Over the past two decades, China has pursued an ambitious plan to establish an accessible and affordable health system that meets the needs of its population. As part of this journey, China’s leadership implemented comprehensive health system reforms and achieved near-universal health insurance coverage at a relatively low per capita income level. Key to this process was the integration of rural and urban resident health insurance programs, which has proven to yield positive outcomes in health care utilization, physical health, and related equity issues. Thus far, however, the integration’s potential psychological effects have been understudied.

New research, published in the journal Health & Social Care in the Community, addresses this gap in the literature. The researchers – Stanford health economist Karen Eggleston, the director of APARC’s Asia Health Policy Program (AHPP); Peking University’s Gordon Liu; and Renmin University of China’s Yue-Hui Yu and Qin Zhou, the latter a former visiting scholar with AHPP – find that the urban-rural health insurance integration has been beneficial for improving mental health among China’s rural adults.

Their study underscores the potential of policy-driven health system reforms to address longstanding disparities, promote mental well-being in vulnerable communities, and enhance quality of life among aging populations. This is the researchers’ final installment in a series of studies on China’s urban-rural health insurance integration.

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Tracking Mental Health Over Eight Years

For decades, China had a fragmented health insurance system, which led to disparities between different populations and hindered the implementation of the Healthy China 2030 blueprint, a bold national strategy to make public health a precondition for all future economic and social development. Responding to this challenge, in 2016, China announced plans to unify its rural and urban health insurance programs. The unified health insurance system, called Urban and Rural Residents’ Basic Medical Insurance (URRBMI), offered equal health service packages and insurance benefits to rural and urban residents. Studies have shown that the integrated system improved healthcare access for nearly 800 million rural residents and helped reduce coverage gaps and inequality. Yet evidence about the integration’s potential psychological impacts has been limited.

Eggleston and her co-authors hypothesized that this reform might also benefit rural adults’ psychological well-being. To test this hypothesis, the researchers conducted a comprehensive analysis using data from the China Health and Retirement Longitudinal Study (CHARLS), a nationally representative survey that tracks health, economic, and social variables among Chinese adults aged 45 and older. The study focused specifically on rural residents, examining changes in mental health, particularly depressive symptoms, before and after the insurance integration. Data from four waves of CHARLS, spanning from 2011 to 2018, allowed the team to analyze trends over a substantial period.

The researchers used an event study combined with a time-varying difference-in-differences (DID) approach, capturing the effect of the health insurance integration on depressive symptoms and comparing changes over time between those affected by the reform and a control group not yet impacted (since local governments introduced the integration reforms in different years, samples in the control group had constantly entered the treatment group during the survey period). This method helps isolate the effect of the policy from other confounding factors, providing a clearer picture of causality. The researchers further examined the heterogeneity of the integration effect across subgroups by gender, age, health status, and family economic status. They also analyzed possible mechanisms through which the reform produced psychological effects

Key Findings: A Significant Drop in Depression

The researchers find that the health insurance integration was associated with a measurable reduction in depressive symptoms among rural seniors. Specifically:

• CES-D scores – a standard measure of depression severity (using a version of the Centre for Epidemiological Studies Depression Scale) – decreased by an average of 0.441 points among those covered by the reform.
• The likelihood of experiencing depression dropped by approximately 3.5% in the post-reform period.
• The decline in depression scores following the integration was continuous, suggesting cumulative effects of the reform. Notably, some psychological benefits appeared up to two years before the reform took effect, likely due to public awareness and positive expectations generated by advance announcements from local authorities.

The results were statistically significant, indicating that the health insurance integration reform has significantly improved the mental health of rural adults and reduced their risk of becoming depressed.

The findings also indicate that a key driver that produced continuous positive psychological effects was the integration’s reduction of health care costs for rural residents, particularly for hospital care. By lowering financial barriers to treatment, the integration improved access to healthcare and made its use more equitable. This, in turn, boosted rural adults’ satisfaction with their health and overall sense of well-being. The improvement may have set off a positive cycle, encouraging more social engagement and physical activity, which helped further ease symptoms of depression.

