Zhu Rongji on the Record: The Road to Reform 1991-–1997

Basic Medical Insurance Should Be Low in Level but Broad in Coverage

410 52 Basic Medical Insurance Should Be Low in Level but Broad in Coverage1 october 27, 1997 reforming the medical insurance system is quite difficult, even more difficult than [reforming] pension insurance and as a result, there are still many problems. intensive study indicates that we must draw up a reform plan for nationally unified employee medical insurance that is practical and feasible. now, in response to the questions you’ve raised, i’d like to discuss some tentative thoughts on this subject. 1. We Must Determine the Basic Level of Medical Insurance the key to the success or failure of the entire medical reform plan is how we determine the basic level of medical insurance. Premier Li Peng has repeatedly emphasized that china is still a developing country. We must be very cautious in establishing social insurance and cannot aspire to the levels of developed countries —we can only provide basic insurance. given the current circumstances in our country, any type of social insurance system can provide only the most basic level of protection. We cannot try to equal the united States and europe, nor can we try to equal some Southeast Asian countries. We don’t have this capacity and can’t do it, no matter what. china still can’t set up a complete social insurance system—we don’t have the money! developed countries spend a lot of their fiscal outlays on social insurance. People who aren’t working might even get better treatment than those who are working, yet no one would dare to lower the level of insurance after winning an election. if anyone were to lower the level of insurance, that person would quickly have to leave office. therefore their social insurance levels rise higher 1. these remarks were made by zhu rongji after listening to a work report by Peng Peiyun, State councillor and director of the State council’s leading group on pilot medical insurance reforms for employees. it was originally published under the title “on reforms of the employee Medical insurance System” in Selected Major Essays on Labor and Social Insurance in a New Era, and has been edited for this publication. Basic Medical Insurance Should Be Low in Level but Broad in Coverage 411 and higher, and many of their leaders increasingly feel that this has become a burden that their governments cannot cast off. We must learn from this lesson. We cannot establish such a system because we don’t have the fiscal capacity . With a population of 1.2 billion people, china has to think about problems from the perspective of the vast majority and proceed from realities. At present, the most important thing in establishing a social insurance system in our country is to make it appropriate for the national circumstances of the early stages of socialism. We can only set a most basic level, a low level of insurance. china has so many people that if we were to raise the standard per person by rMB 1, it would be a large figure. if the standard is set too high, it would not in fact be implemented, and in the end it would become a burden of the state and add to the fiscal deficit. We must be very clear about this principle and must align our thinking on this issue. how should we determine the basic level of medical insurance? i feel that funding for medical insurance cannot be based on need, only on possibility. this is because right now medical treatment can give you not only new blood, but it can give you a new liver and a new kidney. diagnostic equipment is constantly changing and medical technology is improving by the day. Many illnesses can be cured provided you spend enough money, but we truly cannot afford it. this doesn’t mean that we can’t use certain treatments, but it means we must fund them from other channels—there isn’t that sort of money within the basic medical insurance system. Funding what is possible means setting the funding level of basic medical insurance at a figure that everyone can afford at present. if it’s higher, we won’t be able to do it, because socially pooled funds require everyone to pay in, sharing with and helping each other. if premiums are set too high, not only will quite a number of loss-making enterprises be unable to pay, but even the enterprises that are performing well will be unwilling...