For Universal Health Coverage CHINA. Expanding Health Coverage to the Informal Sector SEPTEMBER Produced by R4D

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1 For Universal Health Coverage CHINA Expanding Health Coverage to the Informal Sector SEPTEMBER 2015 Produced by R4D

2 AUTHORSHIP Annette Ozaltin (R4D), Lara Wilson (Independent), Marilyn Heymann (R4D) ACKNOWLEDGEMENTS Wen Chen (School of Public Health, Fudan University), Jack Langenbrunner (Australian Department of Foreign Affairs and Trade, Indonesia), Khizer Husain (Independent), April Williamson (R4D) This report was produced by R4D For Universal Health Coverage

3 China: Summary The informal population is almost entirely covered by two separate schemes: one for the urban informal sector (URBMI Urban Residents Basic Medical Insurance) and one for the rural population (NCMS New Cooperative Medical Scheme), beginning nine and five years after the introduction of social health insurance, respectively. Political commitment, strong economic growth, household-based membership in the NCMS, and a system of national-subnational harmonization are major factors contributing to rapid population coverage. Local governments design programs within minimal centrally determined guidelines, producing highly varied local programs. An organized informal sector provided political pressure for subsidies and top-down political support ensured the availability of funding for subsidies. Central and local governments provide partial subsidies to the informal sector, financed from general taxes, covering 85% of NCMS contributions and 61% of URBMI contributions. Funds are pooled and managed at the local level, creating 3,000 separate risk pools for the informal population that reflect regional and local inequalities. Contribution payments are flat amounts determined at the local level. China struggles to effectively cover its large population of migrant workers in the residency-based health insurance schemes; pilots are ongoing to enroll and provide services in their cities of residence. A low contribution requirement for an initially limited benefits package facilitated rapid population coverage expansion; China is now deepening the benefits package. The current system has been successful in both increasing financial protection and utilization of services, though unequal financing between the health insurance systems for the formal and informal sectors has widened the gap in access to services. m Expanding Health Coverage to the Informal Sector COUNTRY CONTEXT Population (Millions) (2012) 1,350.7 Share of National Population in Informal Sector (2011) 67% GDP per Capita (Current USD) (2012) $6,091 Share of National Population Covered by Insurance (Public and Private) (2011) 97% Out-of-Pocket Expenditure on Health (as Percent of Total Expenditure on Health) (2012) 34.3% Life Expectancy at Birth (2012) 75 Under-5 Mortality Rate per 1,000 Live Births (2012) 14 Sources: Meng et al., 2012; World Bank, 2013; Yuankai, 2013; Liang and Langenbrunner 2013 JOINT LEARNING NETWORK 1

4 POLICY CONTEXT 1994 Government initiates pilots of Urban Employees Basic Medical Insurance (UEBMI) to replace existing Government Insurance Scheme for government employees and Labor Insurance Scheme for work units, and extends coverage to salaried employees of private businesses 1997 Decision of the State Council on Health System Reform and Development suggests creation of the New Cooperative Medical Scheme (NCMS) to residents of rural areas; Ministry of Labor and Social Security (MOLSS) created to oversee health reforms 1998 Decision on the Establishment of Basic Medical Insurance System for Urban Employees expands UEBMI to all cities 2002 New administration pledges to expand social services; Decisions of the State Council on Strengthening Rural Health Care reiterates support for NCMS 2003 Government introduces the NCMS and the Medical Assistance (MA) program to provide supplemental support for the very poorest; UEBMI is extended to include urban residents in flexible employment 2006 NCMS expands to all counties; new President announces larger role for government in providing healthcare 2007 Government introduces Urban Residents Basic Medical Insurance (URBMI) pilots to residents of 88 cities not eligible for employment-based scheme 2008 Government expands URBMI to 50% of cities and commits additional $57 billion to expanding coverage in URBMI expands to all cities Sources: Barber & Yao, 2010; World Bank, 2010; W. C.-M. Yip et al., 2012; W. Yip & Hsiao, 2008; Yuankai, 2013 NEW COOPERATIVE MEDICAL SCHEME (NCMS) Timeline for extending coverage Pilots: to the informal sector National scale-up: 2006 NCMS Target population Rural population Target population covered under scheme (2012) 99% National population covered under scheme (2012) 59% Enrollment Benefit package Government subsidy (2011) Contribution amount Voluntary, de facto mandatory Uniform minimum benefit package for all members includes inand out-patient care, and drugs and laboratory testing on list of essentials Significant variation in supplemental items between counties, including major exclusions and reimbursement ceilings 85% of NCMS contributions from general revenues, determined annually with no standard Contributions are flat amount determined by county, with minimum contribution set by central government Sources: Langenbrunner, 2012; Ma, Zhang, & Chen, 2012; Tang, Tao, & Bekedam, 2012; Wilkes, 2013; Yuankai, 2013; Zheng, JOINT LEARNING NETWORK

