The reform will be carried out gradually and is supposed to cover 5.96 million urban residents when it is completed by the end of the year 2002, according to Wang Dexiu, deputy director of the Beijing Labour and Social Security Bureau.

The reform will be carried out "basically'' in accordance with the guidelines set by the State Council in 1998, but will have Beijing characteristics, Wang added.

According to the reform, which is titled the "Beijing scheme,'' every year participants in the social insurance scheme will pay 2 per cent of their wages in the previous year as the basic insurance premium, the money being allocated to the participants' personal accounts, from which the participants' clinic expenses will be paid.

Employers will pay 9 per cent of the total amount of all its employees' wages. Thirty per cent of this money will also be allocated to the participants' personal accounts, while the remaining 70 per cent is to be allocated to a collective fund, which will cover participants' hospitalization expenses.

Is is expected that the personal accounts will be sufficient to cover the medical expenses of most participants. For the seriously ill whose expenses may be very high, especially the municipality's senior citizens and unemployed, there are also auxiliary regulations such as the "large-sum medical expenditure mutual aid fund.''

The formulation of the so-called "Beijing Scheme'' was based on careful and sensitive research. Since the first draft of the scheme, which was approved by the municipal government in the fourth quarter of 1999, it has been revised dozens of times soliciting opinions from the general public, according to Wang Dexiu.

Medical insurance reform is a hot topic among ordinary Chinese. According to Wang, surveys indicate that the issue topped the list of most-serious matters among urban residents last year.

Established in the 1950s, China's former medical insurance system for urban workers, had many characteristics of the planned economy. The State and enterprises bore almost all of the medical expenses of workers. The system was inefficient and bred a lot of waste.

In a bid to solve the problems, the country began to explore the establishment of a new and more efficient medical insurance system in the mid-1980s.

The experiment was piloted in many localities. At the end of 1998, the State Council decided it was time to launch a nationwide reform.

By the end of June of last year, a total of 252 cities had set up new medical insurance systems. Of them, 146, covering 14 million people, have begun the operation of new systems.

According to Wang Dongjin, deputy minister of Labour and Social Security, the new medical insurance systems are expected to cover 90 per cent of the territory of the cities involved, for a total of 80 million people by the end of this year.

(China Daily 03/22/2001)