Vertically Balanced Rate of the Basic Medical Insurance System

The unbalanced age structure aspect of China's basic medical insurance system increases payment risk and hampers sustainable and healthy development. Combining the actuarial approaches of life insurance and non-life insurance, the principle of long-term fund balance is applied to establish a model with which to calculate the vertically balanced rate of the basic medical insurance system. Analysis of data from City S indicates that the vertically balanced rate is significantly higher than the current premium rate. The vertically balanced rate increases when an older age is used for starting premium payments; the vertically balanced rate is higher for females than for males. As the investment return rate increases, the vertically balanced rate decreases. The vertically balanced rate can be used to adjust the whole-life premium rate, the minimum premium period, the minimum age of participating in the system, continuing and supplemental premiums, and benefit adjustments. It can also provide a scientific basis for policy reform in reducing the aging insured population in the medical insurance system, reduce pressure on the fund, and maintain the balance of the insurance fund.