Review

Consolidating the social health insurance schemes in China:

towards an equitable and ecient health system
Qingyue Meng, Hai Fang, Xiaoyun Liu, Beibei Yuan, Jin Xu

Lancet 2015; 386: 148492 Fragmentation in social health insurance schemes is an important factor for inequitable access to health care and
See Editorial page 1419 nancial protection for people covered by dierent health insurance schemes in China. To full its commitment of
China Centre for Health universal health coverage by 2020, the Chinese Government needs to prioritise addressing this issue. After analysing
Development Studies, Peking the situation of fragmentation, this Review summarises eorts to consolidate health insurance schemes both in
University, Beijing, China China and internationally. Rural migrants, elderly people, and those with non-communicable diseases in China will
(Prof Q Meng PhD,
Prof H Fang PhD, X Liu PhD,
greatly benet from consolidation of the existing health insurance schemes with extended funding pools, thereby
B Yuan PhD, J Xu BA) narrowing the disparities among health insurance schemes in fund level and benet package. Political commitments,
Correspondence to: institutional innovations, and a feasible implementation plan are the major elements needed for success in
Prof Qingyue Meng, China Centre consolidation. Achievement of universal health coverage in China needs systemic strategies including consolidation
for Health Development Studies, of the social health insurance schemes.
Peking University, Beijing
100191, China
qmeng@bjmu.edu.cn Introduction URBMI and NCMS, respectively.1 Government health
Chinas social health insurance schemesincluding the funding increased from US$794 billion in 2009, to
rural new cooperative medical scheme (NCMS; launched $1576 billion in 2013, 464% of which was spent on
in 2003), urban resident-based basic medical insurance social health security programmes such as social health
scheme (URBMI; launched in 2007), and urban insurance schemes and medical assistance funds
See Online for appendix employee-based basic medical insurance scheme (appendix).2 Proportion of out-of-pocket payments in
(UEBMI; launched in 1998)have rapidly expanded total health expenditures has been rapidly reduced after
during the past decade and at present cover almost the introduction of the social health insurance schemes.2
whole Chinese population. Payroll taxes are the main The three health insurance schemes are separately
funding source for UEBMI and government subsidies administered and operated nationally and locally. NCMS is
are the major funding sources for NCMS and URBMI. administered by the Chinese National Health and Family
The per person annual fund contribution for UEBMI is Planning Commission (previously the Chinese Ministry of
about six and seven times higher than that for the Health), whereas URBMI and UEBMI are administered by
the Chinese Ministry of Human Resources and Social
Security (appendix). After the guidelines from national
Search strategy and selection criteria government and implementation plans from provincial
governments, NCMS funds are pooled at the county level
We searched for publications describing or evaluating the practice of consolidating health
(2852 rural counties in 2012, with an average population of
insurance schemes in dierent areas of China. We searched the PubMed and China
300 000 in one county), and URBMI and UEBMI are pooled
National Knowledge Infrastructure (CNKI) databases for studies published between Jan 1,
at the municipal (prefecture) level (333 municipalities and
2000, and Feb 15, 2015, and screened the references of relevant articles. Our search
prefectures in 2012),3 which implies that in China there are
strategy included terms for health insurance schemes (health insurance and
roughly 2852 NCMS schemes, 333 UEBMI schemes, and
consolidating, harmonizing, integration, merge, and their Chinese translations).
333 URBMI schemes. The benet packages and nancial
We included only empirical studies in which the experiences of consolidating dierent
protection are not equal within and across the schemes,
health insurance schemes in China were described, or the authors asserted that the eects
which is a crucial barrier to achieving universal health
of consolidating policies were evaluated. We excluded those studies in which investigators
coverage in China.
analysed or discussed the feasibility of consolidating dierent health insurance schemes,
Rural populations have more restricted access to health
and those that only theoretically discussed the advantages of consolidated health
care than urban residents and also have a larger
insurance compared with fragmented health insurance schemes.
nancial burden, mainly due to low funds for NCMS.
From the CNKI search 1596 papers were identied, and after primary screening Reimbursement was 10% lower and service coverage was
43 potentially relevant papers were included. After screening the full text of 43 papers, smaller for NCMS than for either URBMI or UEBMI.4
22 papers were shown to include information about how their consolidation of health Additionally, access to health care for the 245 million
insurance schemes was designed and implemented; in 12 papers the authors asserted and migrants is also aected by fragmentation of the health
reported the eects of the consolidation policy. The study designs of these 12 papers were insurance schemes.3 In 2011, infant mortality in rural
before and after intervention comparison, cross-sectional data comparison, or areas was still almost three times higher than in urban
post-intervention description. areas, and the prevalence of child cognitive disability was
From our PubMed search we identied one paper on experiences of consolidating health four times higher in rural areas than urban areas;5 these
insurance schemes in Zhuzhou (in Hunan Province, China), but no information was dierences are associated with the disparities in capacities
available with regards to its eects. of protection mechanisms between the two areas. In
Chinas rural region, NCMS oers much higher benet

