the social, economic and political repercussions of the system’s failures. Section IVpresents the strengths and weaknesses of two suggested, competing solutions to thehealthcare crisis that have emerged in policy circles. The brief will conclude in SectionV by looking at the future of healthcare policy.
Section I: the Structure of Healthcare
Pre-reform urban insurance policy separated the urban population into two publiclyfinanced schemes based on job description. Between the Public Health Insurance Schemeand the Labor Health Insurance Schemes, about 75% of the urban labor force wascovered.
Public health insurance covered public sector employees. This group includedemployees of government, academia and political institutions; military personnel,veterans and college students. It was financed by the state and regulated by ChinaNational Labor Union and the Ministry of Organization. The labor insurance schemecovered industry employees, i.e., city workers in SOEs and collective-owned enterprises(COE). This group was financed by enterprises
and overseen by The Ministry of Laborand Social Security.
In 1998 the “Basic Health Care Insurance for Urban Employees” emerged, partiallyreforming the above system. In addition to narrowing the gap in health benefits the twogroups can access, it diverged from the original scheme in three major ways:
Compulsory participation for all employers and compulsoryenrolment for all formal employees;
Funding: social pooling and individual accounts have beenestablished with contributions by both employers andemployees;
Management of health insurance funds is carried out bymunicipal governments and regulated by the relevantgovernment bodies.
By the end of 2006 only 47% of urban residents had been covered.
Among the reasonsfor low coverage is its exclusion of the unemployed, self-employed, children and students,as the target has only been formal employees thus far. Noncompliance by foreign andpublic enterprises seeking to cut costs and local officials reluctant to discipline these
Guo, Baogang “Transforming China’s Urban Health-care System,”
Survey, vol 43 no 3 (2003) p385-403.
However, welfare benefits ultimately came from the state. If an enterprise was in the red, it would besubsidized by the regime. See Edward Gu and Jianjun Zhang “Health Care Regime Change in Urban China:Unmanaged Marketization and Reluctant Privatization,”
, vol 79 no 1 (2006) p 49-72.
Hougaard, Jens Leth, Lars Peter Østerdal, and Yi Yu “The Chinese Health Care System: Structure,Problems and Challenges” Department of Economics, University of Copenhagen. 2008.
“Transforming China’s Urban Health-care System” p 392-393; “Health Care Regime Change in UrbanChina: Unmanaged Marketization and Reluctant Privatization” p 59.
Gu, Edward “Towards Universal Coverage: China’s New Health Care Insurance Reforms” (