# How to Accelerate the Province-Level Coordination of Basic Medical Insurance, Which Has Been Included in Government Work Reports for Three Consecutive Years?

This article is from Times Weekly, authored by Alimire.

By 2026, citizens seeking medical treatment and medication may experience a series of changes.

This year’s government work report clearly states that the per capita financial subsidy for residents’ medical insurance will increase by 24 yuan. Additionally, it will optimize the functional positioning and layout of medical institutions, strengthen the connection of medications at the grassroots level, and promote hierarchical diagnosis and treatment to enhance medication linkage at the grassroots. At the same time, a multi-level medical security system will be improved, and basic medical insurance will be steadily coordinated at the provincial level.

Li Haichao, director of the National Health Commission, mentioned at a press conference on people’s livelihood that seeking medical treatment is a professional issue. Patients should go to the appropriate hospital, consult the right department, and find the most suitable doctor—professionals are the most authoritative and knowledgeable.

“During the 14th Five-Year Plan period, we will focus on advancing reforms in this area, promoting hierarchical diagnosis and treatment, and responding to the health needs of the people,” Li Haichao said.

The Times Weekly found that “promoting provincial-level coordination of basic medical insurance” and “hierarchical diagnosis and treatment” have been included in government work reports for three consecutive years.

The coordination of provincial-level medical insurance and the construction of hierarchical diagnosis and treatment are mutually reinforcing: provincial coordination provides institutional guarantees and policy support for hierarchical diagnosis and treatment, which in turn creates a favorable environment for implementation.

Only through coordinated efforts can a fairer, more sustainable, and more efficient medical security system be built.

Per Capita Subsidy Standard Increased by 24 Yuan

China’s medical insurance system mainly consists of two categories: employee medical insurance and resident medical insurance.

Employee medical insurance is for employed workers, with contributions shared by the employer and employee. It has relatively higher contribution standards but offers broader reimbursement scope and ratios, and includes personal accounts for outpatient and medication expenses.

Resident medical insurance covers unemployed residents, students, children, and other groups, with voluntary participation and annual payments. Due to limited payment ability among these groups, substantial government subsidies are provided, resulting in lower overall contributions and a relatively basic level of coverage. Since the establishment of the urban and rural resident medical insurance system in 2003, fiscal subsidies have been the main funding source.

Over the past two decades, the per capita subsidy standard for resident medical insurance has continuously increased. Last year, it increased by 30 yuan, reaching 700 yuan per person. The 2026 government work report proposed an increase of 24 yuan (this standard refers to the total fiscal subsidy for the insurance year).

From 2003 to 2026, the per capita funding standard for resident medical insurance rose from 10 yuan per person to 724 yuan per person.

The Times Weekly calculated that, based on the current individual contribution standard of 400 yuan for basic resident medical insurance, plus the 724 yuan subsidy, the total per capita funding amounts to 1,124 yuan. Among this, the fiscal subsidy accounts for as much as 64%.

In other words, the government bears nearly two-thirds of the resident medical insurance costs.

Resident Medical Insurance Fiscal Subsidy Standard Increase Source: TuChong Creative

Looking at the timeline from 2018 to 2025, the central government has allocated a total of 2.87 trillion yuan in subsidies for urban and rural residents’ basic medical insurance, benefiting over 180 million people.

However, with the deepening aging population, the rigid demand for medical expenses will continue to grow. Xu Yucai, a healthcare reform expert, told Times Weekly that compared to employee medical insurance, the income and expenditure of resident medical insurance are in a tight balance.

Data from the National Healthcare Security Administration shows that by the end of 2024, the accumulated balance of urban employee medical insurance funds was about 3.04 trillion yuan, and that of urban and rural residents’ medical insurance was about 0.82 trillion yuan.

“This means that the current use of medical insurance funds and the focus of reform are not about solving incremental issues but about using limited funds more efficiently and precisely,” Xu Yucai said.

Promoting Hierarchical Diagnosis and Treatment

To make medical insurance funds more efficient and targeted, the government has employed various policy tools.

Since 2018, through drug procurement, it has squeezed out middlemen in drug circulation, saving about 440 billion yuan in medical insurance funds; through negotiations, it has lowered prices of innovative drugs to include them in the insurance catalog; nationwide DRG/DIP payment reforms have been implemented to change the previous fee-for-service model.

However, reform is a long-term process with ongoing challenges. In 2026, reforms continue to deepen. Among many policies, hierarchical diagnosis and treatment are repeatedly emphasized and have become a major focus this year.

