Summary of Key Points
The number of people enrolled in the residential medical insurance program has decreased by 83 million over the past 7 years, with half of this reduction due to the elimination of duplicate enrollments and a natural decline in population, and the other half due to actual loss of coverage. The root causes of the actual loss of coverage include: the excessive financial burden on low-income groups, the lower cost-effectiveness of the insurance compared to the employee medical insurance, and the inability of the system to meet the needs of the mobile population and flexible workers. This has led to an imbalance in the insurance fund structure, with younger people opting out of the program while the elderly and children remain enrolled, potentially creating long-term risks.
I. The Reduction of 83 Million Enrollments: Half Due to Elimination of Duplicate Enrollments, Half Due to Actual Loss of Coverage
Many people may panic upon hearing that 83 million enrollments have been lost in 7 years, but in fact, half of this reduction is due to the elimination of duplicate data from the statistical records:
- Elimination of duplicate enrollments: Previously, medical insurance systems in different regions were not interconnected, leading to multiple enrollments by migrant workers and students moving between provinces. In 2022, efforts began to eliminate these duplicate enrollments, and 56 million duplicate records were removed in just two years.
- Natural population decline: The number of newborns is decreasing annually, and the national population is also declining (a decrease of 3.39 million by 2025), which has lowered the overall number of insured individuals.
However, the remaining 27 million enrollments (83 million - 56 million - natural decline) represent actual cancellations of coverage, and the majority of these cancellations occurred among the low- and middle-income groups who need the most protection.
II. Rapid Increases in Insurance Premiums Are Unaffordable for Low-Income Families
The individual contribution to the residential medical insurance has increased from 10 yuan in 2003 to 400 yuan in 2024 (with no further increases planned for 2025), representing a 40-fold increase over 20 years. For a rural family of six, this amounts to an annual expense of 2,400 yuan, which is a significant financial burden.
The fixed contribution amount is particularly unfair: regardless of income level, everyone pays the same amount. For example, the lowest 20% of the population pays 7.4% of their income for medical insurance, while the highest 20% only pay less than 1%—meaning the poorer the individuals, the heavier the financial burden. Many low-income and large-family households are unable to afford the insurance and have to opt out, with some even having to pay out of their own pockets.
III. The Low Cost-Effectiveness of Residential Medical Insurance Makes It Unattractive to Young People
There is a significant difference in benefits between residential and employee medical insurance:
- Hospital reimbursement: Residential medical insurance covers an average of 70% of expenses, compared to 85%-95% for employee medical insurance.
- Outpatient reimbursement: The annual limit for residential medical insurance is only 350-560 yuan, and it can only be used at community hospitals; employee medical insurance includes a personal account that can be used for outpatient services and medication purchases.
For healthy young and middle-aged individuals, residential medical insurance seems unnecessary unless they suffer from a serious illness, making it less cost-effective, leading them to choose to cancel their coverage. However, these individuals are the backbone of the insurance fund, as they contribute more and use the insurance less frequently, helping to cover the medical expenses of the elderly and children. Without their contributions, the stability of the fund is at risk.
IV. Imbalance in the Insurance Fund Structure, Leading to a Vicious Cycle
The purpose of medical insurance is for everyone to contribute to supporting a small number of sick individuals. However, the current situation is as follows:
- Ageing of the insured population: The proportion of people over 60 years old and children under 14 years old exceeds 52%, while the number of young and middle-aged adults is declining.
- Rapid growth in expenses: Although the number of enrolled individuals has decreased, the number of people receiving benefits is expected to increase by 7.7% by 2025, with annual expenses rising by 8%.
This leads to increased pressure on the insurance fund, forcing either higher premium payments or reduced benefits, which in turn results in even more people choosing to cancel their coverage. This creates a vicious cycle. Moreover, the young and middle-aged individuals who cancel their coverage are often the breadwinners of their families, and a sudden serious illness without insurance could push them back into poverty (60% of newly impoverished families due to illness involve those who had previously canceled their coverage).
V. Difficulty for the Mobile Population to Enroll in Medical Insurance
There are over 300 million people in China who are flexible workers or work across provinces, but the existing medical insurance system does not accommodate their needs:
- High costs for employee medical insurance: The annual contribution is several thousand yuan, which is unaffordable for those with unstable incomes.
- Incompatibility of residential medical insurance: Enrolling in the insurance at one's place of residence results in a 10%-15% reduction in reimbursement when seeking treatment in another place, and the registration process is cumbersome. Enrolling in the insurance at the place of permanent residence is also restricted by household registration requirements.
As a result, the dropout rate among the mobile population is 2.3 times higher than among local residents. They are not unwilling to enroll, but the system does not provide them with suitable options.
Conclusion: Medical Insurance Reform Must Address the Real Difficulties of Ordinary People
China's medical insurance system has progressed from ensuring coverage to focusing on the value and effectiveness of the insurance. The reduction of 83 million enrollments highlights the need to consider not only the balance of the insurance fund but also the financial burden on low-income groups, the convenience for the mobile population, and the cost-effectiveness of the insurance for young people. Only by ensuring that the most vulnerable and willing individuals can and do enroll in the insurance can the system be truly sustainable.