The impact of fertility policy on the actuarial balance of China’s urban employee basic medical insurance fund–The selective two-child policy vs. the universal two-child policy

Abstract

This study aims to investigate the impact of the change in China’s fertility policy from its selective two-child policy to a universal two-child policy on the balance of its Urban Employee Basic Medical Insurance (UEBMI) fund. This study uses data obtained from the 2013 and 2015 China General Society Survey to estimate the Poisson model, and then adopts a bisexual Leslie matrix, estimated adjusted coefficients, and an actuarial model to forecast the current balance and accumulated balance of the UEBMI fund under each of the selective two-child and universal two-child policies up to the year 2060. The primary finding of this study is that this change in fertility policy results in the current balance of the UEBMI fund registering a lower deficit and eventually a surplus. Although this policy change cannot prevent the UEBMI from facing bankruptcy, the deficit in terms of the accumulated balance of the UEBMI fund will decline.