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 Review

packages in rich rural counties than in poor counties as a
result of gaps in economic development. The fact that
NCMS funds are pooled by counties has aected risk
sharing between rich and poor counties.
To establish a consolidated health insurance system by
2020 is one of the main goals in Chinas health system
reform agenda.6 Achievement of universal health
coverage needs both vertical consolidation (NCMS group
from county level, and URBMI and UEBMI group from
municipal level to a higher level of provincial [short
term] and country [long term] levels) and horizontal
consolidation (merging the funding pools of the three
schemes). However, progress is slow. The national
government planned to merge the administrative
authorities nationally in 2013, but has not started yet,7
mainly due to lack of agreement made on which
governance structure would be suitable.8 A few provinces
in China have piloted consolidation of the rural and
urban schemes, paving the way towards a nationwide,
consolidated, health insurance system.
Experience of other countries shows that consolidation
of nancial protection mechanisms is a crucial strategy
to achieve universal health coverage. Fragmentation of
funding pools leads to dierential benet packages,
which is a major source of inequity accessible to needed
care and nancial protection9,10the bigger the funding
pool the greater the risk protection.9 Fragmentation of
health nancing systems has resulted in ineective
coverage of the poorest settings in Latin America.11 The
separate funding pools can also lead to inecient
systems because of their restricted ability to negotiate
with health-care providers.12 Examples from South Korea
and Taiwan show a signicant reduction of administrative
costs after health insurance was consolidated.13,14 Since
2008, Turkey has integrated ve health insurance
schemes into a unied general health insurance to
achieve an increasingly eective and equitable insurance
system,15 and Indonesia has also begun to merge its
ve existing government risk pools since 2011, aiming to
promote cross-subsidisation, decrease administrative
costs, and reduce inequities in benet packages.16
Germany, since 2009, has harmonised the available
health insurance schemes (sickness funds) by
establishing a Central Reallocation Pool.17
The purpose of our Review is to promote consolidation
of health insurance schemes by providing evidence of
consolidation practices in China and internationally. We
provide an overview of the fragmented social health
insurance and discuss pilot programmes and the practical
application of social health insurance consolidation. We
then summarise the experiences from other global
examples in consolidating health nancing systems and
recommend strategies for Chinas consolidation of social
health insurance.
Fragmented social health insurance system and
eects of health insurance on health in China
Fragmentation
Table 1 contains basic information about the three social
health insurance schemes in China. Rural residents were
not covered by a formal social security system before
2000, and still have less coverage in benet packages
than urban residents. The predecessor of NCMS was
organised by the farmers themselves without government
nancial support, which was outside of the formal
institutional system until 2003. Policy development for
NCMS, URBMI, and UEBMI has not been coordinated
nationally and provincially because these schemes are

NCMS URBMI UEBMI

Inception year 2003 2007 1998
Eligible population Rural, employed and Urban, non-employed Urban, employed
non-employed
Number of people insured (millions) 802 296 274
Population coverage 987%
Source of funding Government subsidy (80%) and Government subsidy (70%) and Contributory (8% of annual
individual premium (20%) individual premium (30%) payroll, 6% from employers,
and 2% from employees)
Per-capita fund (US$) $612 $662 $4247
Number of funding pools 2852 (counties) 333 (municipalities) 333 (municipalities)
Service package Limited Limited Comprehensive
Annual admission to hospital rates 91% 71% 113%
Rate of physician visits for 2 weeks 125% 124% 134%
Number of drugs covered 800 2300 2300
Per-capita household consumption expenses ($)* $1095 $2974 $2974
Proportion of health expenditures in total household 93% 62% 62%
consumption expenses*

