State Council pushes for health insurance fund efficiency
Premier Li Qiang wants local governments to manage health insurance funds more efficiently.
At a State Council executive meeting on November 27, Li called for:
- “Advancing the provincial-level pooling of basic medical insurance”
- “Improving the efficiency of fund utilization”
Some context: Provincial-level pooling involves aggregating public health insurance funds from city- and county-level to the province-level. Instead of having many small local funds, the province manages one large fund that pays medical bills for insured residents across the whole province.
- So far, 12 provinces in China have implemented this mechanism.
Why it matters: A larger province-level fund can better balance surpluses and deficits across regions, reducing idle funds in some areas while others face shortages.
- This not only makes healthcare services more accessible and fairer across localities, it also increases capital efficiency.
Get smart: China’s aging population will put increasing financial strain on national insurance funds, as more people draw money from the system than pay into it.
- Improving capital efficiency is a step in the right direction, but sooner or later Beijing will need to find more sustainable ways to fund its health insurance system – such as increasing central government funding, mandating greater individual contributions, and developing a complimentary private health insurance market.