Equity in Health Care Financing: Evaluation of the Current Urban Employee Health Insurance Reform in China

Abstract

ABSTRACT This paper uses multi-year, individual-level data to evaluate the effects of the current Chinese urban employee health insurance reform on equity in health care financing. It found that the new Urban Employee Basic Health Insurance Scheme financed by personal medical savings accounts (MSAs) plus a social-risk pooling account (SPA) is regressive. The contributions to the SPA, although slightly regressive, played an important role in equalizing health care financial burden; the payments from the SPA favored low-income insured employees. The introduction of MSAs has resulted in more resources being available for high-income insured employees and an increased burden on low-income ones. The amount of resources currently collected by the new program would achieve equity in health care financing if they were pooled in a social insurance fund without MSAs. These results have important policy implications for both China and other countries contemplating implementing MSAs.