China Pushes Ahead With Health Insurance Reform Amid Public Concern
Guo Jinhui
DATE:  Feb 27 2023
/ SOURCE:  Yicai
China Pushes Ahead With Health Insurance Reform Amid Public Concern China Pushes Ahead With Health Insurance Reform Amid Public Concern

(Yicai Global) Feb. 27 -- Moves by some regions in China to carry out national health insurance reform, targeting the personal account system that has been in place since 1998, has raised public concern.

Experts interviewed by Yicai Global said that the general direction of the reform will move ahead as planned, but personal accounts will not be abolished for some time yet.

At a recent consultation on health insurance reform, at least half of the experts suggested abolishing personal accounts and using all the funds for outpatient services. But to ease social acceptance of the plan, the reform will have a transitional strategy of allocating fewer funds to personal accounts, one of the participating experts told Yicai Global.

China's employee health insurance system uses a combination of social pooling and personal accounts. Employers must contribute 6 percent of a worker's salary and the worker 2 percent, with 30 percent of the company's and all of the employee’s contribution going into their personal account.

After this year's reform, the balances of the original personal accounts will remain unchanged, and individual contributions will still go into personal accounts, but the health insurance costs paid by firms will instead go into the pooled fund, an official with the National Healthcare Security Administration said on Feb. 25.

The reform states that the funds transferred away from personal accounts will be used for reimbursement of outpatient expenses, which will benefit more people, especially retirees.

The original system was not really fair, Zhu Minglai, director of the Health Economics and Healthcare Security Research Center at Nankai University, told Yicai Global. Young people and those in good health had a large balance saved in their accounts, while elderly people in poor health or those with chronic diseases did not have enough.

The large amount of money accumulated in personal accounts poses a degree of moral hazard and leads to regulatory pressure, according to Lou Yu, director of the Institute of Social Law at the China University of Political Science and Law.

By the end of 2021, the accumulated balance in employees' health insurance personal accounts was CNY1.18 trillion (USD169.8 billion). Zhang Xiao, director of the Medical Insurance and Social Security Research Center at Southeast University, said the new system will improve efficiency.

Some regions have already started with the reform. According to the NHSA, so far this year designated medical institutions have realized the settlement of 441 million general outpatient co-payments, with a daily average of over 7.8 million settlements and a completed settlement amount of CNY46.24 billion (USD6.64 billion).

Editor: Tom Litting

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Keywords:   medical insurance,personal account