China moves to merge urban and rural medical insurance plans for universal offer

China will merge its rural and urban medical insurance plans to create a national basic system, according to the State Council, in a move that follows efforts to curb the rush to urban "super hospitals" for treatment and align spending on drugs with medical needs.

The system will be phased in gradually a rely on a mix of out-of-pocket or private insurance, government subsidies for medicines and services and help from civil society groups under a formula that will eventually see those that earn more, pay more, whether in the cities or in rural areas.

"A plan will be set up so that individual contributions are determined by the disposable personal income of urban and rural residence," according to a release from the State Council, China's cabinet. "While governmental subsidies being increased, individual contributions should also go up."

The guidelines remain to be filled in with details, but appear to take a page from Singapore which in early 2015 moved to offer a form of universal health coverage that formally blended existing private insurance plans with subsidized outpatient care and catastrophic in-patient cover through contributions to a Central Provident Fund--at generally higher costs going forward except for low-income groups. Importantly, the mix of public and private also extends to hospitals--a policy that China has pushed as well.

State-run Xinhua news agency said the combined effort could see around 75% of inpatient medical fees covered, while outpatient fees would increase.

In July, the State Council moved to rollout medical insurance for serious illness nationwide. China lags Singapore in broad access to private health insurance policies. But in July, Liang Wannian, vice-director of the medical reform office under the State Council and a senior official with China's National Health and Family Planning Commission, suggested that could change.

Liang said at the time that paying for the new system meant drawing on pools of cash from the urban and rural resident basic medical insurance and the New Rural Cooperative Medical System fund--which will now be melded.

He also suggested wider private insurance may be allowed.

"In principle, the government selects commercial insurance institutions through a bidding process," Liang said in July. "If this does not work, local governments should clarify the selection method. The profit margin of commercial insurance institutions should be controlled in a proper range."

China has three basic medical insurance programs with two aimed at urban populations separated into employees in one case and dependents under 18-years-old or the poor in the second.

The third, managed by National Health and Family Planning Commission, provides basic coverage at rural medical cooperatives that can refer patients to specialists if needed. The initial step is the merger of the urban dependent and poor basic coverage with the rural cooperative effort, Xinhua said.

- here's the release from the State Council
- here's the Xinhua story

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