China’s health insurance reform: What is changing?

Since many places in China have launched health insurance reforms, some residents have found their monthly health insurance income reduced.

Before getting mad about the change, let’s take a look at what the benefits are, and the bigger picture of China’s health insurance system.

China’s current health insurance system has two parts: a national fund paid by employers that covers serious or chronic illnesses, and a private fund paid by employers and employees jointly for daily doctor visits.

Personal funds are managed, as the name suggests, by the employees themselves. The national fund is managed by the government, with some of the money going directly to employees as cash – this is where revenue cuts occur.

Exchange cash for profit

Running for over 20 years, this system is naturally out of date, causing balance issues.

The reforms were announced in April 2021, and have been rolled out in the following months.

According to recent media reports, more than 80 percent of personal funds are in the hands of younger and healthier people, while the retirees who need the most funds do not have enough for treatment.

One of the goals of reform is to achieve a new balance.


Under the new system, more cash will be held in the national fund – so people get less cash.

In return, the money will be used to cover at least 50 percent of the daily doctor’s visits.

So the “lost” money will be used to pay for more coverage. And coverage can be high if the resident visits the doctor frequently.

What’s more, personal funds can now be used for family members, giving healthy people the option to use money in meaningful ways.

Not ‘broke’

Some netizens on social media have speculated that reforms are being pushed to use private funds to feed a national fund that has no money left over.

The national fund still has a lot of money. Official statistics show the fund’s revenue in 2021 was nearly 1.19 trillion yuan (about $170 billion) and its expenses were only 932 billion yuan (about $136 billion).

The fund doesn’t lose money, let alone get emptied. So, it doesn’t make sense for the government to “steal” money from the people’s pocket – after all, the money is used for patients. It’s not healthy to let money pile up in the hands of healthy people.

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