Data are from 2013 from the National Health Statistics Annual Report18 and Xie and Zhang.19 NCMS=new cooperative medical scheme. URBMI=urban resident-based basic
medical insurance scheme. UEBMI=urban employee-based basic medical insurance scheme. *Household-based data, and URBMI and UEBMI data cannot be separated.

Table 1: Basic information about the three health insurance schemes in China

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 Review
Panel 1: Fragmentation in insurance schemes leads to inequity in services provision
and risk protection of people with non-communicable diseases (NCDs)
The new cooperative medical scheme (NCMS) and urban resident-based basic medical
insurance scheme (URBMI) oer less generous benets packages than the urban
employee-based basic medical insurance scheme (UEBMI), especially for outpatient
services. This disparity has led to diculties in nancial protection, particularly for
patients with NCDs.
A study by Feng and colleagues22 used nationally representative data of Chinese
people aged 45 years and older during 201112, and suggested that NCD treatment
and control programmes seemed more eective in people enrolled in UEBMI than in
NCMS and URBMI (relative risk [RR] 1357); and those enrolled in UEBMI were also
more likely to receive antihypertensive treatment and eective control (RR 1258).
This study22 showed disparities in scheme generosity to be the only reason behind
ruralurban dierences in eective hypertensive control. NCMS and URBMI are not
eective in providing coverage for NCDs.
These gaps still exist, although the equalisation programmes by the National Public
Health Initiative provide universal and equalised NCD management services. Emphasis
should be put on the crucial role of curative services in NCD control and hence the
importance of increasingly consolidated and equalised insurance schemes.
separately governed by dierent authorities. A separate
rural and urban health-care delivery system deepens the
gaps in the quality of health-care provisions between
rural and urban populations. Fragmentation of social
health insurance schemes in turn negatively aects
integration of the health delivery system. Financial
capacity is also a factor in consolidating the schemes,
because NCMS and URBMI need government nancial
support if they are expanded to larger pools and narrow
the benet gaps with UEBMI.
UEBMI has more comprehensive service coverage and
nancial protections than URBMI and NCMS.5 This
dierence is mainly because the insurance premiums
collected from UEBMI are much higher than the other
two health insurance plans. When NCMS was launched
in 2003, general outpatient services were almost entirely
excluded and only catastrophic medical treatments
(mainly inpatient services) were covered,20 but outpatient
services were gradually added with the increase of
funding. The outpatient services in URBMI are still very
restricted and its reimbursement cap is lower than the
cap of UEBMI.21 For both the rate of admissions to
hospital per year (percentage of people who have received
inpatient services in 1 year) and the 2 weeks physician
visit rate (percentage of people who have visited their
physician in the previous 2 weeks), UEBMI is higher
than NCMS and URBMI. Rural populations have higher
nancial burdens than do urban populations After the
introduction of NCMS the rate that people fell into
poverty due to medical costs decreased for middle-income
and high-income individuals, but increased for people
with low-income (panel 1).22,23
The types of health insurance schemes available to
each individual depend on employment status,
household registration systems (rural or urban), and
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living locations.24 Rapid urbanisation in China has led to
an enormous inux of people migrating from rural to
urban areas. These rural migrants are usually not eligible
for urban health insurance schemes and are still covered
by NCMS in their rural locales. For rural-to-urban
migrants to receive reimbursement for health care in
urban areas is dicult, even if they are covered by NCMS.
NCMS is not portable across counties in most provinces.25
Provider payment system reform is a central policy in
public hospital changes in China. To replace fee-for-service
with alternative payment systems capitation, use of
diagnosis-related groups, case-based payment, and global
budget have been applied in the three schemes. However,
large achievements for the payment reforms have not
been made mainly due to the fragmented health
insurance system in which purchasing strategies cannot
be coordinated. For the same health care with the same
quality, prices could vary for patients with dierent types
of health insurance schemes. Hospitals might provide
services to those patients with higher levels of payments
in their schemes rst. Health-care quality control is also
dierently managed by the dierent schemes. An
expanded risk pool would increase purchasing power of
the insurers to aect behaviours of the health-care
providers.
Eects of social health insurance on health and nancial
protection
