Equity in health financing in China: a national financing and benefit incidence analysis, 2013-2023.

Abstract

Equity in health financing is essential for achieving universal health coverage (UHC), particularly in low- and middle-income countries (LMICs). As one of the largest middle-income countries, China has undergone substantial health financing reforms over the past decades and achieved near-universal social health insurance coverage. However, whether these achievements have translated into equitable distribution of health financing burdens and benefits remains unclear. We aim to provide updated national evidence on equity in health financing in China. We used data from three waves (2013, 2018 and 2023) of the Chinese Household Income Project, a nationally representative household survey. Financing incidence analysis was conducted to assess the progressivity of major health financing sources, and benefit incidence analysis examined the distribution of realised social health insurance (SHI) benefits. We further conducted counterfactual policy scenario analyses to explore the potential impact of policy reforms to mitigate inequities. All analyses were conducted at the household level and adjusted by adult equivalence. Sensitivity analyses using alternative household ability-to-pay measures, adult equivalence scales, private health insurance imputation approaches, and measures of health need were performed. The overall health financing system remained mildly regressive, with Kakwani indices (KIs) of -0.016 (-0.030, -0.002) in 2013, -0.034 (-0.044, -0.023) in 2018, and -0.071 (-0.080, -0.062) in 2023. Among the financing sources, direct tax payments and SHI contributions by employees remained progressive, while indirect tax payments, SHI contributions by non-employed residents, and out-of-pocket payments were regressive. In addition, SHI reimbursements were distributed pro-rich and did not align with measured health need. In 2013, the wealthiest 20% of households accounted for only 7.9% of the health burden but received 55.4% of SHI reimbursements, and this inequity persisted in 2023. Policy simulations suggest that reforming SHI financing mechanisms, capping out-of-pocket payments, and harmonising SHI benefit packages across schemes could improve overall progressivity to varying degrees, but require additional fiscal investments. Despite substantial increases in public health expenditure and near-universal health insurance coverage, China has not achieved significant improvements in equity of health financing. Lower-income households continue to bear disproportionately greater financing burdens relative to their ability to pay while receiving fewer SHI reimbursements relative to measured health need. These findings underscore the critical importance of equity-oriented design in health financing mechanisms, offering important lessons for other countries in the Western-Pacific region. Key Project of Philosophy and Social Sciences Research, Ministry of Education of China (24JZD035); Taikang Yicai Public Health and Epidemic Control Fund (XY240927100000); General Project of the National Social Science Fund of China (24BTJ054); Innovation Fund for Outstanding Doctoral Candidates of Peking University Health Science Center (BMU2026BSS001); Fundamental Research Funds for the Central Universities in China.