(Xinhua)
Updated: 2007-08-15 14:43

BEIJING -- China will launch a pilot project of medical insurance to cover 240 million urban residents outside the workforce this year, and all urban residents will become beneficiary by 2010, said a senior official with the Ministry of Labor and Social Security (MLSS) here Wednesday.

The medical insurance project would cover those not included in the system for the urban employees, namely, school students, children and adults who are not employed, Hu Xiaoyi, vice minister of MLSS, said at a press conference.

Hu said the pilot project would be carried out in 79 cities, including large cities as well as county-level cities.

Beijing, Tianjin and Shanghai are not among the pilot cities, as similar practices have already been adopted in the three cities, according to Hu.

Experimental practices of establishing medical insurance for all urban residents have been implemented in some cities and towns of the east, west and central China earlier.

Hu said the local governments would fix the contribution rate for the insurance plan under guidelines from the central government based on the economic development level locally.

However, Hu said the contribution rate set at about two percent of the average per capita disposable income would be appropriate, and the Chinese government aimed to have the insurance project cover 50 to 60 percent of the total cost of those insured.

The central government held the contribution rate should be at a low level at the beginning, and the participation in the insurance plan is based on the free will of the residents.

It also encouraged local governments to set different contribution rates for adults and children, and to link the rates with the income of policy holders.

Hu said the premiums would be paid by households, instead of individuals, and the government would give subsidies up to no less than 40 yuan (5.3 U.S. dollars) each person annually for those who participate in the insurance program in pilot cities, and low-income families and disabled ones would get extra subsidies.

Both the central government and local governments would fund the subsidies, and China has the capability to finance the project which aims to cover all residents by 2010, with its rising fiscal revenue on the back of a fast-growing economy, Hu said.

The project would mainly cover expenses of residents for hospitalization and major illnesses, said Hu, as the greatest medical risks confronting Chinese people are big illnesses

China has established a medical insurance system for urban employees in 1998, and a new cooperative medical care system in 2003 designed to cover all rural residents.