A Research on the Funding Mechanism of Public Health Insurance
|Keywords||Public Health Insurance Social Health Insurance Funding Mechanism Financial Risk Contribution Rate|
Public Health Insurance Fund is a non-profit fund organized by government orsociety to provide health expense coverage for its members. It has various forms indifferent countries, such as “Social Health Insurance Fund”,“Statutory HealthInsurance Fund”,“National Health Insurance Fund”,“Community-based HealthInsurance Fund”,“Society Managed Health Insurance Fund” etc. In China, it refers tothe pooling fund of the social medical insurance, which consists of the UrbanEmployees Basic Medical Insurance, the Urban Residents Basic Medical Insurance,and the New Rural Cooperative Medical Schemes.In these years, the Public Health Insurance Fund in China has achieved abreakthrough in extending coverage and increasing benefit, while many problems stillexist in the system. Some residents below the poverty line are not covered by the fund;contribution based on the working salary instead of the overall income violates theequity principle; the funding of the Urban Residents Basic Medical Insurance and theNew Rural Cooperative Medical Schemes lacks of a steady growth mechanism; theratemaking scheme on the annual balance basis is vulnerable confronting withpopulation ageing and rapid increase of medical costs….The funding mechanism isstudied from three aspects in this research: the funding pattern, the funding level andthe distribution of funding responsibility. The aim of the research is to make someproper recommendation on the adjustment of the Public Health Insurance fundingscheme, to make it more stable in coping with enlarged coverage and enhancedbenefit, more adaptable in face of population ageing and cost increasing, and morereliable in balance between equity and efficiency.In the first part of the research, the theoretical framework is built using the basictheories in public finance, development economics, new institutional economics etc.,mainly about the essential characteristics of the Public Health Insurance funding, theprinciples of equity and efficiency, and the regular evolution pattern of Public HealthInsurance Fund. In the second part, funding patterns of the typical Public HealthInsurance Funds in nine different countries are analyzed and compared, in order to borrow ideas and draw lessons for the funding pattern design of the Public HealthInsurance in our country. In the third part, short term aggregate risk model andlife-table method are used to calculate the funding demand of the Public HealthInsurance in our country in next30years under universal coverage, and the fundingcapacity in the same period under present policy, to measure the gap between them. Along-term financial risk model for the Public Health Insurance Fund is also builtusing the micro-data of individual medical costs, taking city X as an example. In thefourth part, new proposals to distribute funding responsibility are set up based on thetheoretical foundation proved before. Contribution rates are calculated on both theannual balance basis and the comprehensive balance basis, adequate fiscal subsidyamounts are assessed at the same time. Last, some coordinated reforms required inthe adjustment of Public Health Insurance funding are discussed, including thereforms in legal system, administration and some parallel mechanisms.The calculation result illustrates, if the Public Health Insurance Fund covers thewhole population with the benefit level of70%, and if the population ageing andmedical costs increasing as rapid as assumed, the funding capability under presentpolicy is not sufficient. If the contribution and fiscal subsidy of the Urban ResidentsBasic Medical Insurance and the New Rural Cooperative Medical Schemes increaserapid enough, the funding capacity would match the demand in the mid-term of theforecast-period, while after that, the funding demand would exceed the fundingcapacity again due to population ageing and medical costs increasing. Thus thepresent funding policy ought to be adjusted. If the contribution is determined inaccordance with overall income, and the contribution rate is uniform, the annualbalance contribution rate would be6.02%in2011and increase gradually to8.35%in2040, the comprehensive balance contribution rate would be8%from2011through2040. In the annual balance condition, the fiscal subsidy amount would be269.84billion Yuan in2011, raise to460.25billion Yuan in2031and drop to193.06billionYuan in2040. In the comprehensive balance condition, the fiscal subsidy amountwould be405.75billion Yuan in2011, raise to550.03billion Yuan in2024and dropto184.92billion Yuan in2040. Comparing with the present scheme, the contributionrate for the urban employees and residents in the new scheme would be higher, yet itwould still be lower than the international level; the contribution of the rural population raised likewise though not as much as the urban section; the fiscal subsidywould be lower than in the present scheme. Most significant point is that the fundingcapacity in new scheme is sufficient for universal coverage and70%benefit leveleven confronting the population ageing and the increase of medical costs. Anothertwo funding schemes are proposed in the research, in the first one, rural populationcontribute on the basis of their capital goods, such as lands, orchard, fishingpool...owned by a family; in the second, all the population enrolled the fund in familyunit. In the annual balance hypothesis, rural population would contribute4.34Yuanfor each contribution point in2011and6.20Yuan for each contribution point in2040in the first scheme, employees in urban families would contribute5.97%of theirincome in2011and9.61%of their income in2040.There are five major conclusions in the research. First, the base of thecontribution ratemaking should be extended from the working salary to the overallincome; otherwise the funding mechanism is not equitable. When the funding policyfor urban and rural population is converging, there should be a unified basis forcalculating the contribution. Second, the advisable contribution mechanism isproportional, that is, the economic burden brought by the contribution is equal toeveryone. The upper limit for the contribution basis makes the funding processregressive. It could be substituted by a lump-sum subsidy for the general tax. Third,the government is responsible for ensure everyone be covered in Public HealthInsurance Fund, especially those under poverty line, whose contribution should bepaid by the social welfare department. Fourth, the long-term financial status of PublicHealth is challenged by the population ageing. Ratemaking system based on partialaccumulation could counteract the ageing effect. Besides, there should be a financialrisk warning system. The management of the Fund should evaluate the financial riskof the fund each year, and publish intact report on the financial status of the Fundregularly to the enrolled population. Finally, taxes on consumption, value-added andenterprise income etc. could be utilized to supplement the Public Health InsuranceFund, so that the financial risk of the fund could be dispersed.