Urban health insurance and financing in China has been undergoing a decade-long reform since 1994 when the two
pilot experiments were initiated in Zhenjiang and Jiujiang cities. This study provides an overall assessment of the
changes in the urban health insurance system based on a comprehensive review of the existing literature. The major
findings can be summarized as follows. First, compared to the previous Government Insurance Scheme (GIS) and
Labour Insurance Scheme (LIS), the newly established community-based employee insurance plan appears to be
more efficient in cost savings; more equitable in access to care; and more promising in protecting the insured
individuals from catastrophic risk. However, it is uncertain whether the new plan is sustainable in the next phase
when expanded to cover the entire urban population, including both the unemployed and their dependents. As a
result, it will be a big challenge ahead to insure the currently uninsured and underinsured urban populations.
Second, the existing literature paid little attention to changes in health outcomes when assessing the new insurance
mechanisms. Given the ultimate goal of modern medicine in general, and the Chinese health reform policy in
particular, population health outcomes should be central in assessing the reform. Thus, it is important that future
research focuses on health outcomes research.
Third, the existing literature offered little evidence to adequately assess the alternative model specifications, i.e.,
compartment versus pathway models, which were implemented indifferent cities with some disputes concerning the
relative efficiency and equity in serving the insured. In order to allow for valid and reliable evaluations, future
research should employ a better-designed empirical data, especially panel data that include a comparison group,
both at the institution and individual levels.
Forth, the current policy requires that the government sectors and SOEs must participate in the community-based
insurance program. Yet it appears that many other forms of institutions are allowed to participate in the program on
a volunteer basis. Such a non-mandatory policy for non SOEs, especially the self-employed and some privately owned
enterprises, is likely to result in potential problems of adverse selection and unequal access among individuals
working in different industries and employers. Future policy efforts may seek to mandate a universal insurance policy
for all urban employees and dependents.