China Xiaokang Magazine:
I have a question for Vice Minister You. Could you talk about this year’s general plan for building a unified basic medical insurance system for urban and rural residents by integrating the medical insurance system for urban residents with the new rural cooperative medical care system?
You Jun:
China has set up a new rural cooperative medical care system for rural residents and a basic medical insurance system for non-working urban residents, which played a great role in ensuring basic medical care for the two groups of people. As China’s medical care systems are covering over 1.3 billion people, we have ushered in a new era of universal health care. With deepening urbanization and the mobility of the people, division between the new rural cooperative medical system and the medical insurance system for non-working urban residents has caused institutional imbalances and a disparity of resources. Therefore, the State Council issued a specific document early this year, requiring the unification of the basic medical insurance system for both urban and rural residents. It refers to the unification in six aspects mainly on the policy level, including coverage, financing policies, medical benefits, the directories of insured drugs, the management of designated hospitals and the management of insurance funds. Before the State Council released the document, many places around the country, like Tianjin Municipality, Shandong Province, Guangdong Province and Zhejiang Province, had been exploring means of institutional unification of the two medical insurance schemes. Generally speaking, the result is quite good. The new adjustments have given urban and rural residents a sense of fairness, and the benefits of medical insurance have improved.
The Ministry of Human Resources and Social Security is actively implementing the requirement of the State Council. After the release of the document, we immediately held a conference on this matter, distributed related guidelines and supervised its implementation in a regular manner. We hope different parts of the country can implement the plan by June and complete the unification of the two schemes by the end of the year. Thank you.
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.
China National Radio:
My question is about pension funds. Recent reports claimed there is a gap in China's pension fund, resulting in a difficulty in issuing pension in some areas. I would like to ask how big the gap is and how we should deal with the situation.
Yin Weimin:
The gap in pension funding has attracted wide public attention and stirred up many discussions. First, on the national level, the operation of pension funds has been stable, and there is no such a gap. Last year, the total income for pension funds stood at 2.7 trillion yuan (US$413.24 billion) and its expenditure was 2.3 trillion yuan (US$352.02 billion), so the annual balance was more than 300 billion yuan (US$45.92 billion) and the overall balance was 3.4 trillion yuan (US$520.37 billion). The figure shows that no gap exists across the country, given that our ability to pay will last for 17 months.
Second, as for different provinces, an imbalance does exist and the disparity varies from province to province. Since the pension fund is conducted individually by different provinces, many factors, primarily the demographic structure, have resulted in these differences. Some provinces are capable of issuing 40-50 months' pensions, whereas others could sustain only 1-2 months. Last year's statistics show that seven provinces' pensions were experiencing a deficit for the past year alone, though they still had a surplus as to the total fund. It is like a household. This month you made 1,000 yuan but spent 1,100, so the monthly deficit was 100. However, you don't have to borrow money since you still have a deposit of 10,000 yuan, which is enough to pay off all the expenditures. Even when the seven provinces had to draw money from their total funds, there was still no deficit created.
Third, from the long-term perspective, this issue is indeed worth mentioning, and we should make preparations for future difficulties, especially the aging population. This calls for stronger sustainability of the pension fund. As for specific measures, I have already talked about them just now. The abovementioned seven to eight measures are all centered on the pension fund's sustainability.
With regard to the reform of the pension system, the basic principles are fairness and sustainability. I think the public can relax on this issue, since we will implement a series of reform measures to ensure the sustainability of pension plans. There is no problem there. Thank you.
Beijing TV:
Some people have pointed out that the "the more you contribute, the more you reap" stimulus mechanism in the pension system is not noticeable enough, and that the pension funds for newer retirees are reduced year after year, attributing these to certain people's suspension of pension contributions. How would you comment on this, and would more payments ensure more benefits? Thank you.
Yin Weimin:
In designing China's pension system, we followed a basic principle of more benefits for more and longer contributions. The system combines social contributions with personal contributions. Years of practice show that the system is sound overall. For social contributions, we pay more attention to fairness to allow secondary distribution to play a part. For personal accounts, we stress each person's own contributions to their pension plans. The more they contribute, the more they will reap in the future. The system has been developing throughout the years. As I mentioned above, we have a plan to improve personal accounts, in which we will stress the role of stimulation and restriction. We will roll out concrete measures for this undertaking. Thank you.
Hu Kaihong:
This marks the end of today's press conference. Thank you, Minister Yin, Vice Minister You, and our friends from the press.
