How Health Insurance Works in China, and How It's Changing

Since the introduction of new policies a decade ago, almost everyone in China has at least had some form of health insurance. The better option of both is the employee hospitalization insurance, which is used by 25% of the country's inhabitants. Contrary to the United States', China does not have a company manage employee insurance. The pools are typically funded by companies, which can be as high as 9.8 per cent of the worker's annual salary. Employee plans are often available to those who have personal health accounts. Employee insurance pools forward approximately a third to their personal health accounts. The rest is spent on hospitalizations and other expenses. Wuhan's employee plan continued to forward $38 per month to personal health accounts until this month. This was even after employees had retired and their employers stopped contributing. Three-quarters of China’s 1.4 billion inhabitants are insured for their rural or urban residents. Residents insurance is available for both farmers and migrants, as well for children who are rarely covered by their parents' insurance. Many companies resort to loopholes and evasion in order to avoid paying workers' insurance contributions. China has less than 4 percent without any health insurance. Chinese insurance plans are very restrictive in terms of what they cover, have high co-payments, and provide very limited coverage. In 2020, the average employee insurance payout was $544 per person. Many of these funds are now in deficit. The pooled employee funds in many Chinese cities are running low, but personal health accounts in China have amassed more than $130 trillion. Also, the rules for spending money from personal health accounts have been changed. Beneficiaries will have the right to transfer money to their spouses, children, parents, and siblings, as well as rural family members. It is becoming increasingly difficult for people with personal health accounts to spend the money. To be eligible for partial reimbursement from employee insurance pools, retirees must spend $75 per year on outpatient and medical expenses. Urban retirees make an average income of $6,000 per year, excluding personal savings. Rural retirees not only live on a lower income but also grow their own food.