Beijing Legislates Mandatory Medical Insurance

Beijing Legislates Mandatory Medical Insurance

Executive Summary:

• A new Healthcare Security Law mandates enrollment in Resident Basic Medical Insurance (RBMI) for uninsured citizens. This legal obligation shifts the burden of funding healthcare from strained government fiscal resources onto the public. Total Chinese government health expenditure is already lower than that of comparable countries, standing at 3.4 percent of GDP in 2023.
• The mandate is in part a response to falling enrollment, which declined for seven consecutive years between 2019 and 2025, shedding roughly 83 million people. Over the same period, the individual contribution standard rose 60 percent, while the fiscal subsidy standard rose only 35 percent.
• Statutory measures task tax authorities with collecting insurance premia and require that enrollees be brought into a social credit management system as an enforcement mechanism.
• Although the law specifies a resident’s obligation to enroll, it offers no concrete provision for the enrollee’s rights. Authority to determine the fiscal subsidy standard, the benefit standard, and the date on which benefits begin has all been devolved to provincial-level departments. Given the strain on fiscal resources, some provinces may cut RBMI benefits further.

On August 28, the Standing Committee of the National People’s Congress passed the Healthcare Security Law (医疗保障法), effective January 1, 2027 (Xinhua, August 28). The law governs an extensive healthcare system and a fund that covers 1.3 billion enrollees and raised nearly renminbi (RMB) 3.6 trillion ($500 billion) last year (National Healthcare Security Administration [NHSA], July 16). Article 11 of this law—the first dedicated national statute in the field of healthcare security—states that all citizens “shall” (应当) enroll in Resident Basic Medical Insurance (RBMI) should they not enjoy other state medical security. The People’s Republic of China (PRC) already spends little on healthcare as compared to peer countries, and this law offers avenues for further cuts.

The new law likely extends an enrollment mandate to address shrinking sources of medical insurance funding. Earlier normative documents on RBMI all held to the principle of voluntary enrollment. In the Healthcare Security Law (Draft for Comment) (医疗保障法 [征求意见稿]), released by the National Healthcare Security Administration (NHSA) in 2021, the corresponding language read that persons were “to enroll in RBMI in accordance with law” (依法参加城乡居民基本医疗保险) (NHSA, June 15, 2021). The 2010 Social Insurance Law likewise applied compulsory enrollment only to Urban Employee Basic Medical Insurance (UEBMI), using for RBMI the formula that “the state establishes and improves” (国家建立和完善) the system (Ministry of Human Resources and Social Security, December 29, 2018). This shift reflects the state’s unwillingness to commit more public fiscal resources, transferring the funding burden onto ordinary residents, even though the people insured under this scheme generally occupy a weak position in society.

Resident Insurance Is Losing Its Contributors

RBMI enrollment has declined year-over-year since 2019. A policy brief released in August by Duke Kunshan University notes that enrollment decreased from 1.025 billion in 2019 to 942 million in 2025, a cumulative decline of more than 80 million people (Zuo et al., 2026). [1] As of the end of May 2026, RBMI enrollment had dropped further to 933 million. In the same period, UEBMI enrollment reached 386 million, up more than 7 million. The NHSA describes this divergence as the “continued optimization of the enrollment structure” (参保结构持续优化) and reports the enrollment rate “consolidated” (巩固) at 95 percent (NHSA, July 9).

Researchers attribute the wave of withdrawals to the design of the contribution mechanism. Between 2019 and 2025 the individual contribution standard rose 60 percent, while the fiscal subsidy standard rose only 35 percent (NHSA, May 13, 2019; Xinhua, December 19, 2025). RBMI charges a fixed sum-per-head, which weighs more heavily on the poorest enrollees. For the bottom 20 percent of rural households by income, the premium has climbed from about 1.2 percent of per capita disposable income in 2003 to 7.4 percent in 2024 (Zuo et al., 2026). [2] Coverage is calculated by calendar year, and the premium must be paid each autumn (Hunan Healthcare Security Administration, September 29, 2025). Given how limited rural pensions are for the elderly, and given that their other income often arrives irregularly, a premium that must be settled in a single payment frequently presents difficulties. [3]