The government work report this year proposed optimizing the functions and layout of medical institutions, strengthening medication linkage at the grassroots, solidifying family doctor signing services, and promoting hierarchical diagnosis and treatment. This means managing common and frequently occurring diseases at the grassroots level, while large hospitals focus on tackling difficult and severe cases.

Hierarchical diagnosis and treatment aim to solve the problem of “difficulties in seeing a doctor.” Source: TuChong Creative

For a long time, most outpatient work at top-tier hospitals (Grade A) has focused on treating common diseases and managing chronic conditions. These tasks, which should be handled at the grassroots, have been concentrated at large hospitals due to resource allocation and policy tilt, leaving tertiary hospitals overwhelmed with complex cases.

This directly affects residents, who often find the process frustrating. For example, they need to go to large hospitals to get blood pressure medication or blood sugar tests, waiting in long lines for hours.

Hierarchical diagnosis and treatment seek to address this issue by stratifying medical services based on disease severity and treatment difficulty. Common illnesses are managed at community clinics, severe and complex cases are transferred to large hospitals, and recovery is managed back at the community level. This allows hospitals at all levels to perform their respective roles and ensures medical resources are matched accurately to patient needs.

Li Haichao explained at the recent people’s livelihood press conference that in recent years, hierarchical diagnosis and treatment have been gradually advancing. By 2025, outpatient visits at grassroots medical institutions will account for 52.6% of the total nationwide.

Looking ahead to the 14th Five-Year Plan, the goal is to promote the advanced experience of Sanming, Fujian, and “learn from Sanming, improve healthcare reform.”

Xu Yucai analyzed that the core measure of this reform is to bundle the medical insurance funds at the county level or based on population and year, giving the leading hospital control over the funds, with a policy of “no extra funding for overspending, surplus retained for use.” Medical expenses of insured residents are directly settled by local hospitals.

“This adjustment will give hospitals control over the funds, encouraging them to manage costs proactively, reduce waste, and curb over-treatment. Meanwhile, the leading hospital’s influence can effectively enhance the service capacity of grassroots medical institutions,” Xu Yucai said.

Steady Advancement of Provincial-Level Coordination

The provincial-level coordination of basic medical insurance has been included in government work reports for three consecutive years, with this year’s emphasis on steady promotion and inclusion in the “14th Five-Year Plan” recommendations.

Historically, China’s medical insurance was mainly coordinated at the county level, initially to motivate local governments. However, as population flows to large cities increased and aging at the county level deepened, the drawbacks became more apparent.

For example, with increasing aging, the employee-to-retiree ratio (the proportion of working employees to retired workers) has declined.

According to the National Healthcare Security Administration’s annual “Statistics on the Development of the Medical Security System,” in 2012, the ratio was 3:1. Since the system relies on active workers’ contributions while retirees do not contribute, this ratio significantly impacts the financial health of the fund. Three active workers support one retiree.

By 2023, the ratio had fallen to 2.71. The 2024 report did not publish this data, but calculations based on insured populations show a ratio of 2.63 in 2024.

“Raising the coordination level to the provincial level aims to expand the fund pool, better leverage mutual aid and assistance, and enhance the fairness and sustainability of the medical insurance system,” Xu Yucai explained.

In late November last year, the State Council’s executive meeting emphasized that promoting provincial-level coordination of basic medical insurance is an important measure to improve the national health insurance system and better utilize mutual aid advantages.

In December, the national healthcare security work conference called for standardizing and unifying the medical insurance system, enhancing mutual aid functions, and steadily advancing provincial-level coordination. As of December 2025, 20 provinces had issued documents to promote provincial coordination.

According to Times Weekly, in the implementation process, most provinces have advanced this reform mainly through two models: “unified collection and payment” and the transitional “adjustment fund.”

Regions like Beijing, Shanghai, and Tianjin, which have smaller geographic areas, less income disparity, and more balanced development, have achieved “unified collection and payment” for medical insurance. Their administrative levels are simpler, making resource and policy coordination easier.

Provinces like Sichuan, Guizhou, Shaanxi, Jiangxi, and Yunnan, which have larger regional disparities in development, population structure, and medical resources, tend to adopt the “adjustment fund” model at the provincial level to balance regional differences.

“The key to provincial coordination is ‘coordinating’ rather than ‘unifying.’ It involves collaborative planning and resource allocation across the province to address uneven distribution of medical resources, thereby systematically improving the benefits for all insured residents, rather than applying a one-size-fits-all approach,” Xu Yucai concluded.