Introduction
China is home to the world’s largest elderly population. By 2024, the number of people above 60 reached 310 million. As life expectancy grows, so does the gap between healthy life expectancy and actual lifespan. Consequently, healthcare costs concentrate heavily in the final years of life.
A new study published in npj Health Systems examines how health insurance influences end-of-life healthcare spending among elderly Chinese citizens. Drawing on data from the Chinese Longitudinal Healthy Longevity Survey (CLHLS) spanning 2005 to 2018, researchers analyzed over 10,000 deceased individuals. Their findings offer fresh evidence on the relationship between insurance coverage, medical expenditure inequality, and the urgent need for health system reform.
How Health Insurance Shapes End-of-Life Costs
Health insurance serves as the primary tool for financing medical expenses. It lowers financial barriers, broadens access to providers, and reduces out-of-pocket uncertainty. However, insurance also introduces complications such as moral hazard and adverse selection. These issues are especially pronounced at the end of life, when healthcare utilization peaks sharply.
Prior research consistently shows that the final year of life accounts for 25–30% of total lifetime medical costs. Moreover, the average annual medical expenditure for patients aged 65 and older in their terminal year is roughly five times higher than for non-terminal patients. Understanding what drives these costs — and whether insurance is a key factor — is therefore critical for policy planning.
Key Findings from the Study
Insured Patients Spend More on Medical Care
The study found that individuals whose medical costs were primarily covered by insurance spent 16.5% more during their final year of life than uninsured individuals. Furthermore, when researchers applied propensity score matching (PSM) to control for selection bias, insured patients spent an average of 2,232 RMB more on medical services. This effect remained consistent across all statistical models tested, ranging from OLS regression to quantile regression and Tobit models.
Notably, the spending gap between insured and uninsured groups widened progressively after 2017. This trend reflects both expanding insurance enrollment and the higher medical utilization that coverage enables.
Nursing Care Costs Remain Unaffected
In contrast, health insurance showed no significant effect on nursing care costs. The data revealed that insurance serves as the primary payment source in only 2.1% of nursing care cases. Over 90% of nursing care expenses rely on out-of-pocket payments or family contributions. This structural gap highlights the absence of long-term care coverage within China’s current insurance framework.
Urban-Rural Divide in Insurance Benefits
The study uncovered a stark urban-rural gap in insurance effectiveness. Health insurance produced a 62% larger effect on end-of-life medical spending in urban areas than in rural areas. Urban residents benefit primarily from the Urban Employee Basic Medical Insurance (UEBMI), which offers higher reimbursement rates and broader service coverage. Rural residents, by contrast, depend on the New Rural Cooperative Medical Scheme (NCMS), which provides less generous benefits.
Additionally, rural areas face higher out-of-pocket costs due to limited healthcare facilities and longer travel distances to specialized care. Meanwhile, urban centers offer more advanced services — but at greater cost. These differences reflect deep structural inequalities embedded in China’s health system design.
Regional Disparities Across China
Beyond the urban-rural divide, the study identified significant regional variation in insurance effects. The Eastern region showed the strongest impact, with insured individuals spending 2,985 RMB more than their uninsured counterparts. The Western region followed with an effect of approximately 1,858 RMB. Notably, no statistically significant insurance effect appeared in the Central or Northeastern regions.
This regional pattern aligns closely with healthcare resource distribution across China. Even with insurance, individuals in less developed regions face supply-side constraints — fewer hospital beds and lower reimbursement ceilings — that limit actual service utilization.
What Drives End-of-Life Healthcare Costs
Beyond insurance, several other factors shape end-of-life spending patterns. Urban residence, cohabitation with a partner, and reported pain all increase healthcare expenditure, particularly at the upper end of the spending distribution. Health status emerges as the most powerful predictor. Elderly individuals with low activities of daily living (ADL) scores and severe pain consistently incur higher medical costs.
Interestingly, gender does not significantly affect healthcare expenditure in most analyses. Income, while relevant, has a comparatively minor impact. Among uninsured individuals, gender and education level showed little to no influence on spending — a pattern that differs notably from the insured group.
Policy Implications for China’s Health System
These findings carry clear policy implications. First, insurance enrollment in China ties closely to place of residence and employment status. This design exacerbates inequality at the end of life. Policymakers should therefore delink insurance eligibility from geographic and employment factors.
Second, strengthening the NCMS benefit package is essential to narrowing the urban-rural spending gap. Higher reimbursement rates and broader service inclusion would bring rural elderly citizens closer to parity with their urban counterparts.
Third, China’s long-term care sector urgently needs dedicated insurance coverage. Currently, families absorb over 90% of nursing care costs. Building a sustainable long-term care insurance system would reduce this burden and address the structural gap the study identifies.
Finally, regional health disparities demand targeted investment. Expanding hospital capacity and improving reimbursement rates in Central and Northeastern China would allow insurance to function more equitably across the country.
Conclusion
Health insurance significantly increases end-of-life medical spending among elderly Chinese individuals, but leaves nursing care costs largely untouched. Urban residents and those in economically developed regions benefit most from coverage. Meanwhile, rural elderly populations and those in less developed areas remain underserved. China’s health system must therefore move toward more balanced insurance coverage, stronger long-term care financing, and reduced regional disparities — to ensure equitable end-of-life care for all its citizens.