Limited fiscal subsidies and a low reimbursement ratio count among the reasons for insurance withdrawal. Governments supply somewhat more than 60 percent of RBMI funding—a modest sum when measured against the standards of the budget it comes from. Calculated on 942 million enrollees at the end of 2025 and the 2026 subsidy standard of RMB 724 ($101), total fiscal subsidies come to about RMB 680 billion ($94.6 billion), under 0.5 percent of the country’s official gross domestic product (GDP) (National Bureau of Statistics, January 20; NHSA, March 15, July 16). By way of comparison, total Chinese government health expenditure stood at 3.4 percent of GDP in 2023. This is below both the Organisation for Economic Co-operation and Development (OECD) member average of 7.98 percent and comparable economies such as Brazil (4.3 percent), Russia (4.9 percent), and South Africa (5.5 percent) (World Bank, accessed on September 1). Chinese household out-of-pocket health spending meanwhile accounted for 32.2 percent of national health expenditure, far above the OECD member average of 13.4 percent and the highest among the countries just named, against 26.2 percent in Brazil, 28.4 percent in Russia, and 6.7 percent in South Africa (World Bank, accessed on September 1).

Tax Collection and Credit Records Supply Enforcement Capability

The law undertakes a degree of institutional preparation to ensure that compulsory enrollment takes effect in practice. First, Article 20 provides that “tax authorities shall collect basic medical insurance premiums, including maternity insurance premiums, in accordance with regulations” (税务机关应当按照规定征缴基本医疗保险费 [含生育保险费]). This arrangement predates the law, as seen in the Plan for Reform of the State and Local Tax Collection and Administration System, issued by the General Offices of the Central Committee and the State Council in July 2018 (Xinhua, July 20, 2018). In practice, however, RBMI premiums are paid mainly through front-end channels such as community agents, Alipay, and WeChat, so enrollees do not always know that the tax authorities are the real collector behind them and remain unaware of that authority. Tax authorities command data interfaces across many dimensions, and putting RBMI collection in their hands completes the organizational preparation for severe measures such as compulsory deduction in the future.

Efforts also include the use of an enrollee’s social credit record to apply pressure. Article 44 requires healthcare security administrative departments to establish a credit management system covering designated medical institutions and their staff, employers, enrollees, and others. The law stops there, neither specifying what conduct will be entered as an adverse record, nor stating what cost an adverse record will impose on the household concerned. This drafting approach follows a tradition in Chinese legislation: Chinese leader Deng Xiaoping once said that “the provisions of laws may be somewhat coarse at first, and be perfected step by step” (Selected Works of Deng Xiaoping, 1994). [4] “Better coarse than fine” (宜粗不宜细) subsequently became the common name for this legislative style, and its effect is to leave administrative organs room to maneuver, at the expense of the public’s legitimate expectations.

The social credit system in the PRC is embedded in a nationwide framework. A 2016 State Council guiding opinion directed departments to place restrictions on individuals who have the capacity to carry out their obligations but refuse to do so. These restrictions include leaving the country, purchasing real estate, boarding aircraft, taking high-grade trains and seat classes, traveling on holiday, and staying in graded hotels; and guide financial institutions to raise their lending rates and property insurance premium rates, or restrict the provision of loans, sponsorship, underwriting, and insurance (China Law Translate, May 30, 2016). A further 2025 opinion from the General Offices of the Central Committee and the State Council carried this system forward, adding lists of seriously untrustworthy entities in real estate, the Internet, human resources, and medium- and long-term energy contracts (Xinhua, March 31, 2025). No provision at present links these punishments directly to unpaid medical insurance premiums, leaving possible compulsory force to the future implementation stage. From the standpoint of Chinese legislators, room reserved for discipline will always stand some chance of being used. [5]

