In response to a noticeable decline in participation attributed to rising premiums, numerous local governments across China have opted to extend the deadline for enrolling in this year’s state health insurance scheme, catering to both urban and rural residents. This voluntary scheme, covering just over 70% of China’s massive 1.4 billion population, is managed by local governments and plays a crucial role as one of the two pillars of the country’s basic medical insurance system.
The falling participation rate poses a threat to the sustainability of China’s state medical insurance system, especially in the face of a rapidly aging population. At least seven provincial-level governments, along with numerous cities from seven other provinces, have announced extensions to encourage more subscribers to join the scheme, which primarily targets individuals not formally employed.
The urban and rural residents’ scheme, in place since 2003, requires subscribers to pay an annual premium, traditionally due at the beginning of the year. While it offers a lower fixed annual premium compared to the mandatory plan for urban employees, a government subsidy has historically covered over 60% of the total premium. However, recent years have witnessed a significant drop in enrollment, with over 25 million people exiting the scheme in 2022 due to factors such as escalating premiums, reduced incomes, and lack of awareness.
The National Healthcare Security Administration reports a consistent decline in the number of subscribers since 2019. Recognizing the urgency, provincial governments, such as Gansu in the northwest and Shanxi’s Yuncheng in the central region, have taken measures to extend payment periods, intensify outreach efforts, and ensure comprehensive coverage.
Experts, including Hua Ying from the Institute of Population and Labour Economics under the Chinese Academy of Social Sciences, highlight systematic flaws in the scheme’s sustainability. Hua Ying suggests linking premiums to individual incomes to address issues of equality. A research paper by Hua Ying published in the China Academic Journal advocates for this change, emphasizing that the financial burden on the lowest income group in rural areas is over 20 times that of the highest income group in urban areas.
The minimum annual personal contribution for the urban and rural residents’ scheme has surged from 10 yuan (US$1.4) in 2003 to 380 yuan last year. Regions like Baoji city in Shaanxi province have witnessed a declining participation rate over the past three years, dropping from 98.5% in 2021 to 96.3% in 2023, with increased premiums cited as a significant factor.
Experts and officials alike caution against diminishing public enthusiasm for China’s state medical insurance scheme, urging a reevaluation of premium structures and greater attention to income-related disparities to ensure the scheme’s continued success and sustainability.
