By the end of 2023, approximately 1.334 billion people were covered by basic health insurance. But having an insurance card and receiving care are two distinct realities. Migrants can encounter less favorable reimbursements depending on their scheme, their place of enrollment, and local regulations. China has built the largest social protection system in history: it has not yet resolved the question of who it truly belongs to.
The Essentials
- By the end of 2023, approximately 1.334 billion people fell under two major basic schemes: employees and residents. Actual coverage depends notably on employment status and can be administered at the workplace or, depending on circumstances, at the place of registration.
- Migrant workers without urban hukou pay into local funds but their benefits can be less favorable depending on the scheme and place of enrollment.
- China had approximately 297.5 million migrant workers in 2023.
- The rules combine place of employment, enrollment status, and transfer mechanisms, rather than exclusive attachment to hukou.
- Reforms to the hukou have been underway since 2014, but they are progressing slowly in major metropolitan areas, where demographic pressure is greatest.
The World’s Largest System and Its Tiers
To understand what is happening in China, one must first measure the scale of what has been accomplished. At the beginning of the 2000s, fewer than 30% of China’s population had health coverage. In 2023, this rate exceeds 95%. It is one of the most rapid expansions of social protection in modern history.
The basic health insurance system rests primarily on two schemes: employees and urban and rural residents. The first covers formal urban employees and their employers. The second, an urban residents scheme for the non-employed that began in 2007, was integrated into the unified urban-rural residents scheme from 2016 onward. The third, more recent, attempts to cover workers in the informal economy. These schemes coexist but are not equivalent: contribution levels, reimbursement rates, and coverage ceilings can differ by territory and between the two basic schemes, while the urban and rural residents schemes have been integrated.
This tiered architecture reflects the speed at which the country expanded coverage and the difficulty of financing a system uniformly across a territory the size of a continent. The wealthiest provinces finance well-funded funds; the poorest provinces finance funds under strain. The structural difficulty appears when a poor worker from a poor province comes to work in a wealthy metropolis: the scheme applicable to him depends on his place of registration, not his place of residence.
The Hukou, or How an Identity Document Distributes Health
The hukou is the residence registration system established in 1958. Each citizen is attached to a locality and category, rural or urban. This document determines access to school, public housing, and, in our subject, to local health protection.
A worker born in Hunan who moves to Shenzhen keeps his Hunan hukou. The applicable scheme depends primarily on his employment status and enrollment, not exclusively on his place of registration. Access to local reimbursement is possible through interprovincial direct settlement, but the benefits that apply remain linked to the scheme and place of enrollment.
This asymmetry is not trivial. China has approximately 290 to 300 million internal migrant workers, a population representing one-fifth of the country’s total population. These are construction workers, delivery couriers, cleaning staff, home care workers who built China’s metropolitan cities. They live there, sometimes for decades. They contribute.
And the social protection they receive can be less favorable depending on the scheme and affiliation, without uniformly constituting second-class protection.
Contributions and benefits are tied to applicable enrollment, with transfer procedures between locations, often toward regions without corresponding medical infrastructure. Returning to one’s native village to consult a specialist is not a realistic option for a worker whose economic life is in Shenzhen or Guangzhou. Many forgo care, or pay for it out of pocket.
The Cost of Nominal Coverage
The difference between nominal coverage and effective coverage is measured first in direct out-of-pocket household health spending. In China, the share of health expenses paid directly by patients, without reimbursement, is 32.17% of current health spending in 2023, slightly above the average of 31.22% for upper-middle-income countries according to World Bank data from the World Health Organization’s Global Health Expenditure Database. For some migrants, reimbursement rates and access to health facilities can be less favorable depending on the scheme and enrollment.
There is a direct consequence on health behaviors. Local studies conducted notably in Beijing and Chengdu document barriers to health care access among migrant workers, particularly foregone preventive care. Nominal coverage, paradoxically, can mask a problem of under-consumption of medical services.
The question of forgoing care among populations structurally excluded from national systems is not unique to China. In the MENA region, health workers trained for abroad create a similar shortage of access for populations least integrated into local systems. The mechanism differs, the result converges: an insurance card does not guarantee access to care.
