A SIMPLE OVERVIEW OF CHINA’S BASIC MEDICAL INSURANCE SYSTEM
Healthcare and health insurance in China have undergone significant changes in the past decade, with the country establishing a national healthcare system that is able to cover over 95% of the entire population. This comes at a time when demands for China’s healthcare market continue to expand , especially with the country’s increasing income, aging population, and economic growth.
The National Health Commission in China is the main legislative body that drafts laws and regulations related to national health and determines plans for the future development of public health services in the country. The basic health insurance systems are overseen by the National Healthcare Security Administration (NHSA), which was established in 2018.
In China, the national medical security system has multiple tiers, with Basic Medical Insurance (BMI) providing the main source of coverage, and medical aid, commercial health insurance, donations, and mutual aid as additional services.
BMI in China can be split into two groups. The first is called the Employee Basic Medical Insurance Program (EBMI) and is for enrolled employees, mainly financed by the employee and employer payroll taxes. In urban areas, enrollment in this program is mandatory for employees. The second group is called the Residents Basic Medical Insurance (RBMI) and is for non-working residents, covering rural residents, along with urban residents such as children, students, elderly, self-employed, and others. Enrollment in RBMI is voluntary for households.
In September of 2020, enrollment in either of the BMI programs reached more than 1.35 billion, which is over 95% of the population in China. This means that China now has the largest healthcare security network in the world. The breakdown of coverage by the two BMI programs is 337 million people enrolled in EBMI, and 1.014 billion enrolled in RBMI. Despite the massive coverage provided, China’s healthcare system continues to grow, with a revenue of RMB 2.44 trillion and expenditure of RMB 2.09 trillion for the BMI fund in 2019. Permanent foreign residents living in China are entitled to the same healthcare benefits as Chinese citizens. However, visitors or undocumented immigrants are excluded.
Despite the wide reach of China’s BMI programs, the coverage provided still cannot be compared to other countries who have more developed and extensive social security systems. Coverage by the public health insurance in China is dependent on region and local governmental regulations, with BMI programs typically including partial coverage for:
- Primary and specialist care
- Inpatient hospital care
- Prescription medication
- Mental health care
- Emergency care
- Physical therapy
- Traditional Chinese Medicine
On the other hand, preventative services such as immunizations and disease screening are covered under a different public healthcare program, with funding provided by both the central and local government in China. Although maternity care is currently still under a separate healthcare program as well, it is being merged into the general BMI programs.
China has taken increasing steps to ensure basic healthcare for its population by more than tripling the governmental health expenditure from RMB 482 billion in 2009 to RMB1640 billion in 2018. The percentage of out-of-pocket expenses, that account for total health expenditure, decreased from 37.46% in 2009 to 28.61% in 2018.
Moreover, the gradual establishment of a national volume-based procurement system has pushed down the costs and pricing of several drugs, creating a standardized benchmark for different types of drugs procured across regions in China.
Process for Seeking out Healthcare
Depending on the region or area, primary care will be delivered by village doctors, community health workers, general practitioners (GPs), family doctors, urban community hospitals, and medical professionals in secondary and tertiary hospitals. Due to lower cost-sharing, local governments will usually advise patients to seek healthcare in village clinics, township hospitals, or community hospitals, prior to going to secondary or tertiary hospitals. However, patents are still able to go to higher level hospitals if they want to, usually without prior registration or referrals required, even for outpatient specialists.
The pricing of primary care within public government-funded health institutions is regulated and cannot be above a certain fee schedule. However, to encourage nongovernmental investment in healthcare, since 2014, non-public health institutions are allowed to charge above the fee schedule.
When it comes to long-term care and social support, these services are not covered by the public health insurance programs. Traditionally, in China, long-term care is mostly provided by family members at home, with no government funded financial support or tax benefits awarded. For the few professional long-term care facilities and providers that exist, it is almost always paid out-of-pocket.
To summarize, healthcare in China is accessible by almost the entirety of the population. The quality and specific type of coverage however, depend on individual circumstances such as place of residence, health insurance, and access to healthcare workers. Moreover, the Chinese government is still continuing the process of reforming and optimizing the medical security system in the country, with the aim of relieving concerns for illnesses and healthcare among all residents in China.
How Melchers supports you in China
With 155 years of business experience in various sectors in China, we know that every company needs its unique approach to the Chinese market. China’s business world is continually changing and varies significantly from region to region in terms of prosperity, regulation, openness to business, and other factors influencing the business environment. Due to its size and diversity, China can hardly be compared to any other country in the world. This is also true for the health care sector. Our longstanding experience and knowledge along the value chain of the Chinese healthcare industry through sales, management, and compliance activities, as well as corporate services, enables us to offer tailored and brand-oriented market approaches for all our partners. We help our selected brand partner to understand the Chinese healthcare market, quantify the scale and the competitor landscape, and identify short, mid, and long-term opportunities for market growth.
We take equity shares in our partners’ China operation with a focus on long-term partnerships, if desired.