The Urban-Rural Resident Basic Medical Insurance (URRBMI) has improved healthcare equity across China; however, it continues to face persistent challenges related to sustainability, fragmentation, and weak inter-sectoral coordination. This study examines the existing literature to analyse the current status, challenges, and development opportunities of the URRBMI scheme in terms of equity and governance mechanisms. We finds that the URRBMI has significantly enhanced residents' sense of social equity and their utilisation of medical services, thereby improving health outcomes. Nevertheless, the scheme still faces multiple challenges, including an excessive focus on clinical treatment at the expense of public health, sustainability pressures on the medical insurance fund (evidenced by continuous growth in premiums and fiscal subsidies), and structural disparities in healthcare accessibility for vulnerable groups. This study also explores the critical role of health governance within the medical insurance system, highlighting positive experiences such as the central government's prioritisation of support and flexible local implementation, while also identifying significant issues like insufficient inter-departmental coordination. To establish a more equitable, efficient, and sustainable medical security system in China, it is imperative to continuously deepen reforms, effectively integrate public health services into the medical insurance framework, ensure the financial stability of the fund, and genuinely strengthen cross-departmental coordination and collaboration.

Keywords: urban-rural resident basic medical insurance, Health Equity, Social Medicine, China.

Система объединённого базового медицинского страхования городского и сельского населения Китая (URRBMI) внесла существенный вклад в повышение справедливости в сфере здравоохранения, однако продолжает сталкиваться с проблемами устойчивости, фрагментации и слабой межсекторальной координации. Настоящее исследование представляет собой обзор существующей литературы с целью анализа текущего состояния, вызовов и возможностей развития URRBMI с акцентом на механизмы управления и обеспечение справедливости. Установлено, что URRBMI значительно усилила чувство социальной защищённости населения и повысила уровень использования медицинских услуг, что положительно сказалось на состоянии общественного здоровья. Вместе с тем сохраняются проблемы, включая чрезмерное внимание к клиническому лечению в ущерб профилактическому здравоохранению, нарастающее давление на страховой фонд (в форме роста страховых взносов и бюджетных субсидий), а также структурное неравенство в доступе к медицинским услугам для уязвимых групп. В работе подчёркивается роль государственного управления в функционировании страховой системы: при наличии положительных примеров (приоритетная поддержка со стороны центральных органов, гибкая реализация на местах) сохраняется недостаточная координация между секторами. Для формирования более справедливой, эффективной и устойчивой системы медицинского обеспечения необходимо углубление реформ, интеграция общественного здравоохранения в страховую модель, обеспечение финансовой стабильности фонда и укрепление межведомственного взаимодействия.

Ключевые слова: базовое медицинское страхование городских и сельских жителей, равенство в области здравоохранения, социальная медицина, Китай.

1 Introduction

Over the past few decades, China's healthcare system has undergone profound changes, with the core objective of providing universal and equitable basic healthcare services to its vast population. The country's unique demographic shifts have underscored the urgency of this endeavour, including rapid population ageing and evolving disease burdens, which have placed enormous pressure on healthcare resources and fiscal sustainability. Historically, China's health insurance system was fragmented, with separate plans established for urban employees (Urban Employee Basic Medical Insurance, UEBMI), urban residents (Urban Resident Basic Medical Insurance, URBMI), and rural residents (New Rural Cooperative Medical Scheme, NRCMS). This fragmentation resulted in disparities in coverage, benefits, and financial protection across different populations and regions. Recognising these challenges, the Chinese government embarked on a significant reform journey to integrate these disparate schemes. A key step was the establishment of the Urban and Rural Residents' Basic Medical Insurance (URRBMI) programme, which merged UEBMI and NRCMS to achieve greater equity and efficiency in healthcare provision. This integration holds considerable political significance, reflecting the government's commitment to social justice and its efforts to bridge the urban-rural divide, thereby promoting social harmony and stability. The establishment and ongoing enhancement of the integrated urban-rural basic medical insurance system represent a major milestone in China's healthcare reform. The system, primarily composed of UEBMI and URRBMI, has successfully expanded healthcare coverage, now reaching approximately 95 % of the total population [1, 2].

