Health Insurance International Health Care Systems

Health insurance in China

Although China has the world’s largest economy, the average individual is actually fairly poor.  Average incomes in the country are less than $15,000 per year, ranking #121 in the world.  However, a vast majority of Chinese have health insurance due to some recent reforms.

A paper by Zhang et al. (2016) uses data from the 2011-2012 China Health and Retirement Longitudinal Study (CHARLS) and finds that:

The two new programs, the New Rural Cooperative Medical Scheme (NCMS) and the Urban Resident Medical Insurance (URMI), expanded rapidly since their introduction in 2003 and 2007, respectively. These two programs, together with the existing Urban Employee Medical Insurance (UEMI), covered nearly 95% of the population by the end of 2011, that is, almost reaching the goal of universal coverage.

However, having insurance does not mean that all out-of-pocket costs are covered as coverage generosity varies across the plan types.

China now has more than four social insurance programs targeting different groups of population with quite different levels of reimbursement rates. For instance, the median of reimbursement rate of the UEMI for inpatient cost is about 66%, while that of NCMS is only 25%.

Which programs cover Chinese residents living in urban areas?

Among the population with urban hukou, the two important insurance schemes are the UEMI, targeting urban employees, and the URMI for non-employees, covering 15.6% and 5.8% of our overall sample or 50.7% and 17.6% of those with urban hukou . The government medical insurance (GMI) also covers a nontrivial share (8.5%) of people with urban hukou.  The GMI provides health insurance for government offi cials and requires no insurance premiums and has no restrictions on deductible levels and payment ceilings. It has a copayment rate of 10%, which is lower than all other social health insurance schemes…While the NCMS is designed to cover rural people, there is still 9% of our urban sample who have NCMS.

Which programs cover individuals living in rural areas without an urban hukou?

On the contrary, 90% of our study sample with rural hukou  are covered by the NCMS, while only less than 4% are covered by other health insurance schemes. One striking fact is that the insurance rate for rural people is even higher than that for urban people, either by hukou  status or residency.

How generous are these programs?

  Across insurance plans, the difference in OOP cost is smaller than that of total medical cost; as a result, the urban insurance plans (UEMI and URMI) have higher reimbursement rates than that of the rural plan (NCMS). For instance, the reimbursement rate at the 25 percentile of UEMI is 50%, while those of the URMI and the NCMS are both zero.   The variation across UEMI, URMI, and NCMS is quite clear at the median amount, as their reimbursement rates are 66%, 33%, and 25%, respectively



CHARLS is a biennial survey conducted by the National School of Development at Peking University, aiming to be representative of the Chinese residents aged 45 years and older and their spouses. CHARLS is part of a set of longitudinal aging surveys that include the Health and Retirement Study in the USA, the English Longitudinal Study of Aging, the Survey of Health, Ageing and Retirement in Europe, the Korean Longitudinal Study of Aging, the Japanese Study of Aging and Retirement, and the Longitudinal Aging Study in India.


  • Zhang, C., Lei, X., Strauss, J., and Zhao, Y. (2016) Health Insurance and Health Care among the Mid-Aged and Older Chinese: Evidence from the National Baseline Survey of CHARLS. Health Econ., doi:10.1002/hec.3322.


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