Govt mulls making retirees pay health insurance

China is studying the possibility of introducing medical insurance fees for retirees, a move that has split expert and public opinion.

In an article for Seeking the Truth, the official Party magazine, Finance Minister Lou Jiwei said the government should look at the option as a way to tackle rising pressure on the national health system. Unlike in most countries, retirees in China are not required to pay health insurance.

By the end of 2014, about 283 million Chinese were included in the so-called employee medical insurance program, a main pillar of the national system, according to the Ministry of Human Resources and Social Security.

The national insurance system currently has a surplus of 673.2 billion yuan ($103 billion), a figure that has continued to rise in recent years, from 495 billion yuan in 2012 and 579 billion in 2013. Yet experts warn that China's rapidly aging society means a deficit will occur if expenditure keeps rising at the current pace.

"In the West, the biggest threat to national health insurance systems is an aging population. But in China, besides that factor, pressure also comes from the fact reimbursement levels need to be increased－and that means retirees need to contribute," said Lin Shuanglin, director of the China Center for Public Finance at Peking University.

Contribution

The employee program requires workers to contribute about 2 percent of their monthly salaries to the medical insurance fund, while employers pay in another 9 to 10 percent.

The ratio is not low compared with the West, Lin said, but the problem is that the program covers only a slice of the population, while the surplus comes from the fact reimbursements are much lower than in the West.

"Patients have found that many items are not covered by the medical insurance. What's more, rural and urban residents without fixed jobs－who make up a larger section of the population－get even lower reimbursements," he said. "China should shift its spending pattern, from subsidizing public hospitals and requiring them to lower medical costs to increasing reimbursement levels."

However, asking pensioners to pay insurance fees will likely face public opposition. The finance minister's comments have already been criticized online.

Lyu Wangshi at the Research Institute for Fiscal Science said he believes the criticism is misplaced because raising social insurance payments for retirees is a universal trend. The real problem, is some of the retirees receive an excessively high retirement pay.

"Many retirees with State-owned enterprises receive higher pay than working employees' salaries, while in the West retirement pay variation among different groups is much smaller. The pension system should be reformed so insurance payers could feel less unfair," he said.