However, in the development of this large-scale and complex system, issues of fairness and challenges to the effectiveness of governance mechanisms remain prominent. Ensuring the accessibility, efficient utilisation, and financial security of healthcare services, while continuously optimising administrative management and policy frameworks, is crucial for the long-term healthy development of China's healthcare industry. From a social medicine perspective, we emphasise the interplay between insurance governance and population health equity. This study systematically synthesises existing literature to conduct an in-depth analysis of the significant issues and potential opportunities facing China's urban and rural basic medical insurance system, viewed through the lenses of equity and governance mechanisms. Drawing insights from recent academic research, it provides a comprehensive overview of the system's developmental trajectory, achievements, challenges encountered, and potential directions for future policy and research. This study particularly focuses on the unique context of China's public policy, aiming to offer more practical and actionable recommendations for policymakers.

2 Results

2.1 Medical Insurance Integration on Social Equity and Healthcare Use

The implementation of the Urban and Rural Residents' Basic Medical Insurance (URRBMI) has had a significant impact on social equity and healthcare service utilisation patterns across the country. Research indicates that the URRBMI has significantly enhanced residents' perceptions of social equity. This improvement in perceptions of equity is closely associated with higher evaluations of overall social fairness and increased public well-being. The mechanisms through which the URRBMI promotes equity are multifaceted, primarily achieved by strengthening social capital, improving satisfaction with income distribution, and reducing out-of-pocket medical expenses. These positive effects are particularly pronounced among vulnerable groups, including low-income individuals, low-skilled workers, and residents in central and western China [3].

In addition to promoting fairness, the URRBMI has profoundly reshaped patterns of healthcare service utilization patterns. Research indicates its subtle impacts: outpatient service utilization rates have decreased, while inpatient service utilization rates have increased. This shift suggests that healthcare-seeking behavior may be changing, potentially indicating that individuals are more inclined to choose inpatient treatment when needed, supported by the financial security provided by insurance coverage. The URRBMI has improved healthcare accessibility for the economically disadvantaged; however, comprehensive equity remains elusive [4]. Furthermore, healthcare reform has significantly enhanced the health status of both urban and rural residents. Urban residents have reported an improved self-assessed health status, while rural residents have experienced enhancements in both self-assessed health status and a reduction in the number of diagnosed diseases. Reforms have also contributed to narrowing gaps related to difficulties with activities of daily living (ADL). Nevertheless, a concerning trend of worsening ADL has been observed, particularly among the elderly and the working-age population. This highlights the ongoing necessity of implementing targeted interventions for these specific groups, as well as the urgent need for a more equitable distribution of healthcare resources and a focus on promoting healthy behaviors [5].

2.2 Challenges and Equity Gaps in Medical Insurance System

Despite significant progress in achieving near-universal health insurance coverage, China's urban and rural basic medical insurance system continues to face internal challenges and structural disparities that constrain its optimal operation and the attainment of its overall goals of health equity. A key limitation of the current system is its excessive focus on hospitals and clinical treatment, often at the expense of public health investment. This treatment-centric healthcare service model may lead to overall inefficiency within the healthcare system and undermine broader public health objectives, as disease prevention and health promotion are typically more cost-effective than treating existing illnesses. The current payment mechanism, which primarily relies on a fee-for-service model, further incentivises hospitals and doctors to prioritise treatment services while neglecting preventive care and public health initiatives, which are mainly funded by government subsidies rather than the insurance system.

