III. Medical Insurance
In 1998, on the basis of previous trials, the Chinese Government promulgated
the "Decision on Establishing a Basic Medical Insurance System for Urban
Employees," promoting a national reform of the basic medical insurance system
for urban employees. By the end of 2003, some 109.02 million people around China
had participated in the basic medical insurance program, including 79.75 million
employees and 29.27 million retirees.
Establishing a Basic Medical Insurance System
for Urban Employees
China has adopted a basic medical insurance system for urban employees that
combines social pool and personal accounts. In principle, the medical insurance
is managed locally.
-- Insurance scope and premium. The basic medical insurance program covers
all employers and employees in urban areas, including employees and retirees of
all government agencies, public institutions, enterprises, mass organizations
and private non-enterprise units. People employed in a flexible manner can also
participate in the basic medical insurance program. The funds for basic medical
insurance come mainly from premiums paid by both employers and employees: the
premium paid by the employer is about six percent of the total wage bill, while
that paid by the employee is two percent of his or her wage. Retirees are
exempted from paying the premiums. The individuals' premiums and 30 percent of
the premiums paid by the employers go to the personal accounts, and the
remaining 70 percent of the premiums paid by the employers goes to the social
pool program funds.
-- Payment standards. Medical expenses are shared by the medical insurance
fund and the individual: Outpatient treatment fees (smaller amounts) are mainly
paid from the personal account, while hospitalization expenses (larger amounts)
are paid mainly from the social pool fund. The minimum and maximum payments from
the social pool fund are clearly set out. The minimum payment is, in principle,
about 10 percent of the average annual wage of local employees, and the maximum
payment is about four times the average annual wage of local employees. The
medical expenses between the minimum and maximum standards are mainly paid from
the social pool fund, and the individual pays a certain proportion. Expenses
paid by retirees for medical treatment and medicine are reasonably lower than
those paid by people in employment.
Improving Medical Insurance Management and
Services
To standardize medical services and reduce costs, the state simultaneously
promotes the reform of the basic medical insurance system, medical and
healthcare system, and pharmaceuticals production and circulation system.
Catalogues have been made of medications, medical consultations and medical
services and facilities covered by the national basic medical insurance scheme.
Efforts have been made to ensure that the insured enjoy necessary medical
services, to curb unreasonable medical expenses, and to enhance the utilization
efficiency of the basic medical insurance fund. A management method of the
designation of medical institutions and pharmacies allowed to provide services
covered by medical insurance has been put into practice. A competitive mechanism
has been established to select and designate medical institutions and pharmacies
that operate in a standard manner and provide good services. Meanwhile, account
settlement procedures have been formulated and steadily improved for medical
insurance handling organizations and designated medical institutions.
Improving the Multi-Level Medical Security
System
While establishing the basic medical insurance system, to meet the medical
demands of different types of people covered by the insurance, the state has
established and improved a multi-level medical security system to reduce
personal burdens on the insured individuals. In local areas, a system of
subsidies for large medical expenses has been set up in accordance with actual
conditions to settle medical expenses exceeding the maximum limit of the basic
medical insurance payment, the funds for the subsidies being raised mainly from
individuals or enterprises. The state encourages enterprises to establish
supplementary medical insurance for their employees, mainly for settling medical
expenses not covered by the enterprise employees' basic medical insurance. The
part of the enterprise's supplementary medical insurance premiums that is within
four percent of the total wage bill is booked as the production cost. A civil
servants medical subsidy system has been established for civil servants and
employees of public institutions who formerly enjoyed free medical services. The
state is gradually establishing a social medical aid system mainly funded by the
government to provide basic medical security for people with special
difficulties.