While the reform reduced depressive symptoms for both male and female older adults, the findings revealed differences across subgroups. It appears the reform did not significantly reduce depressive symptoms for those aged 40-49 and over 70, individuals in poor health, or those in the lowest economic bracket. The researchers attribute this to ongoing financial barriers and limited insurance financing, which may blunt the perceived benefits for high-need groups.

Policy Implications: A Path Toward Health Equity

The study’s co-authors highlight several policy implications for China:

• Expand and standardize coverage: Build on the success of the URRBMI by moving from local-level integration to broader provincial or national coverage, and encourage enrollment among vulnerable populations through subsidies.
• Improve equity for high-need groups: Design more targeted insurance policies for older adults, those with chronic illnesses or disabilities, and low-income groups, especially by covering outpatient treatments for high-cost conditions.
• Increase funding for the URRBMI: Despite progress, reimbursement rates remain low, highlighting the need for greater investment in the program.
• Strengthen rural health infrastructure: Insurance reforms must be paired with improvements in rural healthcare facilities and services to ensure quality care is both accessible and effective.

China’s experience offers valuable lessons for countries aiming to achieve universal health coverage and those grappling with health disparities and aging populations. The positive association between insurance integration and mental health among rural adults in China underscores the importance of comprehensive, inclusive policies addressing financial and social determinants of health.

The study’s findings highlight the need to ensure that the most vulnerable populations benefit equally from health reforms. They also serve as a compelling reminder that thoughtfully designed and implemented reforms can improve physical health and increase mental resilience and social cohesion.

Demographic shifts worldwide have increased the number of older workers, and many economies are facing a critical question: Are their labor markets ready to support older workers?

Researchers have found that, in the United States, the surge of older workers has gone hand–in-hand with an increase in the number of “age-friendly jobs” – roles with working conditions more suitable for aging employees, such as placing fewer physical demands or offering greater scheduling flexibility. Yet it remains unclear whether comparable trends have taken hold in other aging economies.

A new study, published in the Journal of the Economics of Ageing, helps fill in this gap by examining the evolution of age-friendly jobs in South Korea (hereafter Korea), where the number of workers aged 50 and over increased by 165 percent from 2000 to 2023. Korea is now officially considered a "super-aged" society, and the government is doubling down on its efforts to bolster the workforce.

The study, co-authored by Hyeongsuk Kim and Chulhee Lee, both of Seoul National University, and Stanford health economist Karen Eggleston, the director of APARC’s Asia Health Policy Program, examines Korea’s workforce and economy to determine whether the nation significantly expanded its 50+ workforce by creating job opportunities favorable for older workers or if some other mechanism is at play. 

The co-authors examined the job characteristics experienced by older Koreans relative to their younger counterparts and U.S. older workers. Second, they analyzed data collected in 2020 about Korean workers, evaluating their jobs based on various parameters in the Age-Friendliness Index (AFI), a tool that measures the degree to which jobs are more suitable for older workers. The researchers considered AFI factors such as the requirement for heavy physical activity, the pace of the job, and the possibility of telecommuting. They also examined how the number of age-friendly jobs changed from 2000 to 2020.

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The study finds that, while age-friendly jobs have increased in Korea, the number grew more slowly than in the United States, indicating that the U.S. market responded more quickly to changes in workforce demographics. Furthermore, the study indicates that older Koreans were not the main beneficiaries of age-friendly jobs. Instead, women and college-educated workers benefited more from these jobs, while non-college-educated men have seen fewer gains. “These results highlight the uneven adaptation of Korea’s labor market to demographic change and suggest that social norms and labor market frictions shape age-friendly job creation and who benefits from those jobs,” the researchers write.

The study also unveils that, in Korea, the working conditions of employees aged 50–61 differ significantly from those aged 62 or older. Despite the nation's high employment rates for those aged 65 and older, the researchers discovered that a third of working Koreans over the age of 62 held jobs requiring heavy physical activity and earned lower wages. Additionally, only a little over one-fifth of them had jobs that allowed for “mostly sitting.”

