SCIO briefing on China's employment and social security

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Yin Weimin, minister of human resources and social security

Hu Kaihong, vice director-general of the Press Bureau, State Council Information Office

Feb. 29, 2016

Health News:

Recently, there have been rumors that many provinces have seen deficits in medical insurance funds. Previously, there were also media reports that a new policy might be adopted to ask retirees to pay medical insurance premiums. Will the government put this policy on its agenda? According to the materials I just received, in the next step, the government will probe into the practice of long-term care insurance. Is there any specific plan regarding this issue? Thank you.

Yin Weimin:

I will answer the first question and leave the other two to Vice Minister You Jun.

Basically speaking, China’s medical insurance system is running well. It has adopted the pay-as-you-go approach. This is different from the old-age pension, under which part of the fund needs to be accumulated. Concerning medical insurance, on the national level, there is no deficit. Our problem is that medical insurance is managed separately at lower levels. The highest authorities with power to allocate the funds are prefecture-level governments. Therefore, some particular regions have seen deficits. There are many reasons behind this situation. For one thing, the population structures in different regions differ from each other. For example, in some regions, retirees account for a large portion of the regional population. A case in point is the old industrial bases. For another thing, in some regions, people might receive excessive medical treatments. We will take comprehensive measures to address these problems.

Now, I’ll leave the floor to Mr. You.

You Jun:

We have also noticed that the news about retirees paying medical insurance premiums had sparked public discussion. We believe that the discussion will help all circles in the society better understand China’s social security system. It will also help us collect public opinion and advice, so as to further improve social security policies.

As you might know, the rules on retirees in the medical insurance system for urban workers were designed during the reform according to old conditions. It evolved from the labor insurance system in enterprises. Under the system of the planned economy, state-owned enterprises’ income and expenditures were under unified state control. There was no accumulation of funds. At that time, the task of distributing old-age pensions to retirees was very difficult. Therefore, there was a rule that retirees could enjoy the benefits of medical insurance without paying premiums. This practice showed our respect to the great contributions the retirees had made to our country.

The system has been running for almost 20 years. It is basically running well. It effectively protects the rights of workers enjoying medical care. We are able to continue to provide you with the service, so you may rest assured. However, as the old saying goes, preparedness ensures success, and unpreparedness signals failure. Even though our current work has gone well, we should study the situation and work to foresee problems concerning medical insurance.

The old Chinese saying goes, “a man with no thoughts for the future will surely have trouble close at hand.” Currently, the biggest challenge has come from the ageing population. The Chinese population is getting old at a faster rate and on a larger scale. It definitely imposes great pressure on the long-term operation of medical insurance. You mentioned that in some particular regions, there were deficits in medical insurance. Minister Yin just explained the issue. The deficits were seen in regions where more people were enjoying the benefits of medical insurance, while less people were paying the premiums. This is a reminder to us. According to statistics, retirees’ medical expenses are generally about four times that of the workforce. Currently, about 25 percent of all those participating in the medical insurance system are retirees, so their medical expenses account for 65 percent of the total. It’s natural that elderly people spend more on medical treatments. We established the system to provide the elderly with care and help promise them a healthy, happy life. This should be the consensus of society.

However, China’s current health insurance system runs on a pay-as-you-go (PAYG) basis, which raises funds from society, and achieves mutual aid through mutual assistance. In order to ensure medical care payment and guarantee basic medical needs for insured participants, rights and obligations should be balanced. It requires an even sharing of the responsibilities by the government, employers and individual. That is the essential attribute of social insurance. It’s not fair to place all the pressure that results from an aging population in the future only on employees, which is unsustainable and undermines economic and social development. Thus, the difficulties the current health insurance system has to face in future are mainly about fairness and sustainability.

There are two ways to solve the problem, to increase income and reduce expenditure. To increase income, we should strengthen management, deepen health-care reform, cut medical costs, and keep residents’ life-savings secure. Meanwhile, in response to future pressures, we should work out strategies to ensure the long-term balance of healthcare insurance funds, and provide better and more sustainable guarantees for participants. The research requires time. During the process, we will widely solicit public opinion and conduct thorough research before the reform suggestions finallyintroduced.

What I want to explain is that there are multiple choices for the reform paths and implementation methods. However, no matter how it is reformed, one thing won’t be changed. The reforms are made to better protect participants’ interests, and giving participants a feeling of satisfaction about the healthcare system. To increase peoples’ welfare has always been the priority of our work.

Long-term care insurance is an important measure for us to deal with the aging population. The statistics show that the number of disabled and half-disabled elderly people in China has reached40 million, and the number is on the rise. The increasing number of disabled elderly caused by the aging population will bring serious risks for families, individuals and society. According to the requirements of the fifth plenary session of the 18thCPC Central Committee, the Ministry of Human Resources and Social Security has set up a panel to research long-term care insurance. Until now, pilot projects have been launched in Qingdao of Shandong Province, Shanghai, and Changchun of Jilin Province. We will sum up experiences, actively expand pilot projects to the whole country, and release policies in good time. Thank you.

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