The additional difficulty in China lies in the geography of care. Tertiary-level hospitals, capable of treating complex pathologies, are concentrated in major cities. Migrants work there but their access can be limited by enrollment, referral, and reimbursement rules. Those who return to their regions of origin to seek treatment find less equipped facilities and fewer practitioners. They find themselves caught between two systems without fully belonging to either.
Ongoing Reforms and Their Real Limits
China has recognized the problem. Since 2014, hukou reforms have been undertaken in several small and medium-sized cities, with liberalized access to urban resident status. The stated objective is to enable long-term migrants to transfer their hukou to their actual city of residence, and thus to access full local rights.
These reforms have produced results in cities of fewer than three million inhabitants. According to Chinese authorities, several tens of millions of workers have been able to change status since 2014. But the cities that concentrate the most migrants—Beijing, Shanghai, Shenzhen, Guangzhou—are precisely those where access conditions for hukou remain most restrictive. Municipal authorities fear unsustainable pressure on public services, school housing, and local health insurance funds if they widely open status access.
There is a structural tension that partial reforms do not dissolve. Cities that concentrate migrants often maintain restrictive access conditions for hukou. Cities that grant these rights lack the means to finance them properly. The central government and local authorities share financial responsibility, with the center providing transfers and localities contributing to financing, but there is no complete national equalization of funds.
Biometric data already widens health insurance inequalities in other national systems, by stratifying access according to criteria beyond individuals’ control. In China, the stratification tool is administrative rather than technological: but the logic is the same. Formal rights exist; their actual exercise depends on a variable the insured person does not control.
A Challenge Other Decentralized Nations Have Faced
Other countries have had to guarantee effective health coverage across vast territory, with deeply unequal fiscal capacities between regions and mobile populations that no longer correspond to inherited administrative borders.
India faces comparable tension between states, whose health financing capacities vary in a ratio of one to five. Brazil built its Unified Health System on the principle of universality but struggles with deep disparities between northeastern and southern states. The United States, meanwhile, for decades tied access to care to employment, creating populations of functional exclusion despite formal mechanisms.
The system exceeded 95% nominal coverage, but the scale of a population with partial rights is not established by the official data consulted. The declared universality of a system does not guarantee its actual universality when rights remain attached to an administrative category rather than actual presence on a territory.
The horizon set by certain Chinese provinces is that of complete rights portability between regions by 2030. In 2022, China strengthened interprovincial direct settlement of health insurance within a national framework. Preliminary results would be encouraging according to official reports, but a large-scale independent evaluation remains to be produced.
Rights Portability, the Only Mechanism That Matters
The model to be built is known: it assumes that health rights are attached to the person and portable across the entire national territory, that financial transfers between local funds are automatic and balanced by a national equalization fund, and that health facilities are accessible regardless of the patient’s administrative status.
Portability via interprovincial direct settlement exists largely, while complete national financial pooling and perfect equality of access remain distinct issues. The first is partially advanced by hukou reforms. The second remains limited by the resistance of the best-funded local funds. The third runs up against the geographic concentration of technical capacity.
Positive signs do exist, however. China’s telemedicine program, one of the most developed in the world with several hundreds of millions of consultations per year, is beginning to partially circumvent the geographic constraint. A migrant in Shenzhen can consult a specialist at a hospital in his province of origin without traveling, which reduces the cost of forgoing care for conditions not requiring technical procedures. This is a beginning of a response, not a complete solution.
China has the administrative tool, declared political will, and technological capacity that enable it to consider complete rights portability. The outstanding institutional question concerns the distribution of the burden: which authority finances the care of workers who enrich a city without being recognized as full members. This redistributive design choice will influence access to care for migrant workers in years to come.
Health financing reform is never merely technical. It always says something about how a society defines its members. In China as elsewhere, institutional legacy weighs heavily on actual redistribution: formal rights do not erase structural inequalities inscribed in the architecture of systems.
Sources
- World Bank, China Overview, Health Equity
- China Healthcare Reform Commission, Report on Health System Reform (2024)
- World Health Organization, Health Equity and Universal Coverage, China data (WHO Global Health Observatory)
- National Health Commission of China, Pilot Program for Health Rights Portability (2022)
