Looking Toward a New Decade: The Big Picture
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become increasingly blurred. Rural and urban areas are not fixed: their status shifts and is reclassified over time. Nor are their populations static: rural-urban migration continues apace in China. Rural counties also have urban-designated areas within them. In any case, NRCMS and BMI are not separated only by the rural-urban distinction: eligibility depends partly on occupation and industry. At the same time, however, clear differences exist between the schemes in terms of revenues per member, with the BMI scheme currently receiving on average around Y 1,000 per person and the NRCMS around Y 100. Unsurprisingly, the generosity of coverage also differs dramatically, with BMI members getting more expensive care, though not necessarily paying smaller copayments. These inequalities are likely to breed resentment among the rural population, and go against the government’s ideal of creating a harmonious society.44 Moreover, fragmentation creates inefficiencies as well as inequities. Opportunities to reap economies of scope and scale in health insurance management are lost by running separate schemes. Each scheme must set up its own provider payment system, certify providers, and create its own financial management and auditing systems. Substantial cost savings could be achieved through consolidated management of the different schemes, which would pave the way for an eventual merger. Fragmentation also makes it difficult to establish provider payment systems that have consistent and coherent incentives; there is a risk that providers may find they make more money treating patients insured with, say, BMI than patients insured with, say, NRCMS. Finally, fragmentation may make it difficult for people to move from one job to another, or from one area of the country to another, thus inhibiting labor market mobility.
Toward a Unified Financing System The long-term challenges for China vis-à-vis health financing, then, are to narrow the gaps between the various schemes and ultimately unify them, and to shift from a payroll-contribution funding system to a broader base involving general revenues. China will no doubt want a financing system that reflects government’s important role generally, acknowledging local government’s role in funding social programs while retaining the important unifying role of central government. That said, China will probably want to allow some limited diversity in coverage, both between the poorer and richer parts of the country and among people in those areas with different willingness and ability to pay for health coverage. Full