Because even though the coverage is high, there is really little consumption by the citizens - the level of benefits received by patients is low and most patients have to pay out-of-pockets-- > they can't afford the payments so they just don't spend the money to treat their diseases. Local governments also don't have the incentives to spend money on healthcare infrastructures so the overall expenditure is "low"

Another point I want to make is that : 5% is not necessarily "low"
Singapore spends 4.6% of its GDP on healthcare while Korea spends 7.2% (refer to worldbank for healthcare expenditure vs GDP : http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS?order=wbapi_data_value_2013+wbapi_data_value+wbapi_data_value-last&sort=asc)

Yet most of their citizens are covered/ insured.

Although US spends 17% of its GDP on healthcare, only ~80% of americans are insured before the obamacare and a lot of people can't afford getting sick in America. I think it's around 90% now with the obamacare but you might want to read more into the conditions and terms of the it- many people still don't get access to expensive procedures and branded drugs.

Attached find the recent McKinsey report on China Healthcare Reform that may be of your interest.