Labor Market Frictions

The study’s authors propose several explanations for why Korea’s economy, despite a significant increase in older workers, has not adapted as quickly as the United States in placing these workers in age-friendly occupations. One reason is Korea's comparatively low level of pension support, which forces workers to fill a disproportionate number of low-skilled, temporary, and day jobs. It may be that many older workers are forced to work, regardless of whether the jobs are friendly to their needs. Another reason may be the rigidities of the labor market, including strong protections against employees being laid off. Such protections are beneficial for workers, but they restrict companies' ability to restructure their workforce. Moreover, the role of chaebol, or large corporations, may also be significant. Although chaebol are producing and selling more, they have also increased automation and resorted to outsourcing instead of hiring additional workers.

Older workers in Korea are also facing competition from women for age-friendly jobs. The researchers noted significant gender-related changes in the country's education and employment levels. In 2009, the percentage of women enrolling in college surpassed that of men, and the percentage of women in the workforce increased by 2.5% from 2000 to 2023. Korean women are likely to have an even stronger preference for the flexibility of age-friendly jobs than American women because of gendered responsibilities for household production.

The study’s results, researchers said, reinforce key findings from previous studies: "that 'age-friendly' jobs appeal to many kinds of workers, not just older adults; and that labor market frictions shape who benefits from age-friendly jobs."

As governments grapple with rising life expectancies and shrinking traditional working-age populations, ensuring that older adults can continue working safely and with dignity is key to sustaining economic growth and social stability. According to the study, South Korea has made impressive strides in keeping older people in the workforce, but the next challenge is ensuring work itself evolves to meet their needs.

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Published in APARC’s in-house series, the book is the second volume resulting from APARC’s Stanford Asia-Pacific Research Innovation project. It collects the research findings of participants at the project’s third conference that was held in South Korea in June 2019.

James Liang, a research professor of economics at Peking University and a leading scholar of demographics and social studies, opened the event by situating the discussion about population structure in the context of the U.S.-China technology race. China is quickly catching up with the United States in the quality of its talent pool and the number of its labor resources. It will continue to outpace and surpass the United States in talent and innovation power in the next 10-20 years, Liang says.

China, however, is on a demographic cliff, facing severe population aging and low fertility rates. Its population of young workers aged 25-44 year-olds is projected to decline much faster and sooner than its overall population, leveling out against the labor and innovation gains the United States makes through the inflow of international talent into U.S. universities and entrepreneurial ventures. To sustain its long-term growth in labor quality and innovation, China will need higher birth rates and additional talent gains through migration, argues Liang.

James Feyrer’s book chapter examines the macroeconomic relationship between workforce demographics and aggregate productivity in Asia. Feyrer confirms that the high-income Asian nations like Japan and Korea, and even some middle-income countries of the region, will no longer enjoy a “demographic dividend” boosting aggregate productivity. However, he finds that the negative consequences of shifting to an older population structure may be less severe than previously projected, and even weakening with time. Feyrer believes this may be a result of improved food security and better overall health experienced by old cohorts in childhood, reinforcing the long-reaching impacts of healthcare on societal well-being.

Joon-Shik Park focused on the specific challenges facing Korean society, where birth rates have dropped severely. These historic declines continue to contribute to rising social and political unevenness across Korean society today. Initially seen most visibly in rural areas and smaller villages, Park’s now sees this unevenness affecting the dynamics of medium-sized towns and more urban areas as well. Korea and other aging societies must find viable solutions to address these issues if they are to prevent demographic divides from hobbling development and innovation, Park says.

Closing the book launch event, APARC Research scholar Kenji Kushida offers perspectives from rapidly aging Japan. where the challenges of shrinking and aging populations, rural-to-urban population distribution, and labor shortages spur advances in technology and innovation. Kushida documents this trend across multiple sectors.

He shows that drone technology has increased the productivity of short-staffed surveying firms, while AI-assisted industrial machines allow a broader range of laborers to work in manufacturing. Even in traditionally human-dominated environments like nursing homes, staff increasingly use robots to help improve the physical and mental well-being of elderly patients. Rather than strictly retarding growth, Kushida makes the case that demographic challenges serve as a catalyst for the development and implementation of new technologies.

As the research collected in Demographics and Innovation in the Asia-Pacific demonstrates, the challenges facing aging Asian societies are complex, but there is reason to look to the future with optimism. As the editors of the volume state in their introduction to the book, “Few concepts are as critical for sustained improvement in living standards as innovation.” New technologies and solutions will be foundational to addressing the challenges of the new demographic frontiers many societies are now approaching.