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Reforms in China’s Healthcare Insurance Aim to Promote Efficient Use of Public Medical Funds, Experts Say

BusinessChina DataReforms in China's Healthcare Insurance Aim to Promote Efficient Use of Public Medical Funds, Experts Say

Chinese local governments have recently implemented healthcare insurance reforms that aim to promote efficient use of public medical funds and increase benefits for those who need them the most, according to experts. Several provinces including Guangdong, Hubei, and Sichuan are now transferring a portion of medical insurance money from personal spending accounts to an outpatient insurance fund managed by authorities. Reforms now base healthcare insurance for retirees on the average pension disbursed in a certain region to ease their financial burden, whereas earlier it was based on personal pensions.

At present, about 354 million people in China are enrolled in basic medical insurance for employees, which comprises a unified account covering hospitalization and outpatient expenses for major diseases, and a personal account for the reimbursement of money spent on the treatment of common illnesses. This system had led to the inefficient use of medical funds in recent years, resulting in retirees’ personal accounts and those who are sick getting drained quickly, leaving them to pay out of their pockets. Meanwhile, younger people and those who are healthy ended up with excess money sitting idle in their personal accounts.

Wang Zhen, a researcher at the Chinese Academy of Social Sciences’ Institute of Economics, said that the State Council released guidelines in April 2021 on establishing a “mutual-aid system” for covering outpatient medical bills under the basic medical insurance for employees. The reform retained the role of personal accounts while allocating reimbursement of general outpatient expenditure to unified accounts, thereby relieving the financial burden on people in need. However, the reform was misconstrued by many because some localities were not adequately prepared for the change.

Data from the National Healthcare Security Administration shows that from 2011 to 2021, the average expenses for each outpatient visit rose by 83 percent to 329 yuan ($48), and the average number of outpatient visits per person annually rose by 28 percent. To reallocate some money from personal accounts to unified accounts, local governments can secure reimbursement of outpatient medical expenses, which Wang Zongfan, head of the Chinese Academy of Labor and Social Security’s healthcare security research department, said will enable people who have emptied their personal accounts to no longer have to pay out of their pockets.

According to experts, there is no need to worry about the capacity of China’s medical funds, as the national medical insurance fund ran a surplus of 630 billion yuan last year. They further suggest enhancing communication between hospitals and drugstores, so that outpatient prescriptions can promptly be sent to drugstores. The coverage for medicines bought at retail pharmacies has also been strengthened, with the administration calling for expanding the number of drugstores that agree to have medical bills reimbursed by unified accounts. Wang Zongfan suggested that community health institutions’ capacity be built up so that residents can see doctors when they need to while increasing the number of drugstores where medicines can be purchased more conveniently.

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