Political Interests and the Implementation of China's Urban Health Insurance Reform

During the 1980s and 1990s China has been experimenting with reform of its health insurance system. Based on a study of experimental schemes in several cities in eastern China in the late 1990s, this paper shows that the schemes' main problems are due to the vested interests of enterprises, hospitals, officials, and other beneficiaries of the pre-reform system. Reform policy has been implemented slowly, and local health insurance schemes have (1) suffered from poor participation rates, and (2) had difficulties balancing contributions into local government-run pooled funds with expenditures needed for medical treatment. These problems threaten the viability of the national programme announced in late 1998. The solution lies in improving local government capacity through effective legislation and training, but this will be difficult to achieve.