China in transition:the new health insurance scheme for the urban employed

Abstract

China has been very successful in achieving good health at a low cost, mostly through national programs for healthpromotion and illness prevention. However, increased prosperity in recent years has led to higher expectations fortherapeutic care, and the change to a socialist market economy has created new risks and opportunities for bothfinancing and care provision.After several years of experimentation, China committed itself in 1996 to a major reform program which includesimplementation of a new method of financing of care for the urban employed population. It comprises a mix ofgovernment-operated compulsory basic insurance, individual health savings accounts, and optional private healthinsurance.This paper outlines the new Scheme, and notes some tactical and strategic issues. I conclude that the Chinesegovernment is correctly choosing to balance new and old ideas, but that there are many challenges to be facedincluding integration of the new Scheme with the rest of the health care system.