Law Specifies Citizen Duties and Leaves Entitlements Undefined

The obligation to contribute is uniform and clear nationwide, but the entitlements enrollees enjoy are not. Article 4 of the law provides that “citizens have the right and the obligation to participate in basic medical insurance in accordance with law, and enjoy the corresponding medical security benefits as prescribed” (公民有依法参加基本医疗保险的权利和义务，按照规定享受相应的医疗保障待遇). The sentence does not explain what the benefits actually are, with RBMI premiums and reimbursement ratios uncertain. Individual contributions are affected by the strength of fiscal subsidies, but how much will be subsidized each year cannot be foreseen, and Article 11 provides only that the standards for individual contributions and government subsidies are determined by the healthcare security and finance departments of the province or pooling area in accordance with state regulations. The reimbursement ratio, which determines how much an individual must spend to see a doctor, likewise fluctuates each year, with Article 13 providing only that benefit standards are determined by the healthcare security and finance departments of the province or pooling area in accordance with state regulations. As a result, the two most critical details of entitlement are left unspecified by the law and consigned instead to subordinate norms, determined annually by each locality.

The date on which enrollees in basic medical insurance begin to enjoy its benefits follows the same pattern. Article 13 provides that this date “shall be determined by the provinces, autonomous regions, and municipalities directly under the central government in accordance with state regulations” (由省、自治区、直辖市按照国家规定确定). This furnishes the statutory basis for the waiting-period regime introduced from 2025, which sets a fixed three-month waiting period for those who enroll late or who have lapsed, and for households that have lapsed continuously for more than four years, a cumulative waiting period of at least six months. [6] The moment of payment is fixed by the concentrated enrollment period each autumn, and the moment of reimbursement is fixed by provincial rules. For a household that misses the concentrated enrollment period, more than three months will separate the two even after the premium is paid in arrears.

The data reflect which way local discretion has tilted. Between 2019 and 2025, fiscal subsidies grew more slowly than individual contributions, lifting the individual share of per capita funding from 32.5 percent to 36.4 percent. Provinces at present hold the discretion to set benefit standards on their own, while bearing a proportionate share of the subsidy cost (Ministry of Finance, January 12, 2022). As local fiscal resources contract, those local decision-makers are required to set subsidies amid a shrinking budget, facing an incentive to further narrow RBMI entitlements (People’s Daily, August 28).

Stratified Insurance System Reflects a Deeper Inequity in the Party-State

The Healthcare Security Law does not resolve the inequity that has long marked the medical insurance system. The official interpretation of the draft promises to “strengthen the coordination of [UEBMI] and [RBMI], and promote fairness and unity” (加强职工基本医疗保险和城乡居民基本医疗保险统筹协调，促进公平统一) (The National People’s Congress, August 25). The two funds, however, differ enormously in scale. UEBMI covers working and retired people attached to employers, funded by contributions from employees and employers jointly, and in 2025 raised RMB 2.47 trillion ($344 billion) across 389 million enrollees, or about RMB 6,353 ($884) in resources per person. RBMI covers everyone else, chiefly farmers, non-employed urban residents, students, and flexibly employed people, and in 2025 raised RMB 1.12 trillion ($156 billion) across 942 million enrollees, or about RMB 1,190 ($165) in resources per person (NHSA, July 16).

The institutional design of UEBMI makes any reform that seeks to narrow its distance from RBMI difficult to advance. About a quarter of the UEBMI fund flows directly into individual accounts. Of the 2025 total revenue for the UEBMI fund, with maternity insurance included, individual account revenue was RMB 639 billion ($89 billion), 26 percent of the total (NHSA, July 16). Cumulative balances in these accounts are substantial, having reached RMB 1.45 trillion ($200 billion) by the end of 2024 (NHSA, July 14, 2025). Zheng Gongcheng (郑功成), president of the China Association of Social Security, has written that UEBMI “sets up privatized, fully funded individual accounts, which greatly weaken the mutual-aid function of the system” (Zheng and Fu, 2026). [7] The existence of individual accounts makes it hard for enrollees to tolerate transferring funds originally credited to those accounts into the public pool, and even adjustments internal to the UEBMI system have previously met strong protest from workers, especially urban retirees (Wall Street Journal, February 15, 2023).

