China cuts medical benefits for the elderly due to lack of cash

The Chinese government, cash-strapped after enforcing a costly zero Covid policy, is cutting medical benefits and planning to raise the retirement age, in deeply unpopular moves that are fueling widespread public anger, CNN reports. . Thousands of older people have taken to the streets since January to protest major cuts in monthly medical benefit payments. They gathered in four major cities across the country, demanding that local authorities overturn the decisions.

The changes are part of a nationwide overhaul primarily intended to cover shortfalls in state health insurance funds, analysts say, which have been depleted after paying for mass testing, mandatory quarantine and other pandemic controls in past three years, CNN reported. The protests, dubbed by Chinese media as a “gray hair movement”, are another rare rebuke to authorities after widespread protests gripped the country in November over Covid lockdowns.

The anger could further undermine trust in the Communist Party already damaged by Covid lockdowns, banking scandals and a real estate crisis. Chinese officials appear to fear that these protests will spread further.

Censors removed hashtags for “Wuhan health insurance” from Weibo’s hot topics section after the protests began in January. They also censored photos and videos of the protests on social media, CNN reported. Fueling the anger is Beijing’s new drive to push back the retirement age for all workers.

For nearly three years, local governments have borne the brunt of enforcing now-defunct pandemic controls, resulting in soaring spending even as their revenues from revenue streams such as land sales have fall. The concerns were sparked after Guangdong province and the city of Dalian announced in 2022 that they would tap public health insurance funds to pay for mass Covid testing.

The problem was exacerbated when, shortly after, the National Healthcare Security Administration (NHSA) said the money should not be used in this way and that local governments should fund the tests from their own budgets. State media reported at the time that some other regions had already spent state funds on mass testing. The reports have raised fears about the future viability of the already underfunded health insurance system, CNN reported.

It’s unclear exactly how much China has spent in total to maintain its ultra-strict zero-Covid policy, or where that money came from. But at least 17 of the country’s 31 provinces have revealed the huge sums they have spent to fight the pandemic. Guangdong, China’s richest province, was the biggest spender. It spent 711 billion yuan ($10.3 billion) in 2022 on measures such as vaccinations, testing and emergency benefits for medical personnel, an increase of more than 50 percent from the previous year. ‘last year.

Zhejiang and Beijing spent 43.5 billion yuan and 30 billion yuan respectively. “Local governments are running out of money, or in some cases, money,” said George Magnus, associate at the China Center at the University of Oxford, CNN reported.

“Zero-Covid funding was the most immediate cause of the crisis, but local finances are also deteriorating for other reasons, including the growing burden of spending associated with age-related expenses.” Interest charges on trillions of dollars of debt and falling revenue from land sales have also worsened public finances, he said.

China’s outstanding government debt may have topped 123 trillion yuan ($18 trillion) last year, of which nearly $10 trillion is so-called “hidden debt”, according to Chinese analysts. The debt problem has become so extreme that some cities are unable to provide basic services, such as heating homes, CNN reported. China’s health insurance system is a key part of its limited social safety net. It covers part of the medical costs for current and retired workers in urban areas.

It consists of individual accounts, fed by compulsory payments from workers and their employers, and a pool of funds made up of employer contributions. The personal account is used to pay for medication and outpatient costs, while the group account is used to pay for hospital visits. Retirees do not need to contribute and receive a monthly payment to their personal accounts from the collective pool.

After the reforms, which were introduced from January, payments to all personal accounts were reduced. Older people, who tend to have more medical needs, are more sensitive to change. In the central city of Wuhan, pensioners have suffered monthly cuts of up to 70%.

Shortly after the protests in Wuhan and the northeastern port city of Dalian, the NHSA released a statement defending the policy, saying that while people would have less money in their personal accounts, there would be more of funds that would flow into the collective account as a result, CNN reported. To protesters, however, it seemed local governments were tapping into their individual accounts to cover shortcomings in the collective pool.

In the longer term, the “gray hair movement” is indicative of a fundamental problem facing the Chinese government, namely how to care for a rapidly aging society where 400 million people, or 30% of the population, will be 60 or older by 2035. China’s public health system and other public services are under increasing financial pressure, with the number of retirees exceeding the number of young people entering the labor market.

A leading government think tank predicted in 2019 that the state pension fund could run out by 2035 due to a shrinking workforce. “(The) crunch affecting health insurance is only a stone’s throw away from the bigger one affecting pensions, and workers could agitate pissed off at poor pension and health care security” , said Magnus. “It is possible that the protests of the elderly citizens will spread.”

To meet the challenge, the government is stepping up its efforts to raise the retirement age. Li Qiang, the country’s new prime minister, said in March that the government would conduct rigorous studies and analysis to roll out policy cautiously “at the right time”.

The news has already sparked a backlash on social media, with tens of thousands of angry responses, CNN reported. Leading the complaints were people close to retirement, who expressed anger at the prospect of delayed access to their pensions. Young people argued that they would have fewer jobs due to greater competition.

“There needs to be a resolution to the financial capacity of local governments to meet current and future age-related costs,” Magnus said. “Otherwise there could be continued crises, layoffs and a reduction in the provision of public goods and services which could lead to political unrest.” From healthcare to public infrastructure, local governments have many bills to pay. But they are facing a severe cash crunch, as three years of tight pandemic controls and a property crash have emptied their coffers. (ANI)

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)