Population aging poses an unprecedented challenge in China. Barriers such as health insurance schemes, socio-economic status, social support, and family structure hinder access to healthcare and have led to an inequitable distribution of government health subsidies for older people. However, the extent of equity of government subsidies for China’s older people’s care services has never been evaluated. Benefit incidence analysis was used to examine the distribution of government health subsidies for older people by income quintile. The concentration index was calculated in both urban and rural areas in 2008 and 2013. The equity of distribution of government health subsidies for older people improved over the period 2008–2013 after expansion of health insurance schemes in both urban and rural areas. All types of older people’s care services were inequitable in 2008, but only urban inpatient care remained inequitable in 2013. The situation was better for rural than urban areas, and outpatient than inpatient care. This is probably the result of expansion of health insurance schemes in urban areas and increased government funding for township health centers in rural areas. Underfunding and inappropriate reimbursement policies by health insurance schemes have resulted in inequitable inpatient subsidies in urban areas.