As concluded by Levy and Meltzer, who reviewed eects
of health insurance on health,26 many of the studies
internationally available cannot show a causal eect of
health insurance on overall patient health. However,
existing evidence suggests that social health insurance
schemes can improve the health of some population
subgroups, such as elderly people and children, who are
the likely targets for coverage expansion of health
insurance. Studies into this topic in China reached
similar conclusions.27 With data from the China Health
and Nutrition Survey, researchers reported positive but
scarce eects of NCMS on health.28 The extent of
income-related inequities in health status was reported
to be larger in rural areas than that in urban areas,
attributed to the low incomes of rural populations and
dierences in social health insurance design.29 A study
of URBMI showed positive eects of URBMI on health
status of the insured, especially for susceptible
populations27; and similar ndings were presented in a
study showing that URBMI was more eective in
improving health for elderly people and children.30 A
study assessing the eect of insurance types on
treatments of ST-elevation myocardial infarction
(STEMI) reported that cardiac mortality was higher in
the NCMS group (115%) than in the URBMI (50%)
and UEBMI (37%) groups, mainly due to dierent
reimbursement levels of the insurance schemes, age,
and occupation of the patients.31 Studies into the eects
of social health insurance on nancial protection are
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summarised in the appendix. UEBMI and URBMI
provided higher nancial protection than NCMS
because of their higher funds.3241 Capacity of NCMS in
nancial protection has been improved along with
increase of nancial input in the scheme.
Experience and practice in consolidation of
health insurance systems
The pilot and practice in China
Fragmentation of rural and urban health insurance
schemes has been recognised as one of the most
important factors determining the disparities in social
and economic development in China.5 Even though
national government guidelines are not available with
respect to the consolidation, by the middle of 2014,
seven provinces (including Chongqing, Guangdong,
Ningxia, Shandong, Qinghai, Zhejiang, and Tianjin)
were in the process of consolidating their social health
insurance schemes with the aim to coordinate rural
and urban social development. The practice of
consolidating the schemes was also noted in some
municipal cities (prefectures) outside the provinces
previously stated.
Consolidation of the schemes is usually initiated
between NCMS and URBMI because of their similarities
in funding sources and levels. Merging of NCMS and
URBMI administrative oces and sta, creating
uniformity of information systems, integrating funding
collection and pooling, and unifying benet packages
and provider payment systems are the major elements in
the consolidation process. The Dongying Municipal
government of Shandong Province has consolidated
the NCMS and URBMI, and represents a typical
consolidation mechanism (panel 2); Jinhua City in
Zhejiang Province, Changsha City in Hunan Province,
and Taizhou City in Jiangsu Province all used a similar
approach.4245
Some areas piloted the primary consolidation of NCMS
and URBMI also with UEBMI, in various forms,46,47
including a simplied procedure for the transfer of
insurance types and the free selection of dierent benet
packages as part of a consolidated health insurance
system. However, to our best knowledge, some selected
areas tried to merge the three schemes in terms of their
administrative organisation, but did not merge the fund
pool with universal benet packages.
Several challenges have been identied in consolidating
the schemes. The absence of institutional design and
guidelines from the national government is one of the
most crucial constraints.8,44,45 Operation of the consolidated
schemes needs a large capacity in administration and
information system, which is not suciently met at
present.8,48
Even though the existing studies reviewed cannot
provide strong evidence to show a causal eect of the
consolidation of the schemes, positive associations are
recognised between consolidating NCMS with URBMI
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Review
Panel 2: Consolidation of the NCMS and URBMI in Dongying, Shandong Province, China
Dongying is a municipal city consisting of three rural counties and two urban districts in
Shandong Province. From November, 2012, the municipal government started
consolidating the rural new cooperative medical scheme (NCMS) and urban
resident-based basic medical insurance scheme (URBMI) in two phases.
Phase 1: Consolidation of administrative resources
NCMS administration was transferred from the Dongying Department of Health to the
Department of Human Resources and Social Security. The NCMS and URBMI
management oces were merged. Some NCMS sta joined the management oce and
others were reallocated to other sectors to reduce human resources costs. Information
systems were merged.
Phase 2: Consolidation of nancing and benets packages
