China Sees 19 Million Health Insurance Withdrawals Last Year... Concerns Over Urban-Rural Medical Gap

Health Insurance Premiums Double Since 2018
Local Governments Face Mass Subscriber Exodus
Economic Downturn Raises Concerns Over Public Healthcare Crisis

As more households in China face financial difficulties due to the economic downturn, concerns are growing that the public healthcare system could potentially collapse. Last year alone, 19 million Chinese citizens withdrew from health insurance due to income reductions, raising warnings that the economic crisis could escalate into a public healthcare crisis.

According to major foreign media on the 10th (local time), the number of public health insurance subscribers in China decreased by 19 million last year. This is the largest decline since statistics began to be compiled.

Experts expect the number of subscribers to decrease even further this year. Among eight local governments that reported statistics to the government from the beginning of this year to September, seven showed a decline in subscriber numbers compared to the previous year.

The main cause of the decrease in subscribers is attributed to the reduction in household income due to the economic downturn. According to China's National Bureau of Statistics, last year, public health insurance premiums in China more than doubled compared to 2018. Meanwhile, during the same period, the average wage of migrant workers increased by only 24%. As the increase in health insurance premiums exceeded income growth, it is analyzed that households' capacity to bear insurance premium burdens significantly decreased.

The decline in subscribers was particularly pronounced in local governments. Anhui Province in China saw a 4% decrease in health insurance subscribers last year compared to the previous year, followed by a 3% decrease in subscribers from the beginning of this year to October.

Local governments have low fiscal independence and different premium payment systems compared to cities. As a result, subscribers are required to bear a significant portion of medical expenses themselves, leading to a surge in subscriber withdrawals. According to Chinese economic media Caixin, Shandong and Guangxi provinces recorded health insurance deficits in 2021. Due to poor financial conditions, some rural subscribers reportedly bear 50-70% of their medical expenses, according to major foreign media. It is also frequently reported that rural residents who receive treatment at advanced hospitals in large cities have to pay more medical expenses than urban residents due to different insurance premium systems.

Major foreign media explained, "Local governments, which have begun to experience financial difficulties, raised premiums to cover the shortfall in health insurance funds, passing the burden onto subscribers," adding, "In recent years, premiums have surged sharply, outpacing income growth trends."

There is growing anxiety that rural residents withdrawing from health insurance could lead to an expansion of the healthcare gap between urban and rural areas. With rural aging accelerating, if subscriber withdrawals continue, more households may struggle with medical expenses in the future. An anonymous official from China's Ministry of Finance warned, "If health insurance withdrawals increase, residents in some underdeveloped rural areas with growing elderly populations could face serious health risks."

The collapse of the public health insurance system could also cause significant losses to China's domestic economy. If subscribers who leave public insurance start saving to prepare for medical expenses, personal consumption expenditure could decrease as a result. Dan Wang, chief economist at Hang Seng Bank, pointed out, "Chinese people have to save a significant portion of their income to prepare for serious illnesses due to the lack of social safety nets such as health insurance," adding, "This weakens the government's efforts to stimulate personal consumption for economic recovery."