Moving towards universal health insurance in China: Performance, issues and lessons from Thailand

Abstract

China is now in the course of implementing a new round of health system reforms. Universal health insurance coverage through the basic social medical insurance system is high on the reform agenda. This paper examines the performance of China’s current social medical insurance system in terms of revenue collection, risk pooling, the benefit package, and provider payment mechanisms based on a literature review and publicly available data. On the basis of critical assessment, the paper attempts to address the issues challenging China as it moves towards universal coverage. Focusing in particular on the reform experience in Thailand as it implemented universal coverage, the following policy implications for further reform in China are articulated, taking into account China’s particular circumstances: firstly, the gaps in the benefit package across different schemes should be further reduced; secondly, the prevailing fee-for-service payment system needs to be transformed; thirdly, the primary health care delivery and referral system needs to be strengthened in coordination with the reform of the health insurance system; and fourthly, raising the risk pooling level and integrating fragmented insurance schemes should be long-run objectives of reform.

Introduction

As the largest developing country in the world, China has been facing substantial challenges to serve its population of 1.3 billion with equitable, affordable and high-quality health services over the past several decades. The performance of the Chinese health system, and the reforms that have been implemented, have attracted broad and intense interest worldwide. China’s health system, once revered by other countries in the early decades after the founding of the People’s Republic of China, has increasingly been criticized for its poor efficiency in health care delivery, inequity in utilization and access to health services, and cost escalation (Eggleston et al., 2008, Wagstaff et al., 2009). Specifically, health care has become a leading and serious national concern. The general public has expressed its discontent with unaffordable access and medical impoverishment through thousands of organized protests throughout the country, receiving frequent media attention (Yip & Hsiao, 2008). With the failures of past reforms and the present policy goals of building a harmonious society, the Chinese government has recognized its responsibility to address these concerns and is launching a new wave of health system reform.

The performance of the health insurance system, which dominates health care financing and payment in China, deserves greater attention in the current context. Through a number of difficult reforms and policy changes in the past decades, China’s basic social medical insurance system, which includes the Urban Employee Basic Medical Insurance system (UEBMI), the New Rural Cooperative Medical System (NRCMS) and the Urban Resident Basic Medical Insurance system (URBMI), has been developed and is expanding rapidly. Although commercial medical insurance exists, it still accounts for a small proportion of the population covered and is purchased mainly by the upper echelon population at present (Wang, 2009). Under the new health plan announced in April 2009, the Chinese government promulgated the goal of achieving universal insurance coverage by the basic social medical insurance system by 2011 (Chen, 2009).

Although China’s basic social medical insurance system nominally covers everyone across the country and is moving towards realization of the objective of universal insurance coverage, the performance of this system needs to be carefully considered and critically evaluated. On the basis of such an appraisal, the intrinsic strengths and weaknesses in institutional design and possible initiatives for further reform of the system can be identified. The experiences of health insurance system reform in other countries may also present useful insights for China’s ongoing reform. As an example, Thailand has made impressive strides towards universal coverage, sparking considerable interest worldwide and potentially providing lessons for China (Tangcharoensathien, Prakongsai, Limwattananon, Patcharanarumol, & Jongudomsuk, 2007).

This paper first appraises the performance of China’s social medical insurance system using available scholarly literature and relevant data from the official web pages of the government, thereby elucidating the current issues confronting the system. The paper employs an analytical framework that has been widely adopted for assessing health care financing mechanisms, first proposed by World Health Organization (WHO) in its evaluation of the world’s health systems in 2000 (WHO, 2000). The framework focuses on four key functions that a financing mechanism must perform: revenue collection, risk pooling, the design of the benefit package, and provider payment mechanisms. The paper then examines the health insurance reform experiences in Thailand with respect to the objective of universal coverage and attempts to draw out some lessons for China, taking into account China’s practical context.