Fund pooling and management of NCMS were moved up from the county level to
municipal level, integrating with URBMI. An integrated funding collection system was
applied to all counties and districts in Dongying. Rural and urban residents were covered
by the same benets package, including reimbursement policies and health-care services.
Besides the basic benets package, a supplementary package covering diseases with
potential catastrophic expenditure was introduced for both rural and urban residents and
was funded by scheme funds and government subsidies.
Changes from consolidation42
Rural residents received a benets package equivalent to that of urban residents. Drugs in
the NCMS list were extended at village clinics and town health centres (from 525 and 785,
respectively, to 2387) after integration of the two schemes because more drugs are
covered in the URBMI list. The number of non-communicable diseases covered by URBMI
and NCMS was expanded from eight and 25, respectively, to 31. Integration of NCMS and
URBMI saved government subsidies of US$44 million in 2013, as a result of reduced
overlapping enrolments of NCMS and URBMI (in 2013, 82 000 people were covered by
both NCMS and URBMI).
and the equitable access to health care and eciency in
operation of the system. Studies undertaken in ve cities
showed that after consolidation of NCMS and URBMI,
the reimbursement for inpatient services increased for
the enrollees, the total expenditures for both outpatient
and inpatient services decreased, and patients directed
to primary health facilities increased.4952 A study in
Jiangsu Province reported an 8% increase of
reimbursement for people with insurance in areas with
a consolidated scheme compared with areas with
separate schemes, after controlling for other factors.48
In Changsha City, Hunan Province, the actual
reimbursement increased by 10% for rural residents
with diseases that have a high cost to treat, and increased
by 515% for people aged older than 80 years, after the
consolidation of NCMS and URBMI.44 A study assessed
the consolidation of NCMS with URBMI and UEBMI in
three cities in Zhejiang Province.46 Compared with
consolidation of URBMI and NCMS, consolidation of
NCMS with URBMI and UEBMI to allow free selection
of the insurance scheme between these three for all
urban and rural residents contributed to a reduction in
inequity in reimbursements between high-income and
low-income populations, after controlling for other
factors (eg, age and health status).46
1487
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Other countries and regions
In the past two decades, many countries and regions
have consolidated their dierent health insurance plans
into one health insurance system, aiming to address
fragmentation of health systems and reduce inequities in
health-care nancing and access. Furthermore, other
countries and regions are also moving towards greater
integration of several schemes that already jointly cover
most of the population.13,53 Table 2 summarises
consolidation of health nancing systems in
South Korea, Japan, Taiwan, and Thailand.
The experience of South Korea and Taiwan illustrates the
dierent approaches to consolidation; however, both were
prompted by historical political conjuncture to start this
process and sourced their additional public funds from
general taxation to close their coverage gaps. Taiwan
achieved consolidation by extending coverage and bringing
single payer schemes together. Taiwan started considering
the consolidation of health insurance plans in 1986, and
planned the entire consolidation process during 198693.54
In 1994, a law was passed to establish a single health
insurance system, which also extended coverage from less
than 60% of the population to almost 100%.55 A total of ten
health insurance plans were consolidated in 1995.56,57 In
South Korea, universal population coverage was achieved
in 1989 through three major types of health insurance
plans. These insurance schemes were replaced with a
national health insurance plan that was launched in 2000.13
In South Korea and Taiwan, institutional and organi-
sational entities played important parts in consolidating
schemes. Health insurance legislation was enacted and
new administrative organisations were established (ie,
the National Health Insurance Corporation in South
Korea and the Bureau of National Health Insurance in
Taiwan). To close the gaps in funding among the dierent
schemes, governments provided additional funds to
non-employed populations and low-income households.
Benet packages covering both outpatient and inpatient
services were equally provided to all scheme enrollees.
Other countries with universal population coverage
are similar to China in being yet to achieve insurance
consolidation. Thailand developed various health
insurance schemes in the 1990s. However, the public
schemes left almost 30% of Thai people without health
insurance coverage before the universal coverage
reforms.58 The universal coverage scheme in 2002
consolidated the health card, medical welfare, and type B
exemption schemes and extended coverage to the