5 URBAN RESIDENTS BASIC MEDICAL INSURANCE (URBMI) Timeline for extending coverage Pilots: to the informal sector National scale-up: 2009 URBMI Target population National non-salaried urban population Target population covered under scheme (2010) 93% National population covered under scheme (2011) 16% Enrollment Benefit package Government subsidy (2009) Contribution amount Voluntary, but de facto mandatory, though targeting issues have prevented the program from achieving universal coverage Uniform minimum benefit package for all members includes inand out-patient care, and drugs and laboratory testing on list of essentials Significant variation in supplemental items between counties, including major exclusions and reimbursement ceilings 61% of URBMI contributions from general revenues, determined annually with no standard Contributions are flat amount determined by county/city Sources: Lin, Liu, & Chen, 2009; Yip et al., 2012; Zheng, 2012 Figure 1. Organizational Structure of Social Health Insurance Schemes City/County level* Central level Ministry of Health Determines central NCMS policy NCMS Bureau of Heatlh Oversees implementation of NCMS NCMS Office Determines financing, reimbursement and cost control policies, as well as the daily management and administration of the scheme National People s Congress Appoints Ministers Ministry of Human Resources and Social Security Determines central URBMI policy and financing standards for both URBMI and NCMS Development and Reform Commission Determines fee schedules URBMI National Development and Reform Commission Determines minimum benefit package for NCMS and URBMI Municipal Bureau of Human Resources and Social Security Determines financing levels, contribution collection and disbursement, as well as the daily management and administration of the scheme Sources: de Haan, Xiulan, & Warmerdam, 2011; Liang & Langenbrunner, 2013; Lin, Liu, & Chen, 2009; Meng et al., 2012 Note: All institutions are government actors. * NCMS schemes are organized at the county level. URBMI schemes are organized at either the city or county level. JOINT LEARNING NETWORK 3

6 1. Political context and background China is an upper-middle-income country with a communist government. The country has experienced dramatic economic growth since the 1990s, with the GNI per capita growing by an average of 13.6% annually since 1994 (World Bank, 2013). China first implemented a social health insurance scheme for urban salaried employees of government or private companies in Five years later, it introduced the voluntary and subsidized New Cooperative Medical Scheme (NCMS 1 ) to all residents of rural areas, regardless of employment status. In 2007, the government introduced the voluntary and subsidized Urban Residents Basic Medical Insurance (URBMI) to cover the remaining population urban non-salaried residents. The government provides supplemental financial support to the poorest through a separate program. Pilots targeting the informal sector were conducted in and for the NCMS and URBMI, respectively (Langenbrunner, 2012). Both economic and political factors contributed to the extension of insurance to the informal sector. Economic liberalization beginning in 1978 led to the collapse of China s commune-based system of healthcare provision and financing. Despite significant economic growth in the following decades, rapidly rising out-of-pocket health costs led to high rates of medical impoverishment and poor access to care. By 2000, growing demands for improved financial protection culminated in public pressure to extend health insurance to the informal sector (Langenbrunner, 2012). The Ministry of Health (MoH) lobbied for more government funding to promote compulsory health insurance for the informal sector. The Ministry of Agriculture, while not explicitly within the health organizational structure, viewed itself as protecting the interest of farmers (the majority of the informal population) by opposing compulsory health insurance on the grounds that it would provide minimal benefit due to the low quality of healthcare available in rural areas. The central government at the time therefore chose not to expand health insurance. In 2002, new central government leadership gave greater priority to establishing effective social services and specifically to decreasing inequality in access to healthcare (World Health Organization, 2011). Annual economic growth rates averaging 12.2% between 1993 and 2002 had created favorable conditions to extend health insurance, as the government had the fiscal space to provide a subsidy and households were better able to contribute to premiums (World Bank, 2013). The SARS epidemic in 2003 highlighted the deficiencies of the rural health care system and made reform urgent (Sussmuth-Dyckerhoff & Wang, 2010). The new leadership announced the creation of the NCMS, a subsidized contribution scheme for the rural population. The scheme uses voluntary enrollment as acknowledgement of the public s resistance to a de facto new tax (W. Yip & Hsiao, 2008). With the implementation of the NCMS in addition to the existing program for urban salaried employees, the urban informal sector remained the only population without health insurance coverage. Thousands of public protests for improved social protections placed pressure on the central government to act. In 2006, the new President, Hu Jintao, announced a greater role for the government in achieving universal health coverage, and created the Health Care Reform Leading Group to chart future reforms (W. Yip & Hsiao, 2008). Continued strong economic growth and the Health Care Reform Leading Group supported the introduction of the URBMI in 2007 (Barber & Yao, 2010; Lin et al., 2009). The global financial crisis and resulting stimulus package in 2008 resulted in the devotion of an additional $57 billion towards expanding coverage between 2009 and 2012 (Barber & Yao, 2010; de Haan et al., 2011). China s three health insurance schemes achieved 97% coverage of the national population in 2012 (Zheng, 2012), up from 7% in 2002 (Tang et al., 2012), and China is targeting universal coverage by Both the NCMS and URBMI have grown dramatically since their inception to reach 99% and 93% of their respective target populations 1 The name of China s rural health insurance scheme is translated as either the New Rural Cooperative Medical Scheme (NRCMS) or New Cooperative Medical Scheme (NCMS) depending on the source. This case study will refer to it as the New Cooperative Medical Scheme (NCMS). 4 JOINT LEARNING NETWORK