Financial sustainability faces significant challenges. Although the Urban-Rural Resident Basic Medical Insurance (URRBMI) has expanded its coverage, residents' premiums have increased substantially on average each year over the past two decades. This rapid rise in premiums may diminish residents' willingness to participate in insurance programmes, particularly among economically disadvantaged groups. Concurrently, government subsidies for the URRBMI have also risen significantly, placing considerable fiscal pressure on local governments. The growth rate of these subsidies has outstripped the growth rate of local government fiscal revenues, raising concerns about the long-term financial viability of the system and necessitating the establishment of a more stable and sustainable fiscal subsidy mechanism [1].

In addition, structural disparities and challenges in the allocation of medical resources remain prominent in the medium to long term. Although the integration of insurance has had a positive impact, vulnerable groups—such as the elderly, the working population, low-income individuals, low-skilled workers, and residents of central and western regions—continue to face significant barriers to accessing equitable medical services. Furthermore, some health indicators, such as difficulties in activities of daily living (ADL), are exhibiting a deteriorating trend [3,5]. These disparities underscore the necessity of implementing more targeted interventions and reassessing healthcare resource allocation strategies to ensure that the benefits of the healthcare insurance system are distributed equitably across all social groups.

2.3 Medical Insurance Governance and Policy Optimisation

The effective operation and sustainable development of China's urban and rural basic medical insurance system are closely linked to the establishment of robust health governance mechanisms. Governance plays a critical role in the design, implementation, and overall performance of the medical insurance system. In China, several supportive governance practices have been identified that have significantly promoted the advancement of the medical insurance system. These practices include the central government's prioritisation of healthcare system development, the combination of the government's strong commitment and an effective hierarchical administrative structure, clear policy objectives that enable localities to make adaptive adjustments based on specific circumstances, and a steadfast commitment to evidence-based decision-making. Collectively, these practices have driven the rapid expansion of medical insurance coverage and the smooth implementation of various reforms.

Insufficient coordination among various government departments poses a significant obstacle to achieving optimal governance [6]. The National Health Security Administration (NHSA) was established in 2018 to centralise and streamline medical insurance management; however, it continues to encounter challenges in fully integrating functions that were previously dispersed across multiple ministries, such as health, human resources, and finance. The lack of effective inter-departmental coordination can lead to policy fragmentation and inefficient resource allocation, ultimately impeding the overall coordinated development of the healthcare system [1, 6].

In addition, discrepancies in the interpretation and implementation of policies between central and local authorities often result in inconsistent enforcement and fragmented outcomes across regions. Local fiscal disparities further exacerbate governance challenges, as economically underdeveloped regions struggle to meet the growing demands for premiums and subsidies, leading to uneven welfare packages and varying quality of healthcare services. The decentralised nature of healthcare administration, coupled with the absence of robust interdepartmental coordination mechanisms, frequently results in disjointed efforts and suboptimal policy outcomes. For example, the disconnect between medical insurance and public health functions, where public health primarily relies on government subsidies rather than being effectively integrated into the medical insurance system, exemplifies this challenge.

3 Discussion

Based on the above results, we propose the following key policy recommendations to strengthen the governance of China's medical insurance system. First, public health and medical services must be organically integrated into the insurance framework. This means shifting the focus from purely clinical treatment to a more comprehensive health management model that promotes disease prevention and health enhancement [7]. Furthermore, establishing a stable and sustainable financial subsidy mechanism is crucial for the long-term viability of basic medical insurance in both urban and rural areas, which will effectively alleviate the financial burden on residents and local governments. Strengthening coordination mechanisms and developing an integrated policy framework to address interdepartmental collaboration issues is also essential for ensuring a more coordinated and efficient medical system [7, 8].

First, it is crucial to shift from a treatment-centric model to a comprehensive health management model. This transition requires the integration of public health services into the medical insurance framework. Pilot projects can be used to reallocate insurance funds towards preventive care and health education, thereby demonstrating long-term benefits. These recommendations are intended to be actionable and implementable through various mechanisms, including pilot projects, specialized funding programmers, and dedicated coordination strategies. Transitioning from a treatment-centric model to a comprehensive health management model necessitates integrating public health services into the medical insurance framework. Reallocating insurance funds towards preventive care and health education through pilot projects can enhance feasibility and demonstrate long-term cost-effectiveness. Establishing clear performance indicators for primary healthcare facilities concerning preventive services, along with providing financial incentives to achieve these goals, can drive this transformation.