South Korea Japan Taiwan Thailand

Rationales for To improve equity in health-care
consolidation nancing and to reduce nancial distress
of individual health programmes
Schemes to be Three major health insurance schemes to
integrated or expanded be integrated
Timeframe Started consolidation in 1998, forming
one health insurance system in 2000
Consolidation process In 1998, consolidation of government
employee and private school teachers and
stas medical insurance associations and
227 self-employed medical insurance
associations to launch the National
Health Insurance Management
Corporation; in 1999, a national health
insurance law was legislated; in 2000, the
National Health Insurance Management
Corporation and 139 employee medical
insurance associations were consolidated
Organisation National Health Insurance Corporation
administered by the Ministry of Health and
Welfare, including headquarters in Seoul
and six regional headquarters and many
branches; the Ministry of Health and
Welfare created policies on fund collection,
benet packages, and regulations
Financing strategy National Health Insurance Programme;
large governmental subsides; low health
insurance premiums
To improve equity in health nancing
and access to health-care services
Two major schemes exist with about
3500 health plans
Since 1961, Japan has tried to unify
co-payment rates and access to
health-care services across dierent
health plans
No formal consolidation of dierent
health insurance societies; the Health
Insurance Bureau is stabilising
insurance premium revenue by
regionally widening the unit of weak
National Health Insurance nances
from the municipal level to the
prefectural level
Health Insurance Bureau develops plans
on medical insurance systems; the
Central Social Insurance Medical Council
set payment rules
The national government provides
subsidies from general revenues to
health insurance societies with low
premium revenues or more high-cost
elderly people
To improve equity in access to health
care, to increase health aordability,
and to improve eciency
Ten (four major) health insurance
schemes to be consolidated
Started consolidation in 1994,
forming one health insurance system
in 1995
In 198693, consolidation preparation
began; in 1994, a law of national
health insurance was legislated; in
1995, the National Health Insurance
was launched
Bureau of National Health Insurance
located in Taipei, including six local
sub-bureaus and 21 coordinating
oces; Bureau of National Health
Insurance is operated by the
Department of Health (policy makers)
Health Insurance Programme; large
government subsides; low health
insurance premiums
To achieve universal health coverage
Universal health coverage scheme
combined three schemes and was
extended to cover uninsured
populations
Started in 2002, covering all targeted
populations in 2003
In 2002, the National Insurance Act
was issued to implement a Universal
Coverage Scheme; in 2006, the
government abolished the 30 baht
co-payment; three major health
insurance schemes are now operational
A National Health Security Oce was
created in 2002
Universal coverage scheme is entirely
funded through tax revenues

Table 2: Summary of consolidating health insurance schemes in South Korea, Japan, Taiwan, and Thailand

