Speech by Hu Xiaoyi, Vice Minister of Labor and Social Security

Ladies and Gentlemen,

According to the arrangements of the Information Office of the State Council, Entrusted by the Inter-Ministerial Joint Conference on the Basic Medical Insurance Scheme for Urban Residents, I will now give you a briefing on the development of the Guidelines of the State Council on the Pilot Program on Basic Medical Insurance Scheme for Urban Residents (thereafter refers to “the Guidelines”) and its main policies.

I. The development of “the Guidelines” and the tasks of the pilot program

Attaching great importance to the health of the people, the Central Committee of the Communist Party of China and the State Council established nationwide basic medical insurance system for the urban employees in 1998; launched pilot programs on new cooperative medical system in rural areas, and started to establish rural medical relief system in 2003; in 2005, pilot program on urban medical relief system were launched and now carried out nationwide. The establishment and implementation of the above systems play a proactive role in improving living standard of the people and promoting social development. As more than 200 million urban non-employed people, including students and children, were not covered by any medical insurance arrangements, relevant departments have carried out research and surveys since 2005, and under their direction, the local governments explored the development of basic medical insurance system for urban residents. Based on these explorations, the State Council requested the relevant departments to draft the “Guidelines”, three symposiums were held in eastern, western and central regions respectively to solicit comments, all the provincial and municipal Governments also were requested to provide written comments. Now the “Guidelines” has been officially issued.

The task of this pilot program is to explore and improve the policy system of the basic medical insurance system for urban residents, to develop reasonable fundraising mechanism, sound management mechanism and standardized operational mechanism, gradually establish a basic medical insurance system for urban residents focusing on social pooling for catastrophic diseases. The overall plan is to launch the pilot program in 79 selected cities in 2007, gradually expand the pilot program, and it will be replicated nationwide in 2010.

II. Main policies of the pilot program

1. The principles of the pilot program. Firstly, start up from low benefit level; Secondly, voluntary participation; Thirdly, identify responsibilities of the central Government and local Governments; Fourthly, overall planning and coordination.

2. The coverage. The basic medical insurance system for urban residents will cover those excluded from the basic medical insurance system for urban employees, namely students in primary and secondary schools (including vocational secondary school and technical secondary school), children and other urban residents of non-employed population.

3. The fundraising level. Firstly, the fundraising level should be determined by local economic development, with the affordability of local residents and finance of the local governments taken into account. Secondly, according to the basic medical care consumption requirements of different groups of urban minors and urban adults of non-employed population, different contribution rate will be set. Thirdly, local Governments are encouraged to explore for the purpose of establishing a mechanism linking up fundraising level, contribution period and benefit standards.

4. Contribution and subsidy. Households will be the main contributor to the contribution of the basic medical insurance for urban residents, and the governments will subsidize to some extent. In terms of subsidy, every insured person in the pilot cities will be subsidized with no less than 40 yuan annually. For the minors of the vulnerable group, in addition to the normal subsidy of no less than 40 yuan, the governments in principle will give an additional 10 yuan per person annually to minors that receive minimum living allowance or almost totally disabled minors for the component to be paid by the households. As for those adults in difficulty, namely the elders above 60 years old living with low income family, those receiving the minimum living allowance and those almost totally disabled persons, the governments will subsidize them with no less than 60 yuan per person annually for the component to be paid by the households in addition to the normal subsidy of no less than 40 yuan annually. The central Government will determine the standard for subsidy according to two category of regions, one is for central and western regions, the other is for eastern region. For central and western regions, the central Government will offer all insured residents a normal subsidy of 20 yuan; in addition to that part of subsidy, the vulnerable minors will get an additional 5 yuan, the vulnerable adults will get an additional 30 yuan as subsidy. For the eastern region, the new rural cooperative medical service will be used as a reference for subsidy.

5. The focus of the scheme. The fund of the basic medical insurance for urban residents will mainly used to cover the hospitalization expenditure and catastrophic diseases medical care expenditure of out-patient. Having covered the catastrophic diseases, those regions with necessary conditions may implement social pooling for medical care expenditure of out-patient services gradually.

6. The administration of medical insurance. In principle, the basic medical insurance system for urban residents will be administered in line with the related regulations of the basic medical insurance system for urban employees. Moreover, those regions with necessary condition are encouraged to explore for the purpose of establishing integrated system and administration service for urban and rural areas. Grass roots administration and infrastructure construction should be reinforced, and the fund must be strictly managed and supervised. The community medical service and Chinese traditional medical service would be given a bigger role to play in medical insurance.

Thank you.