In China, the social insurance system is primarily composed of five sub-programs: medical insurance, employment injury insurance, unemployment insurance, pension insurance, and maternity insurance. The first three in particular have played a major role in providing economic support for the insured during the Covid-19 pandemic.
3.3.1. Medical Insurance and Related Policies: Programs That Bear the Brunt
As mentioned above, there are two kinds of medical insurance system in China: one for urban employees, and the other for urban and rural residents other than urban workers. The former is paid by employers and employees (6 percent and 2 percent of wages, respectively), and the latter is paid by residents and subsidized by the government (in 2020, the individual contributions are 280 yuan, and the central and local financial subsidies are not less than 270 yuan). The medical insurance fund is principally used for in-hospital and substantial medical expenses of the insured, and the current average reimbursement rate is more than 70 percent of the total expense for urban employees, and around 60 percent for urban and rural residents who participate in the scheme.
Effective medical security measures, mainly medical social insurance, were taken in a timely manner during the Covid-19 crisis in China, so that patients and their families are relieved from worrying about treatment costs, specifically: (1) Shortly after the outbreak, the state issued a policy to include drugs and medical services for the treatment of the new coronavirus as part of the payment range for the medical insurance fund. (2) Furthermore, the personal medical burden is borne by fiscal resources of the government, thus achieving free treatment for patients with Covid-19. The policy was initially limited to confirmed cases, but was later expanded to suspected ones. (3) Simultaneously, when people seek medical treatment within one’s coordinated areas of the social medical insurance fund, it is mandated that treatment must be provided first, with the fee to be settled later. (4) For medical institutions admitting a large number of patients, social medical insurance would prepay funds to ensure that the effectiveness of treatment from hospitals is not impaired due to payment policies.
The above policies may be summarized as “two guarantees”, first to ensure that no patient is rejected or treated in an untimely manner due to medical expenditure or cost problems, and, second, to guarantee that no designated medical institution is impaired from treating patients due to budget management regulations from the medical insurance fund. For foreign patients, if they have participated in China’s basic medical insurance or any commercial insurance, their fee will be paid by the corresponding insurance funds; alternatively, they must bear the cost themselves. However, whether insured or not, medical institutions will treat first and charge later to ensure that everyone can receive medical treatment in time.
The total cost of confirmed and suspected Covid-19 cases in China was about 1.486 billion yuan ($
0.21 billion) as of 6 April 2020. The per-capita medical cost of diagnosed inpatients reached 21,500 yuan ($
3035), and of the severe ones, more than 150,000 yuan ($
21,176). The medical insurance fund paid 990 million yuan ($
139.8 million), accounting for 66.6 percent of the total medical cost. The total cost of diagnosed inpatients involved was 1.118 billion yuan ($
0.16 billion), 746 million yuan ($
105.3 million) of which was paid by the medical insurance fund, accounting for 66.7 percent. The total cost of the suspected patients was 368 million yuan ($
52 million), with the medical insurance fund paying 66.6 percent of it (245 million yuan) [25
]. Overall, the medical insurance fund paid about two thirds of the total cost, and the remaining one third was borne by fiscal funds at various levels.
However, these medical security measures were not without constraints. Many of the medical security policies issued during the Covid-19 pandemic were interim measures, which made them difficult for some local medical funds to implement in an orderly fashion [26
]. One question yet to be clarified concerns the ultimate responsibility for payment: between public finance and the medical security fund, which one should eventually bear the medical expenses, or how they should be shared on the basis of specific principles? That is, in this pandemic, the medical security funds and fiscal funds work together to provide free medical care to patients. However, according to the Social Insurance Law (the third paragraph of Article 30), the basic medical insurance funds should not pay expenses that should be borne by public health funds. Therefore, it is necessary to rethink the relationship between public finance and medical security funds in major pandemics like Covid-19.
To address this problem, the first step is to take the perspective of the comprehensive process of public health emergency management. According to China’s Emergency Response Law, the emergency management process includes four phases: prevention and preparation; monitoring and early warning; rescue and disposal; and rehabilitation and recovery.
On the one hand, the beneficiaries of the public health funds include the entire population, so these funds should be mainly used in the prevention and preparation phase, for vaccination, tracking, and service provision for people who test with underlying health conditions. On the other hand, medical insurance helps diversify risks among insured persons, so it should mainly target the medical expenses of patients.
Furthermore, the impact of major public health events on different regions is often disproportional. According to the latest information, among 84,614 confirmed cases recorded nationwide, 68,135 were diagnosed in Hubei Province, accounting for more than 80 percent of the total cases. However, at present, the overall planning level of medical insurance funds in China is only at the municipal level, inevitably resulting in a larger burden of medical expenses in areas with severe pandemics, which cannot be shared on a larger scale. Faced with such a contradiction, limited by the reality of the situation, medical insurance cannot achieve national pooling in a short period of time; it is still necessary to establish a sharing mechanism between the medical insurance and the public finance for medical expenses, especially in areas with severe pandemics.
