Table 3.

Health financing arrangements

	China	Hong Kong	Taiwan
Health insurance coverage	Urban social health insurance (BMI) covers employees in the formal sector. Participation is mandatory but not strictly enforced. Dependants, unemployed, and informal sector workers are excluded. Rural health insurance (NCMS) is voluntary. Geographical coverage remains limited but is being expanded rapidly. In both urban and rural areas, private complementary insurance is available to increase the level of maximum benefit. For those outside formal health insurance schemes, government subsidies to health-care providers provide a form of implicit insurance. However, due to the declining share of these subsidies in overall financing, the implied price subsidy is limited	Through a tax-financed system, all Hong Kong residents are entitled to full, universal access to public hospitals and clinics for a minimal copayment, where 95% of total bed-days and 15–20% of ambulatory episodes are provided. Supplementary private insurance, whether provided by employers or self-purchased, is generally enjoyed by the middle and upper socioeconomic strata, but such coverage is usually inadequate in the case of serious or chronic illnesses, which are predominantly provided for in the public sector	National Health Insurance (NHI), a compulsory social insurance program implemented in 1995, expanded the insurance coverage rate from 57% to 92% by the end of 1995 and 99% in 2004
Risk pool structure/fragmentation	Risk pooling in BMI is at city-level (country or municipality); in NCMS, it is at county level. In neither case is there risk-equalization across risk pools, although there are targeted central government subsidies in the NCMS	The tax-financed public sector covers the entire population where private services are funded by household out-of-pocket payments and mostly employer-provided insurance policies	NHI operates on a common risk pool
Government subsidies to health insurance	In BMI, government pays contributions for government employees, and also allocates some funds to cover deficits and some extra benefits for civil servants. The NCMS is partly financed by central and local government. Some or all of funds from the new medical assistance (MA) scheme may be channeled through existing health insurance schemes	N/A	Government subsidizes 10% of the premium for the labor workers and 100% for the low-income households, veterans, and military service personnel
Health insurance contributions	In BMI, both employers and employees make contributions that are a fixed percentage of income. In many localities, individuals can make voluntary payment for complementary coverage. Part of contributions go into a personal MSA, and the other part to a social pooling account. In NCMS, individual contributions are fixed for all beneficiaries within risk pools, but vary across risk pools (counties). MSA model is used in some counties	Public sector services are funded from government general revenue. Private supplementary schemes such as employer-provided medical benefits for private care typically form part of the remuneration package whereas individually purchased insurance premiums vary a great deal and such policies typically exclude pre-existing medical conditions	Current contribution rate: 4.55% (of wage income); the relative shares borne by employees and employers depend on the category (currently, the insured is classified into 6 major categories) that the insured falls into. For instance, for labor workers, employers, employees, and government pay for 60%, 30%, and 10%, respectively; the self-employed bear 100% of the premium
Benefits package and copayments	BMI covers a certain percentage of eligible expenditures (after deductible), up to a ceiling. In most localities, MSAs are used to finance outpatient care and social pooling account for inpatient care. In other localities, social pooling account is only accessed when personal account is exhausted. Eligible expenditures and benefit caps vary across risk pools. NCMS arrangements are similar. However, due to lower level of financing, the range of eligible services is considerably more limited, and co-insurance rates are often high. As with the BMI, benefits packages varies across risk pools	The public sector provides the full range of health-care services with minimal copayments, amounting to 3–5% of total bed-day costs and about 10–20% of ambulatory episode costs. All pharmaceuticals are included and are not separately billed	NHI provides a comprehensive benefit package that covers preventive and medical services, prescription drugs, dental services, Chinese medicine, and home nurse visits. It also incorporates a copayment of U.S.$5 for each outpatient visit to clinics, U.S. $8 for each visit to hospital outpatient clinics. There is a higher copayment for hospital outpatient visits without a referral by a primary care physician. For inpatient services, the coinsurance rate is 10%, but the total payable amount is capped at 6% for each admission and 10% for each year of the average national per capita income. People with catastrophic illness, children under the age of 6, and users of maternal and preventive services, as well as low-income households, are exempted from the copayment requirement
Special arrangements for the poor (exemptions, subsidized insurance, etc.)	The new medical assistance program is intended to provide benefits to the poorest segments of the population, and to those facing ‘very high’ health expenditures. Program details and implementation, including the extent to which the MA scheme is integrated with health insurance schemes, varies considerably across localities. In addition, some localities require hospitals to provide health care to the poor for free or at reduced prices, but this requirement is often not enforced	Free (i.e. the usually minimal copayments are waived) public health-care services for welfare (namely, Comprehensive Social Security Assistance) recipients	The low-income group whose premium is fully subsidized by the government is also exempted from point-of-care copayments

BMI, basic medical insurance; CMS, cooperative medical system; MA, medical assistance; MSAs, medical savings accounts; NCMS, new cooperative medical system; NHI, National Health Insurance.