China’s richest cities say medical costs are bleeding dry health insurance funds

A number of major Chinese cities have reported worrisome deficits in their government-run health insurance funds, as rising medical costs and a rapidly ageing population put greater strain on the system.

As a result, some analysts warn that the trend could become unsustainable in the long run, while significant reforms are needed to restore financial balance.

In 2024, Beijing and Tianjin reported big shortfalls in their urban and rural residents’ basic medical insurance (BMI) funds.

Beijing’s fund faced a shortfall of 525.6 million yuan (US$72 million), while Tianjin’s deficit reached 1.36 billion yuan, according to figures from the municipal governments.

China’s major economic powerhouses, including Shandong, Henan and Shanghai, the wealthiest city in the country, have also reported significant deficits in recent years.

The insurance shortfall has become a recurring issue among China’s metropolitan regions, exacerbated by rising healthcare costs, longer lifespans, and consequently, increased spending on treatment for chronic diseases.

Unlike mandatory employee insurance, residents’ BMI scheme is voluntary. As premiums rise, many – especially those in low-income groups or rural areas, or those who are generally healthier – may be reluctant to participate and opt out of the system, further straining the fund’s sustainability.