Then director of the National Health and Family Planning Commission Li Bin reported at the 19th Party Congress that China had established a basic healthcare system with a stable participation rate at 95 per cent. This means that the number of people participating in the system exceeds 1.35 billion and that China has woven the world’s largest basic healthcare network.

This exciting number does not indicate how fragmented the healthcare delivery system is. Three subsystems currently constitute the basic healthcare system in China: basic medical insurance for urban workers, a new rural cooperative medical system and basic medical insurance for urban residents.

The first subsystem was established in 1998 by the then Ministry of Labour (which the government has since merged into the Ministry of Human Resources and Social Security) and covers all urban workers. This includes those employed in the public and private sector. In most cities, the employer’s contribution rate to the insurance fund is about 6 per cent of the average monthly salary of all employees and most individuals contribute 2 per cent of their personal monthly salary.

In 2002, the new rural cooperative medical system was built for rural residents. It is supervised by the Ministry of Health (now the National Health Commission) and is based on the principle of voluntary participation. The annual contribution of individuals who opt into the system is no less than 50 RMB (US$7.85) and the subsidies of local governments are no less than 240 RMB (US$37.69) per person.

Basic medical insurance for urban residents was designed in 2007 by the Labour Ministry for workers in the informal sector and those urban residents that did not have an employer, such as college students and housewives.

While the three subsystems roughly cover all urban and rural residents between them, problems such as reimbursement difficulties and simultaneous participation in two of the three subsystems are common. Due to the different payment standards and reimbursement rates across the three subsystems, many migrant workers mail back all of their medical bills to their hometown and demand reimbursement through the new rural cooperative medical system.

In cities that attract a large number of migrant workers (such as Beijing and Shanghai), providing reimbursement to migrants who have not joined the city’s medical system would be a huge burden for the city’s insurance funds. To avoid reimbursement difficulty, many migrant workers are forced to obtain basic medical insurance for urban residents even if they already participate in the rural system.

Simultaneous participation is exacerbated by both the Health Commission’s and the Labour Ministry’s attempts to improve the enrolment rates of their supervised healthcare schemes. Street-level bureaucrats often induce migrant workers to participate in one system even if they have already enrolled in another. Increasing the participation rate is seen as an important indicator of good performance and simultaneous participation is an easy way to increase the official record without real efforts. In 2017, simultaneous participation accounted for 10 per cent of all insured people — a huge waste of government subsidies to the healthcare funds.

In 2016, the State Council issued the ‘Opinion on Integrating the Basic Medical Insurance System for Urban and Rural Residents’, which proposed the combination of basic medical insurance for urban residents and the rural cooperative medical system. But this document did not state which ministry should supervise the integrated medical insurance. Although both the Ministry of Human Resources and Social Security and the Commission for Health and Family Planning supported integrating the three subsystems, there was considerable disagreement as to which department held jurisdiction over the integrated fund. The two ministries competed for the jurisdiction and both parties were reluctant to hand over its control to the other.

The slow integration of the three medical schemes is hard to resolve without a fundamental reform of the regulatory structure. In March 2018, State Councilor Wang Yong announced the establishment of the National Medical Insurance Bureau. All tasks related to healthcare that were under the supervision of existing ministries are now assigned to this new national bureau. This new National Medical Insurance Bureau is a vice-ministerial department and one of its main responsibilities is dealing with the problems of reimbursement difficulties and simultaneous participation in the fragmented healthcare schemes. The restructuring of the regulatory system echoes what the Fujian province has experimented with since 2011 and is a necessary step towards combatting bureaucratic redundancy. It remains to be seen whether this latest solution will be a cure for healthcare fragmentation or whether it will just be sugar pills.

Chelsea C. Chou is an Assistant Professor at the Graduate Institute of National Development, National Taiwan University. She can be reached at [email protected].