Secondly, it is essential to establish a diversified and stable financing mechanism. In addition to existing government subsidies and individual premiums, exploring innovative financing models is crucial for long-term sustainability. This includes establishing a robust regulatory framework to encourage commercial health insurance as a supplementary layer, which can be achieved through measures such as tax incentives. Consideration should also be given to establishing a National Medical Insurance Stability Fund with varied funding sources, and implementing a transparent, dynamic premium adjustment mechanism linked to economic development and income growth, while providing hardship exemptions for vulnerable groups. These new financing models could be piloted in economically developed regions.

Strengthening interdepartmental coordination and providing targeted support for vulnerable groups is essential. Overcoming policy fragmentation necessitates the establishment of a high-level, permanent interdepartmental healthcare coordination committee. This committee should comprise representatives from the health, medical insurance, finance, civil affairs, and human resources departments, who will be responsible for joint policy formulation, implementation oversight, and information sharing. Establishing shared databases and joint training programmers can enhance coordination efficiency, while pilot projects can test integrated service delivery models at the local level, particularly in areas experiencing significant interdepartmental friction. Establishing a national digital platform based on comprehensive data to identify vulnerable groups is a feasible step. For these groups, implementing a tiered reimbursement policy—featuring higher reimbursement rates and lower deductibles—can immediately alleviate their economic burden. Expanding medical assistance programmers to ensure adequate coverage of significant medical expenses is crucial. Special funds should be allocated to support primary healthcare institutions and attract qualified medical professionals to work in underdeveloped rural and remote areas through targeted recruitment plans and enhanced career development opportunities.

Finally, it is essential to promote value-based payment reforms. For instance, accelerating the transition of all medical institutions from a fee-for-service model to a value-based payment model (such as Diagnosis-Related Groups (DRGs) and Diagnosis-Related Groups (DIPs)) is a crucial reform. This necessitates the establishment of a robust quality assessment framework and a hospital performance disclosure mechanism to ensure accountability. Exploring bundled payment and outcome-based payment systems for chronic diseases can further incentivise the integration of healthcare services and enhance cost-effectiveness. These models can be piloted in selected hospitals or regions to gather evidence to support large-scale implementation and refine relevant mechanisms prior to nationwide rollout. By implementing these specific and feasible policy measures, China can sustainably advance the development of its healthcare system, progressing towards a more equitable, efficient, and sustainable future that ultimately benefits all citizens.

Limitations and Future Directions

First, although our review is relatively comprehensive, it is primarily based on secondary literature. Future research could enhance our understanding of equity dynamics through comparative case studies across provinces or by integrating health outcomes derived from surveys. Second, this is a qualitative study, and we plan to collect additional data in the future to support our conclusions. Finally, this study primarily focuses on the analysis of China's medical insurance policies, and its applicability to other regions may be limited. In future research, we will conduct analyses and comparisons across different countries and regions to broaden the scope of application.

4 Conclusion

The Urban and Rural Residents' Basic Medical Insurance (URRBMI) system in China has achieved significant success in nearly attaining universal coverage and improving access to public healthcare services. The integration of urban and rural medical insurance has effectively enhanced social equity, optimised the allocation of medical resources, and consequently improved the health status of numerous residents. However, the system still faces several challenges, including an overemphasis on clinical treatment at the expense of public health, pressures regarding financial sustainability, and persistent disparities in healthcare access and health outcomes among vulnerable groups. Effective governance mechanisms, such as the central government's firm commitment and flexible local implementation, have played a crucial role in the system's development; however, interdepartmental collaboration still requires strengthening.

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