7 Figure 2. Public Health Insurance Coverage in China by Program, 2011 Source: Liang & Langenbrunner, 2013 NCMS 62% Uncovered 3% UEBMI 19% URBMI 16% in 10 years and 6 years, respectively. The NCMS covers the majority of the country, with 62% coverage of the national population in 2011, while the URBMI covered 16% in the same year (Liang & Langenbrunner, 2013). 2 Because eligibility for both the URBMI and NCMS is based on the location of permanent residence, China s 200 million rural-to-urban migrants represent much of the population remaining to be effectively covered. These migrants are often covered by the NCMS in their rural county but have poor access to benefits in the cities in which they work and live (W. C.-M. Yip et al., 2012). China s rapid progress towards UHC has utilized an approach of local adaptation within a strong centrally determined framework. The 2,600 county NCMS schemes and 330 city/county URBMI schemes are therefore highly varied beyond basic guidelines. The central government s State Council defines broad objectives and enforces requirements for local governments (Liang & Langenbrunner, 2013). Local governments are responsible for designing and implementing schemes within these guidelines, including determining contributions paid by beneficiaries, contributions paid by the local and central governments, reimbursement percentages and ceilings for hospitals, deductibles, coverage for inpatient and outpatient costs, and coverage of out-of-county medical costs (de Haan et al., 2011). Financing and assessment of local authorities are based on achievement of specific enrollment targets (Liang & Langenbrunner, 2013). Local governments can design programs inside their insurance schemes to cover the specific needs of local populations, e.g. a large population of migrants (Chen, 2013). The central government encourages local governments to conduct pilots before scaling up initiatives (Liang & Langenbrunner, 2013). Funding is largely decentralized to the local level, creating 3,000 risk pools for the informal sector (Liang & Langenbrunner, 2013) that have been criticized for reflecting income inequalities. Per capita health expenditure in urban areas is 10 times that in rural areas, with significant variation between provinces as well. Additionally, risk protection is limited with so many small pools, rather than fewer larger pools (Langenbrunner, 2012). m 2 Measuring the urban informal population presents a challenge, and so estimates of the program s coverage rate have a large margin of error. JOINT LEARNING NETWORK 5

