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Towards Universal Health Coverage via Social Health Insurance in China: Systemic Fragmentation, Reform Imperatives, and Policy Alternatives

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Abstract

China’s remarkable progress in building a comprehensive social health insurance (SHI) system was swift and impressive. Yet the country’s decentralized and incremental approach towards universal coverage has created a fragmented SHI system under which a series of structural deficiencies have emerged with negative impacts. First, contingent on local conditions and financing capacity, benefit packages vary considerably across schemes, leading to systematic inequity. Second, the existence of multiple schemes, complicated by massive migration, has resulted in weak portability of SHI, creating further barriers to access. Third, many individuals are enrolled on multiple schemes, which causes inefficient use of government subsidies. Moral hazard and adverse selection are not effectively managed. The Chinese government announced its blueprint for integrating the urban and rural resident schemes in early 2016, paving the way for the ultimate consolidation of all SHI schemes and equal benefits for all. This article proposes three policy alternatives to inform the consolidation: (1) a single-pool system at the prefectural level with significant government subsidies, (2) a dual-pool system at the prefectural level with risk-equalization mechanisms, and (3) a household approach without merging existing pools. Vertical integration to the provincial level is unlikely to happen in the near future. Two caveats are raised to inform this transition towards universal health coverage.

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Fig. 1

Source: China Health Statistical Yearbook and China Human Resources and Social Security Statistical Yearbook, various years

Fig. 2

Source: China Health Statistical Yearbook, 2013

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Notes

  1. Designed as voluntary in nature, the implementation of the scheme in reality often involved certain degree of administrative mobilization. To date, very few rural residents are not covered by this scheme, and therefore, the NCMS is usually considered as a SHI scheme.

  2. According to the State Population and Family Planning Commission (2015), 83 % of the floating population has subscribed at least one SHI by 2014.

  3. The State Council’s Opinions on the Integration of Urban and Rural Basic Health Insurance Schemes, January 3, 2016.

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Author information

Authors and Affiliations

  1. Department of Asian and Policy Studies, the Education University of Hong Kong, 10 Lo Ping Road, Tai Po, New Territories, Hong Kong

    Alex Jingwei He

  2. School of Public Health, Zhongshan Er Road, Guangzhou, Guangdong Province, China

    Shaolong Wu

Authors
  1. Alex Jingwei He
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  2. Shaolong Wu
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Corresponding author

Correspondence to Alex Jingwei He.

Ethics declarations

This study is funded by the Early Career Scheme of the Research Grants Council, Hong Kong SAR Government (Ref. ECS859218), the Dean’s Research Fund of the Faculty of Liberal Arts and Social Sciences (Ref. ECR2), the Education University of Hong Kong, and the Early Career Faculty Research Training Program of Sun Yat-sen University (Ref. 13YKPY12). The authors are very grateful to Azad Singh Bali and anonymous reviewers for useful comments.

Conflict of interest

AJH and SW have no conflict of interest to declare.

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He, A.J., Wu, S. Towards Universal Health Coverage via Social Health Insurance in China: Systemic Fragmentation, Reform Imperatives, and Policy Alternatives. Appl Health Econ Health Policy 15, 707–716 (2017). https://doi.org/10.1007/s40258-016-0254-1

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