Summary of Key Points
In 2025, the total expenditure on the national basic medical insurance fund exceeded 3 trillion yuan for the first time. While the scale of revenue and expenditure has expanded, the structure of participants has improved (with an increase in the proportion of employee health insurance and a rapid growth in the number of flexibly employed individuals). The pressure of a declining workforce-to-retiree ratio due to aging is becoming evident. The government will introduce new policies for flexibly employed individuals to participate in health insurance. The medical insurance fund not only ensures access to healthcare for the public but also supports innovation in the pharmaceutical industry; however, there is a need to be cautious about maintaining financial balance in the future.
I. Where Does the 3 Trillion Yuan Spent on Medical Insurance Go Each Year?
In 2025, the medical insurance fund spends over 8 billion yuan daily, with the funds primarily allocated to three areas:
1. Outpatient services, hospitalization, and pharmacy purchases: Participants can get direct reimbursement for medical treatment and medication, such as for colds, surgeries, and chronic diseases, which constitutes the largest portion of expenditures.
2. Reimbursement for innovative drugs: By negotiating with pharmaceutical companies, new drugs are included in the insurance coverage, allowing patients to access the latest anti-cancer and specialized medications. From 2018 to 2025, 490 billion yuan was spent on this aspect, which not only enables patients to use better medicines but also encourages research and development by pharmaceutical companies.
3. Improvement of coverage: This includes increasing reimbursement rates and expanding the range of diseases covered, thereby reducing the financial burden on individuals seeking medical care.
The reasons for the increase in expenditure are straightforward: more people are seeking medical treatment (8.75 billion person-times in 2025, a 4.9% year-on-year increase), the scope and intensity of coverage have expanded, and more new drugs are being included in the insurance.
II. Changes in the Structure of Participants
The proportion of employee health insurance has increased, and the number of flexibly employed individuals is growing:
- In 2025, the total number of insured persons was 1.33 billion, with an insurance coverage rate remaining stable at 95%. The structure has become more balanced:
- Increase in the proportion of employee health insurance: 389 million people are covered by employee health insurance, accounting for 29.2% of the total insured population, a 0.6 percentage point increase from the previous year, indicating that more people have access to more stable medical coverage (employee health insurance generally offers higher reimbursement rates than resident health insurance).
- Rapid growth in flexibly employed individuals: Nearly 70 million flexibly employed individuals are insured in 2025, accounting for 18% of employee health insurance participants, a 5 percentage point increase from 2018, with an annual growth rate of over 8%. This group includes delivery workers, streamers, freelancers, and others, and their demand for health insurance is on the rise.
- Reversal in the trend of insured population growth: After China's total population peaked in 2021, the number of insured persons increased for the first time (an increase of 4.07 million in 2025), indicating that more people are being included in the insurance coverage.
III. The Aging Population Increases Pressure on Medical Insurance
The workforce-to-retiree ratio has decreased to 2.6, meaning that each working person is responsible for supporting more retirees:
This ratio indicates the burden on the medical insurance fund; a lower ratio means that fewer working people are contributing to support more retirees who receive benefits.
- In 2025, the workforce-to-retiree ratio dropped to 2.6, meaning that one working person must support 0.38 retirees (a decrease from 3 in 2012).
- The number of retirees is increasing faster: 3.37 million more retirees were recorded in 2025, a growth rate of 3.2%, while the growth rate for working people was only 2%. Over time, this will put increasing pressure on the medical insurance fund due to the higher frequency and cost of healthcare for retirees.
IV. New Policies for Flexibly Employed Individuals
To address the difficulties in insuring flexibly employed individuals, the government is introducing new policies:
1. Elimination of household registration restrictions: In large cities (such as Beijing and Shanghai), flexibly employed individuals can enroll in insurance without a local household registration.
2. Flexible payment options: Participants can choose how to pay their premiums (monthly or quarterly), which is more suitable for those with unstable incomes.
3. Inclusion of maternity insurance: Flexibly employed individuals enrolled in employee health insurance will also be eligible for maternity insurance benefits, including reimbursement for childbirth and maternity leave allowances.
These policies aim to make it easier for flexibly employed individuals to obtain health insurance coverage and address their concerns regarding financial stability.
V. Balance of Medical Insurance Fund Revenue and Expenditure
In 2025, the total revenue of the medical insurance fund was 3.59 trillion yuan, with expenditures amounting to 3 trillion yuan, leaving a surplus of 525.7 billion yuan. The growth rate of revenue (4% for employee health insurance) exceeded the expenditure growth rate (1.4%), ending the period where expenditures outpaced revenue from 2023 to 2024. However, it is important to note that:
- The revenue growth rate is in the single digits (4% for employees and even lower for residents). If future expenditure growth exceeds revenue, existing funds may need to be used to cover the shortfall.
- Both aging and the expansion of coverage will increase expenditures, so additional measures are needed to maintain the long-term balance of the medical insurance fund, such as optimizing reimbursement structures and controlling healthcare costs.
In summary, the operation of the medical insurance fund in 2025 reflects efforts to protect people's livelihoods while also highlighting challenges posed by aging and changes in the participant structure. The introduction of new policies will make coverage more equitable, but maintaining the sustainability of the fund in the future remains a critical issue.