8 2. Identification, Targeting, and Enrollment a. Informal sector identification The URBMI-eligible population encompasses the urban informal sector. Permanent residents 3 of urban areas who are not eligible for the Urban Employees Basic Medical Insurance (UEBMI), i.e. those who are not flexible or salaried employees of the government or private companies, are eligible for the URBMI. This includes (Liu & Zhao, 2012; Meng et al., 2012; Zheng, 2012): o Self-employed adults in the informal sector o Temporary adult workers o Underemployed adults o Unemployed adults, including dependents of UEBMI members o Retired men over 60 and women over 55 without pensions o Students o Children under 18 NCMS eligibility does not depend on formality. All individuals with a rural permanent address are eligible (W. C.-M. Yip et al., 2012). b. Informal sector targeting Self-employed workers comprised 67% of the total workforce in 2012 (Yuankai, 2013). The central government requires that enrollment in both the URBMI and NCMS be voluntary (You & Kobayashi, 2009). Yet local authorities treat participation as de facto mandatory since there are large incentives to do so. Only poor provinces that achieve at least 80% enrollment are eligible for central government subsidies (You & Kobayashi, 2009), and population enrollment is a criterion in the government assessment of local authorities (Liang & Langenbrunner, 2013). China s targeting system for the informal sector relies on its extensive technological infrastructure. Every citizen has a unique social security or enrollment scheme number, as well as a computerized record for providers (Liang & Langenbrunner, 2013). Urban governments use employment statistics to calculate the fraction of their population that is eligible for the URBMI, and then create structures to determine individual employment status (Chen, 2013). After growing for decades following economic liberalization, the informal population has shrunk in recent years due to 2008 labor law reforms that encourage the use of labor contracts (Gallagher, Giles, Park, & Wang, 2013). Historically, China s 200 million rural-to-urban migrants were typically targeted by the NCMS in the rural community in which their permanent residence was listed, rather than the cities in which they lived and worked. This created barriers in access to care because of high co-payments for using providers outside the NCMS (Yip et al., 2012). To address this, the MOH is currently piloting a project that aims to provide health services to migrant workers in 65 cities (Gong et al., 2012). c. Informal sector enrollment NCMS schemes typically use household enrollment to lessen adverse selection while URBMI schemes use individual enrollment (Liu & Zhao, 2012; World Bank, 2010; You & Kobayashi, 2009). Enrollment methods can involve door-to-door appeals and social pressure, such as posting the names of nonparticipants at the village center (Wu et al., 2006). Many NCMS and URBMI localities are now issuing ID cards to quickly validate enrollment, and some validate enrollment through a partnership with local banks (Liang & Langenbrunner, 2013). 3 Some cities/counties also cover migrants under the URBMI, though their permanent address is elsewhere (Yip et al., 2012). 6 JOINT LEARNING NETWORK

9 During roll-out, NCMS experienced adverse selection, which is evidence that household enrolment alone cannot entirely prevent this (Zhengzhong, 2005). The rapid increase in coverage of the scheme reduced adverse selection. There is consistent evidence of adverse selection in the URBMI due to its lower coverage rate and challenges in identifying members of the urban informal sector (Chen & Yan, 2012; W. C.-M. Yip et al., 2012). Income, health status, and educational attainment of the head-of-household are the greatest determinants of URBMI enrollment for those who are eligible. This suggests that greater subsidies may be an important step towards increasing URBMI enrollment (Chen & Yan, 2012). m Figure 3. Health Insurance Coverage in China as Share of National Population, % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Urban Employee Basic Health Insurance Coverage Urban Resident Basic Health Insurance Coverage New Cooperative Medical Scheme Coverage Total Coverage Source: Tang et al., 2012 JOINT LEARNING NETWORK 7

10 3. Financing and Subsidization a. Health spending and subsidies China s health spending has been expanding at one of the highest rates in world history. The government s expenditure on health (GGHE) per capita grew by 640% in absolute terms between 2000 and 2011 (see Figure 4). While much of this is due to dramatic economic growth, it also reflects increased political commitment to health. China s GGHE as a share of GDP increased by 71% between 2000 and 2011 to reach 2.9%, on par with its regional peers (World Health Organization, 2013). Central and local governments provide a partial subsidy for the NCMS and URBMI, amounting to 85% of NCMS contributions in 2011 (Zheng, 2012) and 61% of URBMI contributions in 2009 (Zheng, 2012). Poorer western and central provinces receive the greatest subsidy support from the central government, at 50% of premium contributions. This support has likely been critical to achieving similar participation rates between richer and poorer provinces, yet NCMS funds per capita are still about 50% greater in richer Eastern provinces compared to poorer Western provinces (Zhengzhong, 2005) and the transfers have yet to significantly improve the equity of health spending (Zhang, Yi, & Rozelle, 2010). Every year, the State Council sets the financing standard for China s health insurance schemes. The subsidies have increased every year as a proportion of the total premium, but the growth rate of the subsidy is not stable and its sustainability is therefore in question (Zheng, 2012). Additionally, there is a big difference in premium revenue between the programs for the informal sector (NCMS and URBMI) and that for the formal sector (UEBMI); even after $62.5 billion additional funding for NCMS and URBMI subsidies in , premium revenue per person in the UEBMI is 7-8 times more per beneficiary than in the NCMS and URBMI (W. C.-M. Yip et al., 2012). Figure 4. Health expenditure trends, USD per capita 300% 250% 200% 150% 100% 50% 0% GGHE per capita OOP per capita GGHE as % of GDP b. Contribution amount Source: World Health Organization, 2013 NCMS and URBMI contributions are flat and determined at the local level (county and county/city, respectively) each year within the standards set forth each year by the Ministry of Human Resources and Social Security. Premiums vary widely, largely due to the wealth of the region (You & Kobayashi, 2009). Box 1 details a program that covers premiums for the poor. In 2012, NCMS annual individual contributions ranged from 20 RMB (3.24 USD) to 60 RMB (9.72 USD) (Yuankai, 2013). URBMI rates are stipulated to be higher than the contributions for the NCMS but lower than those of the UEBMI, with additional minimums determined by the wealth of the province (Lin et al., 2009). The average annual individual contribution in the pilots was 236 RMB (38.27 USD) for adults and 97 RMB (15.73 USD) for children (Liu & Zhao, 2012). 8 JOINT LEARNING NETWORK

