China’s aging problem is becoming more and more serious, and the healthy development of elderly care institutions has become a very critical issue. Since there are both public and private pension institutions in the Chinese market that serve the elderly at the same time, and public pension institutions enjoy government subsidies and a series of policy advantages, it is very difficult for private pension institutions to operate. Based on the further analysis of the performance of public pension institutions and private pension institutions’ operating dilemmas, this paper analyzes the mechanism behind them, and finds that the cost of land, construction, medical equipment, operating costs, labor costs. There is serious inequality in tax subsidies, which has led to the contradiction between public and private pension institutions in the pension industry.