China's health insurance reform: What is changing?

As many places in China have rolled out the health insurance reform, some residents noticed their monthly health insurance income was cut less.

Before getting outraged about the change, let's 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 diseases, and a personal fund paid by employers and employees together for day-to-day doctor visits. 

The personal fund is managed, as the name suggests, by employees themselves. The national fund is managed by the government, with part of the money going directly to employees as cash – this is where the income cut took place. 

Exchanging cash for benefits 

Running for over 20 years, the system is naturally getting out of date, leading to a balance problem. 

The reform was announced in April 2021, and has been rolled out over the subsequent months. 

According to latest media reports, over 80 percent of the personal fund is in the hands of younger, healthier people, while the retired, who need the fund the most, have insufficient funds to get treatment. 

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

The reform 

Under the new system, more cash will be kept in the national fund – so people are getting less cash. 

In return, the money will be used to cover at least 50 percent of day-to-day doctor visits.

So the "lost" money will be used to pay for more coverage. And the coverage can be high if a resident visits doctors often. 

What's more, personal funds can now be used on family members, giving healthy people an option to use the money in a meaningful way. 

It's not 'bankrupt' 

Some netizens on social media speculated that the reform was pushed forward to use personal fund to feed the national fund that had no money left. 

The national fund still has plenty of money. Official statistics showed the fund's income in 2021 was nearly 1.19 trillion yuan (about $170 billion) and its expense was only 932 billion yuan (about $136 billion).

The fund is not losing money, not to mention being emptied. So it makes no sense for the government to "steal" money from people's pockets – after all, the money is used for patients. It's unhealthy to let the money stockpile in the hands of healthy people.