11 Box 1. Medical Assistance Program Provides Supplemental Support to Poor Asupplemental Medical Assistance program pays the premiums on behalf of the country s poor (locally determined criteria). This program also covers the beneficiary s share of expenses for poor households, disadvantaged people with no relatives or ability to work, and non-poor households that face catastrophic medical expenses. Members of the first two groups are identified through a Bureau of Civil Affairs household survey while the third is self-reported and verified by the Bureau of Civil Affairs and a village/neighborhood committee (Liang & Langenbrunner, 2013). c. Contribution collection Local governments are responsible for designing and implementing annual revenue collection for both the URBMI and NCMS. Collection for the NCMS often uses large-scale social mobilization and household visits (You & Kobayashi, 2009). While effective, these methods are costly, contributing to administration costs as measured by field investigations of about 12% 20% in early pilot counties. These costs are especially high in poorer Western counties that may have greater capacity needs (Zhengzhong, 2005). m 4. Benefit Package Core package requirements for the NCMS and URBMI are minimal, providing inpatient and recently added limited outpatient coverage. The National Development and Reform Commission outlines a minimum benefit package for which the local Development and Reform Commission determines the fee schedule (Chen, 2013; Liang & Langenbrunner, 2013). The minimum package includes essential drugs and services, including laboratory testing, which are fully covered (Liang & Langenbrunner, 2013). Local governments are encouraged to supplement benefits, resulting in benefits packages that are highly varied between localities. Both schemes are mandated to reimburse 70% of inpatient expenses, though studies have found effective reimbursement rates in 2011 averaged only 42% in the URBMI and less than 50% in the NCMS (Liang & Langenbrunner, 2013; Yuankai, 2013). Reimbursement rates are typically higher in wealthier localities and lower in poorer localities (Sussmuth-Dyckerhoff & Wang, 2010). Outpatient benefits are limited and new to both the NCMS and URBMI. The NCMS in 2010 began including coverage of outpatient services for 22 priority chronic and fatal diseases. In 2012, the government directed both the NCMS and URBMI to introduce a cap on out-of-pocket expenses for outpatient services. The URBMI is also working to introduce coverage for specific outpatient services beyond this cap (Zheng, 2012). While reimbursement of small outpatient procedures in the initial roll-out was not viewed as important in avoiding catastrophic expenditures and presented an administrative burden, some NCMS schemes that offered reimbursement of outpatient costs noticed increased participation (Zhengzhong, 2005). By offering a benefits package that initially did not include outpatient coverage, the government could rapidly expand enrollment while restricting the initial financial burden associated with coverage expansion. Reimbursement ceilings and major exclusions are determined at the local/municipal level. For example, many JOINT LEARNING NETWORK 9