The responsibility-sharing mechanism between public finance and the medical insurance system also concerns the issue of due beneficiaries, or more specifically, foreigners in China and Chinese students overseas. For foreigners in China, as long as they have participated in medical insurance, they are entitled to benefits; and if they also fulfill their tax obligations, they should also benefit from public financial subsidies. For overseas students, in the context of the global spread of the Covid-19 pandemic, a large number of students want to return to China. In response, the Chinese government has issued a policy stating that if they return, they will be responsible for their accommodation and boarding expenses during the period of quarantine. Whether their medical expenses will be paid depends on whether they have participated in medical insurance. This practice is in line with the basic principles of medical insurance. However, if the medical expenses are mainly to be borne by public finance at the national level, these students should enjoy free treatment, regardless of whether they are insured or not, paying taxes or not.
3.3.2. Employment Injury Insurance and Unemployment Insurance: Social Protection Policies That Played an Active Role
Other insurance sub-programs have also contributed to the battle against the Covid-19 crisis. As far as unemployment insurance and work-related injury insurance are concerned, although the contribution rates have continued to decline over the past five years, and the scope and level of expenditures have increased, the accumulated balances have continued to rise [27
]. (There may be many factors contributing to the increasing accumulated balance. First, and likely foremost, more workers have participated in the social insurance system. According to the Ministry of Human Resources and Social Security, the number of participants in the unemployment insurance system increased from 170.43 million in 2014 to 196.43 million in 2018. Second, on the expenditure side, the total number of beneficiaries has remained stable, fluctuating around just above 2 million people during 2014–2018, despite the relatively higher level of benefits and larger scope of compensation projects for qualified insured persons. Moreover, the level of overall planning in the unemployment insurance system has been low, reducing the efficiency of unemployment insurance funding, which also helps explain the situation. Relatively developed regions usually enjoy more advantages in the labor market such as more local and immigrant workers, and thus more contributions to the unemployment insurance program, while unemployment rates are relatively low, in contrast to underdeveloped regions. These developed regions have contributed the most to the accumulated balance on a national scale, but this surplus cannot be properly shared by other regions if they are not in the same overall planning area.) This has provided a solid foundation for expanding expenditures related to the pandemic. Employment injury insurance was adjusted in time to recognize and thus protect caregivers on the front line. To begin with, it was made clear that medical care staff and other related staff, who were infected with Covid-19 or died from it in the course of their work to prevent and control the pandemic, would be recognized as work-related injuries cases, and their legitimate entitlements and interests would be protected. Given that the Covid-19 outbreak in China was mainly concentrated in Wuhan, the central government mobilized medical care staff from other administrative areas to support Wuhan City. From 24 January (a traditional Chinese holiday, the eve of the Spring Festival) to 8 March, approximately 42,600 staff members from 346 medical teams across the country arrived in Wuhan and Hubei Province to participate in medical treatment. However, as of 11 February, 1716 medical care staff, accounting for 3.8 percent of the national confirmed cases, had been confirmed as infected with Covid-19 nationwide [28
]. In addition, as of 8 March, 53 community workers perished in the line of duty during the epidemic prevention and control [24
]. In order to ensure the basic entitlements for these employees, the relevant authorities opened a “green channel” to simplify the procedure for identifying work-related injuries. At the same time, if the requirements are met, deceased medical care staff and other pandemic prevention workers are eligible to be recognized as martyrs. According to the Regulation on Honoring Martyrs, the state has established a reward system for martyrs. The reward standard is 30 times the per capita disposable income of urban residents in the previous year. Meanwhile, the state grants preferential treatment to the survivors of martyrs to ensure that their quality of life is not lower than the average living standards of local residents, and the state will also provide support for their children’s education and parents’ pension.
Furthermore, the unemployment insurance system, by nature, works counter-cyclically in the sense of economics. As the pandemic caused a large number of enterprises to fail in resuming a timely production schedule, workers were thus unable to return to work, which adversely affected both the employers and employees. As a policy response, a series of regulations have been issued by various governmental departments to broaden the scope of beneficiaries. For insured persons who lost their jobs due to the pandemic in Hubei and other pandemic-stricken areas, if they do not meet the basic requirements for receiving unemployment insurance (e.g., participating in and contributing to the insurance fund for no less than one year), they will be offered an unemployment subsidy. The standard is no higher than 80 percent of the local unemployment insurance premium, and it is only paid for six months. For those who had not contributed to unemployment insurance, the unemployment assistance benefit would be paid, in an amount equivalent to 120 to 150 percent of the social relief amount prescribed by the local civil affairs department, and the specific amount is determined by the provincial government.