The stratified structure of the medical insurance system can be seen as a microcosm of the Party-state. Two systems, two sources of funding, and a line drawn according to whether a person has a work unit: Articles 11 and 13 together sketch a system in which the welfare a citizen obtains depends on their social position, which is largely determined by the urban–rural divide. The same holds across other fields of social welfare. In pensions, resident basic old-age insurance likewise provides broad coverage at a low level, but has large disparities with other systems. Calculated from official statistical data, the average monthly basic pension in 2023 for staff of government organs and public institutions, for enterprise employees, and for urban and rural residents came to roughly RMB 6,350 ($900), RMB 3,260 ($460), and RMB 220 ($30) respectively (Zheng and Fu, 2026). [8] To preserve the vested interests of those inside the system, the Chinese Communist Party is unlikely to fundamentally change this state of affairs.

Conclusion

The new Healthcare Security Law can only delay resolving the deep problems within the medical insurance system. Facing overall funding pressure, policymakers have turned enrollment in insurance into an obligation for citizens, with the burden spread disproportionately among the lower and middle strata of society. The funds this approach can raise are nevertheless limited, and as the general population continues to age, rising medical demand will consume insurance funds faster. In the future, the Party-state will quite possibly cut the real benefits of RBMI further, since the system will otherwise be difficult to sustain.

Notes

[1] Zuo Xuejin [左学金], Zhu Ziyi [朱姿颐], and Tang Shenglan [汤胜蓝]. “Declining Enrollment in China’s Urban–Rural Resident Basic Medical Insurance: Problems and Policy Responses” [我国城乡居民基本医疗保险参保人数下降问题及对策研究]. Health Policy Research Brief, no. 7. Global Health Research Center, Duke Kunshan University, August 24, 2026. https://globalhealth.dukekunshan.edu.cn/zh-hans/hprg-pub/declining-enrollment-in-chinas-urban-rural-resident-basic-medical-insurance-policy-responses-issue-7/.

[2] Ibid.

[3] The national minimum standard for the basic pension under urban and rural resident old-age insurance has long been low. In the government work report of March 2026, Premier Li Qiang proposed raising the monthly minimum by a further RMB 20 ($3), from RMB 143 ($20) in 2025 to RMB 163 ($23), the third consecutive annual increase of RMB 20 after 2024 and 2025. About 180 million people nationwide receive this benefit, more than 70 percent of them farmers (Xinhua, March 4).

[4] Deng Xiaoping [邓小平], “Emancipate the Mind, Seek Truth from Facts, and Unite as One in Looking to the Future” [解放思想，实事求是，团结一致向前看], Selected Works of Deng Xiaoping [邓小平文选], vol. 2, p. 147.

[5] For more on how the social credit system fits into the CCP’s broader system of social control, see: Chapter 6, Samantha Hoffman, China’s Mobilization State, The Jamestown Foundation, 2026.

[6] The State Council General Office’s Guiding Opinions on Improving the Long-Term Mechanism for Enrollment in Basic Medical Insurance (关于健全基本医疗保险参保长效机制的指导意见) provide that, from 2025, a fixed three-month waiting period applies to persons who do not enroll during the concentrated enrollment period or who have lapsed. Each additional year without coverage adds one month of variable waiting period; enrollees may repair this by paying premiums in arrears, with each additional year paid reducing the variable waiting period by one month. For those who have lapsed continuously for four years or more, the fixed and variable waiting periods together are in principle to total at least six months after repair. Those who re-enroll may also face a reduced maximum payment ceiling under catastrophic illness insurance, and their count of consecutive enrollment years is reset to zero.

[7] Zheng Gongcheng [郑功成] and Fu Xingchen [扶星辰], “Correctly Understanding the Logical Relationship between Boosting Consumption and Social Security” [正确认识提振消费与社会保障的逻辑关系], Academic Research Guangzhou [学术研究 (广州)], no. 3 (2026): 91–98, https://www.aisixiang.com/data/180309.html.

[8] Ibid.