12 counties cap the annual reimbursement rate for inpatient care in the NCMS at 8 10 times the local annual average income of farmers, though this has been cited as inadequate to prevent catastrophic expenditures. Most schemes exclude high-cost procedures such as CT and MRI scans (Liang & Langenbrunner, 2013). Efforts are ongoing to increase the depth and breadth of coverage for both schemes. The central government has recently introduced and expanded outpatient benefits, and increased pressure to enforce the 70% reimbursement mandate (W. C.-M. Yip et al., 2012). These initiatives may help control the rising cost of healthcare by encouraging the use of preventive services, but have also pushed some counties into debt (Zheng, 2012). Initially, 63% of NCMS programs included a household health savings account to collect and save a portion of household contributions to cover outpatient services and incentivize participation. These small health savings accounts (approximately Y20, or USD 3) were insufficient to cover more than one outpatient visit and did not impact participation rates (Zhengzhong, 2005) or control expenditure, and have largely been abandoned (Wagstaff, Lindelow, Wang, & Shuo, 2009). m 5. Information and Awareness Most URBMI outreach takes place through local governments community administrative offices and community health centers (Lin et al., 2009). Intense local advertisement campaigns (Liang & Langenbrunner, 2013), as well as intensive tactics like door-to-door visits (Wu et al., 2006), have played a large role in increasing enrollment for the NCMS. While effective, these methods are costly (Zhengzhong, 2005), as discussed in the Contribution Collection section. Because of the incentive structures for local governments, these campaigns focus on encouraging enrollment, rather than benefit awareness. Despite intensive campaigns and high enrollment rates, a 2009 study found that 78% of rural residents were unfamiliar with the NCMS regulations in their counties (Pan, Zhang, Xu, Huang, & Zhao, 2009). m 10 JOINT LEARNING NETWORK

13 6. Lessons Learned The mix of tax-based financing and social insurance has worked well for China, a country with a large, diverse population and a large geographical area, a strong central government, and decentralized system of healthcare provision. The use of separate schemes to target urban and rural informal populations has aided the rapid expansion of insurance coverage in a country with a large and diverse informal population. China s system of providing central guidance to locally managed pools has been successful in expanding coverage, relying on the strong central government s ability to harmonize national and subnational priorities. However, this has resulted in highly fragmented risk pools. The rapid expansion of a limited benefits package to the informal sector has led to strong public support for reducing the disparities between the health insurance schemes for formal and informal populations, which limit the system s effectiveness, particularly for poorer populations. Strong political commitment from a technocratic government has been instrumental. Rapid economic growth has made subsidies to the informal sector affordable and politically palatable. The pilots of the NCMS, URBMI, and all new initiatives before scale-up are important steps to test proof of concept and political and administrative viability (see next page). m JOINT LEARNING NETWORK 11

14 NCMS Pilot ( ) The central government, concerned about the misuse of funds in thousands of rural counties, issued clear regulations on the management of insurance funds (World Bank, 2010). It also mandated that enrollment be voluntary and family-based and that benefit packages cover catastrophic illnesses. The initial premium was shared equally between the central and local governments and individuals (Yip et al., 2012). Central fiscal transfers to poorer provinces helped support similar participation rates between counties with vastly different per-capita incomes. Although participation rates were around 70% for most pilots, adverse selection was observed (Wang, Zhang, Yip, & Hsiao, 2006; Zhengzhong, 2005). Initial pilots, which reimbursed an average of 25% of inpatient expenditures, experienced high surpluses and limited financial protection for beneficiaries, suggesting the need to expand benefit packages. There was also an increase in hospitalizations for less severe conditions, indicating a shift on the part of providers towards covered inpatient services. This likely contributed to the decision to include outpatient services in the mandatory package once the NCMS reached essentially universal coverage (Zhengzhong, 2005). Counties initially struggled to design and implement provider reimbursement policies, suggesting that reimbursement is an area in need of more specific training and/ or guidance from the central government (Zhengzhong, 2005). A few counties, mainly in Zhejiang, Jiangshu, and Fujian provinces, contracted commercial insurance organizations to manage and in some cases handle claim settlement. A comparison of two counties contracting with outside organizations and one managed by the NCMS Office over the course of one year saw greater surpluses, lower reimbursement rates, and lower administrative costs in the counties with outside contracts (Zhengzhong, 2005). URBMI Pilots ( ) The URBMI piloted in 88 cities, reaching 180 million people in its first year. The pilots generally built on the infrastructure in place for the UEBMI, utilizing the same management structures, but requiring greater administrative attention due to individual enrollment. The initial pilots focused on reaching the elderly and children, and benefit packages were intentionally limited to first ensure the sustainability of the schemes before making incremental expansions (World Bank, 2010). The government achieved its goal of reaching 50% of cities in 2008 and 100% in During the initial pilots, those with chronic diseases were more likely to enroll, indicating adverse selection (Lin, Liu, & Chen, 2009). m 12 JOINT LEARNING NETWORK

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