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Health insurance faces risks

2015-February-13       Source: Global Times Net

A report says that China's health insurance scheme for urban employees may run into deficit in 2017 and the accumulated deficit could reach 735.3 billion yuan ($117.5 billion) by 2024.

A report by medical industry experts recommends that the government reduces medical costs, saying that China's health insurance scheme for urban employees may run into deficit in 2017 and the accumulated deficit could reach 735.3 billion yuan ($117.5 billion) by 2024.

Insurance costs has been going up due to the rising medical costs and an aging population while insurance funds continue to be saddled by the slowdown in the economy, the report funded by the Ministry of Education and released on Tuesday said.

The annual average growth of insurance funds between 2000 and 2013 is 33 percent while costs have risen 34.39 percent, the report added. The health insurance scheme for employees in urban areas excludes employees of government and public institution.

Employees are required to pay at least 2 percent of their monthly salary to the scheme, while employers pay 5 to 7 percent of all their employees' salaries. As the economy slows down, the insurance scheme cannot expect greater contributions, Fang Pengqian, a professor of the School of Medicine and Health Management at the Huazhong University of Science and Technology, who led the study, said on Wednesday. "There is no need for the public to worry about a possible deficit as the scheme is in no danger of going bankrupt or will not cover their medical costs," Fang said. "But the scheme faces challenges." The average annual growth of healthcare costs in the past three years is 13.2 percent, or 1.62 times faster than GDP growth during the same period, the report noted.

To reduce medical costs is a crucial way to avoid deficits, Fang said, adding the government should better supervise medicine prices and reform the industry. "Currently, 40 percent of many hospitals' revenue come from the sale of medicine, which could encourage some doctors to recommend higher-priced drugs," Fang said.

The medical insurance scheme for urban employees suffered a deficit in 2010 in some parts of China, the People's Daily reported in January.

Li Zhong, the spokesman of the Ministry of Human Resources and Social Security, said that authorities have already identified possible deficiencies, chinanews.com reported in July 2014. Li said that the government will improve the scheme's effectiveness, supervise it more closely and impose harsher punishment on violators, such as insurance fraud.

Editor: Olivia

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