatest difficulty. It must be demand-oriented, from the aspects of licensing approval, government subsidies, financial support, land use indicators, etc., to restrict the supply of medical care and old-age care services, strengthen the communication and coordination of relevant functional departments, and continuously introduce policy measures with “gold content”. At the same time, the government should establish a model of success and provide examples of learning to guide social investment and expand the supply of medical care and integrated care services.

 

An Overarching Design To Enhance The System

 

The old-age care service is a social undertaking involving many fields. Therefore, this determines the need for a systematic and complete service system. The pension policy must be systematically designed. It must start and go in accordance with the concerned national conditions, while keeping up with the aging population, and to provide a good institutional environment for the development of the old-age causes. The planning and design of introducing new policies requires systematic thinking to enhance the scientific design of the old-age service policy, and must be executed systematically and sustainably. Entering the "Twelfth Five-Year Plan", the direction of the development of old-age services has gradually become clear, that is, in accordance with the newly revised Law on the "Protection of the Rights and Interests of the Elderly" document, focusing on the overall framework of "home-based pension, community support, and institutional pension". Filling in gaps and shortcomings in policy, meeting social needs, focusing on improving regulations, creating policies and innovative measures, systematically answering how government responsibility is implemented, how social forces are launched, and pension institutions on how to supervise, how to cultivate the talent team and other specific issues. The reform of the old-age field should be placed in the overall strategy of national reformation, coordinated with social security and medical reformation, population and industrial policy; more emphasis should be placed on the overarching design, enhancing the laws within the field of old-age services, regulations, normative documents, and policy measures in the field of aged care services should be gradually coordinated on the top and horizontally, while creating an organic system with clear context and complete content.

 

Implementing The Performance Evaluation System For Old-age Care Services

 

The pension service policy needs to enhance its execution and the implementation of performance evaluation and it is a necessary measure. Only by establishing an evaluation system can we distribute the pressure and stimulate motivation between different levels of government and functional departments, in order to establish effective accountability mechanisms. In practice, the evaluation of the performance of the old-age care service is limited to individual areas, the evaluation indicators and methods are simple and extensive, and the boundaries between the assessment subject and the object are unclear. The next step is to propose unified requirements from the national level, and use performance appraisal as the stipulation content of the development of old-age services, to meet the requirements of various policies and plans; accelerate research and propose a scientific evaluation index system, and establish an evaluation implementation entity across departments. Identify and evaluate methods for random extraction of objects across regions, and explore the introduction of third-party assessments to enhance the impartiality and transparency of assessments by breaking the traditional practices of closed assessment within institutions. It is necessary to emphasize that the development of performance appraisal must be changed only to be responsible for the above, while ignoring the tendency of members of society to gain a sense, increasing the weight of customer satisfaction in the assessment, and effectively avoiding the evaluation of the performance of the aged care service.


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