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uninsured population. A National Health Security Oce
(NHSO) was created as an autonomous purchasing
agency separate from the Thai Ministry of Public Health.
Another key feature of the universal coverage scheme in
Thailand was its focus on primary health care.59
Japan achieved universal health coverage in 1961, and
now has two main health insurance schemes:
employment-based health insurance and National Health
Insurance.60 Employees in large-sized companies are
insured by many health-insurance societies, and
employees in small-sized and medium-sized companies
are insured by the government sponsored National Health
Insurance Association. Self-employed, non-employed,
and people who are retired are insured by National Health
Insurance, and people aged older than 75 years are covered
by Late Elders Health Insurance. Even though there are
3500 health insurance plans in Japan, co-payments and
benets by dierent health insurance plans are uniform.61
The national government provides subsidies from general
revenues to health insurance societies with low-premium
revenues or with a high number of elderly people (who are
more likely to claim on insurance). Cross-subsidisation is
also enforced mainly from employment-based health
insurance to national health insurance.61 Japans
experience shows that the core elements of health
insurance schemes (ie, funding, co-payment, and service
packages) can be consolidated, even if organisations in the
schemes are not integrated.
Experiences from the global examples show the
importance of consolidating health insurance schemes
for universal health coverage. Eects of the scheme
consolidation on population coverage and access to health
care are very positive. After consolidation, population
coverage was rapidly expanded, benet packages were
extended to susceptible populations, nancial burdens of
families with low-incomes were reduced, and
administrative costs of health insurance plans were
reduced.13,54 Thailands universal health coverage
programme showed a substantial increase in use of
outpatient and inpatient services after 2001 (especially at
district health systems),58 health resources have been
directed from high-income to low-income areas,51 and the
low-income group beneted more than did the high-
income group.62 Political commitment, legislation, public
funding support, and organisation of administrations are
the main experiences that China can learn from.
Strategies to consolidate the social health
insurance schemes
The key in consolidation of the health insurance schemes
is to unify the schemes in terms of their funding levels,
standards of service provisions, cost-sharing methods,
and payment systems with either integration of the
schemes or other mechanisms. Core elements for the
consolidation are to develop a national guideline and
action plan, to encourage innovative consolidation pilots,
to strengthen political leadership and nancial support,
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Review
Panel 3: Key messages
Disparities in health status and access to health care between rural and urban and poor
and rich areas persist in China, which are closely associated with the inherently less
developed health-care system, including the health nancing system in rural and poor
areas. An equitable and consolidated health system is needed.
After decades of eort, China has achieved universal population coverage of health
insurance, but is now facing challenges on how to consolidate the fragmented health
insurance schemes to improve equity in access to health care and eciency in
operation of the schemes. Although population coverage seems to be close to 100%,
questions remain about the depth of this coverage in view of the large amount of
out-of-pocket expenditures.
Several pilot programmes have been implemented in selected Chinese provinces to
consolidate the rural and urban health insurance schemes without guidelines from the
national government, and these trials are crucial for a future nationwide strategy and
roadmap for consolidating the variously fragmented schemes.
Experiences from worldwide examples show that consolidating health insurance
schemes is valuable in developing health nancial protection systems for low-income
and middle-income countries. Consolidating health insurance schemes is a highly
political process and is crucial in reinforcing political legitimacy undergoing
macroscopic social and economic transformation.
To achieve universal health coverage by 2020a major goal of present health-care
system reform in Chinawould largely depend on the success of consolidating social
health insurance schemes. National strategic plans and guidelines will be essential for
guiding the direction and accelerating this consolidation process.
and to build capacities of the scheme administration
(panel 3). These all aim to improve equality in access to
health care and eciency in administration and use of
the funds.
The national government now needs to develop a
long-term plan for a universal health insurance scheme.
At the same time, dierent levels of consolidations can
be designed and implemented. In terms of vertical
consolidation, the key is to integrate NCMS with URBMI
or UEBMI whereby the risk pool of NCMS can be
expanded from county level to a larger risk pool at
municipal (prefecture) level, which is a foundation for
further expansion to provincial level when administrative
and nancial capabilities are feasible. Consolidation of
NCMS and URBMI is more feasible than consolidation
of all three schemes together because of their similarities
in funding and benet packages. However, some
provinces with advanced economic development could
consolidate all three schemes. For example, Beijing and
Shanghai could establish a universal health insurance
system that would then serve as an example for other
provinces and as a base for national universal health
coverage in the future.
Innovative approaches should be encouraged for
consolidation. Before a national or provincial universal
health insurance scheme is achieved, such as with
Germany, a risk adjustment mechanism could be
established provincially and nationally on the basis of
economic and population characteristics (ie, per person
GDP, proportions of aged population [eg, aged older than
