In another speech last week, Vice-Minister of Labor and Social Security Hu Xiaoyi said that by 2010, 240 million non-working urban residents, such as children and students, will benefit from a basic medical insurance scheme now being piloted in 79 cities. From the press report,

” both central and local governments will subsidize the insurance project, and local governments are encouraged to set different contribution rates for adults and children, and families with different income levels. Studies have found that a contribution rate of about 2 percent of the average per capita disposable income would be “appropriate”. . . adding the government aims to have the project cover at least half of the total cost of those insured. The per capita disposable income for urban residents was 7,052 yuan ($940) in the first half of this year, according to the National Bureau of Statistics. If calculated on the formula Hu described, an urban dweller will have to contribute 141 yuan ($18.5) to be covered by the insurance plan.The premiums will be paid by households, instead of individuals, and the government will give subsidies of at least 40 yuan ($5.3) annually to each participant of the insurance program in pilot cities, with more going to families with low-income earners and disabled ones.”

One of the problems you keep finding in current social insurance programs — and in the proposed programs discussed above I believe — is that the collective funding usually offers only a very thin margin of coverage which often fails to pay for even the most modest of illness or injury. This was evident in the accompanying comments by Wang Lin, president of the Chaoyang Charity Association in Beijing, who said that “charity will continue to have a role to play to cover medical bills of the poor, even after the country provides medical insurance for all. For those with serious diseases, donations are very much needed, as a medical insurance plan usually does not foot all the bills.”

Yet an even bigger and more disputatious question will be how authorities will spend these scarce funds, what medical services will get this new financial attention, and how will cost-effectiveness and health outcomes be accounted for. China’s health care delivery system is simply not prepared yet to answer these kinds of questions. The hard work is still very much ahead of us.