1489
 Review
60 years], and catastrophic expenditure) to redistribute
risks. Another possiblity is to use a family-based mech-
anism to consolidate the URBMI and UEBMI in which
the funds from URBMI and UEBMI can be pooled and
shared by family members without changing the present
premium collection and government subsidies. This
approach would increase capacity of URBMI in nancial
protection because it will be pooled with UEBMI that
mainly covers young and healthy people.
Strong political commitments based on clear
understanding of the importance of scheme consolidation
and a good governance structure from central to local
governments are crucial for any reform strategies and
policies. A national guideline for the importance and
approach of scheme consolidation is urgently needed. In
this guideline the objectives and principles of equity and
eciency should be emphasised, administrative
and nancial responsibilities of national and local
governments undertaking the reforms need to be
stipulated, and evaluation mechanismsincluding
indicators to monitor the progress and assess the
eectsneed to be provided. Consolidation of the
schemes must be a part of the governments social
development agenda as a crucial strategy for a just
society. The level of consolidation and responsibility of
dierent government departments are important issues.
A national accountable governance structure is key for
consolidation. Present national authorities in charge of the
three schemes have their own advantages. First, social
security authorities have greater experience in admin-
istering urban-social insurance programmes, whereas
health authorities have a greater understanding
of health-care practices and more experience in
administering health providers. In the short term,
advantages of the two authorities could be used by a shared
responsibility mechanism in which the social security
authorities could take the lead in fund collection and
management, and health authorities could take the lead in
benet package design and contracting with health
providers. In the long term, an independent authority
could be created to specically administer the insurance
system.
Strengthening of the capacity for administration of the
schemes is essential to materialise potential gains in
equity and eciency for health systems. Consolidation
will not automatically lead to improvements in the health
system in terms of equity and eciency if good
operational mechanisms are not available. To protect
susceptible populationsincluding families with
low-income, elderly people, and rural migrantsin fund
collections and benet package arrangements, this group
should be thought of in making and implementation of
consolidation policies. Service packages should be
designed to use mechanisms that identify cost-eective
services and supplies; cost-sharing mechanisms should
favour susceptible populations; and the purchaser should
use alternative payment systems to replace the present
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prevalent fee-for-service approach. Monitoring systems
and assessments on key indicators, including service and
nancial coverage, medical and administrative costs, and
quality of care, would need to be developed. Susceptible
populations such as elderly people, rural migrants, and
individuals with non-communicable diseases should be
prioritised in assessments of accountability.
Conclusions
To achieve universal health coverage by 2020, China
needs to prioritise solving the fragmented situation of its
social health insurance schemes. In this Review we have
shown the importance of scheme consolidation and
presented how other settings, as well as China, have
proceeded. Lessons from global and domestic experiences
can be benecial to China in helping to identify and push
the way forward. Yet, none can replace indigenous
innovation in the whole of China because the situation
diers regarding institutional context. Innovations in
institutional and organisational arrangements,
strengthening administrative capacities on operation and
management of the schemes, and protection of the
interests of susceptible populationsrather than
bureaucratic interests of functionally divided
administrative authoritiesare the key elements for
success. Pilot programmes and the practices of
consolidating insurance schemes in selected local
settings can provide examples that will be important
sources to develop national and provincial guidelines.
Other worldwide experiences are also very useful for
China in its attempt to develop its own policies and
pathways in consolidating health insurance schemes.
The main challenges, besides the fragmented social
health insurance schemes, for China to achieve universal
health coverage include poor quality of health care
delivered by primary care providers, a fragmented
health-care delivery system in preventive and curative
care, fragmentation between dierent levels of health
facilities, and ineective mechanisms for cost containment
of medical care. Capacity of the health-care system can be
strengthened by supporting primary care providers, key
for universal health coverage, who can improve patient
access to quality care at a reasonable cost for patients,
especially for those in rural and remote areas. The Chinese
Government is implementing a series of policies including
increasing the number of qualied primary care providers
and improving capacity of existing health professionals,
establishing a gatekeeping system, strengthening the
tiered health-care delivery network, and improving referral
systems. How to consolidate the entire health nance
system in which funding for curative care (by the social
health insurance schemes) and for preventive care (by the
public health programmes) are coordinated and integrated
will be crucial to improve eectiveness of the health
system. Systemic strategies and policies that include
consolidation of social health insurance schemes are
needed to achieve universal health coverage in China.
www.thelancet.com Vol 386 October 10, 2015

Contributors
QM designed the Review structure. QM, HF, XL, BY, and JX did the
information collection, analysis, and wrote the Review.
Declaration of interests
We declare no competing interests.
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