The programme, the first in a major Chinese city, is part of a reform package making people pay for their own health care and housing.
BEIJING - Shanghai has launched the first basic health-insurance programme for a major city as part of an overhaul of the Chinese health-care system.
Under the scheme, all workers in Shanghai contribute 2 per cent of their yearly income to a city health fund, while their employers give another 2.2 per cent to the fund.
Retired workers need not make any contribution, reported the Liberation Daily yesterday.
The scheme is part of on-going reforms in China, which require people to pay for their own housing, health care and retirement insurance.
Contributions to the health-insurance scheme are be pooled into two funds, one private and one public.
Withdrawals from the private fund are allowed for normal ailments. For serious illnesses, the public fund can be drawn upon, but only to a certain level.
If that amount is insufficient to cover medical expenses, the patient will have to use commercial insurance.
Shanghai residents are issued a health card, which records all the money spent and medical treatment sought.
The health-fund contributions are managed by non-profit organisations and deposited in bank accounts. The organisations are forbidden to make any risky investments using the funds.
Dr Zhang Lehua, chief executive officer of private medical-consultancy firm New Pine, said: 'In the past, there were several kinds of health insurance. State payments to hospitals were often chaotic and produced a lot of wastage.
'The new system should improve the use of public money.'
With municipal funds paying for basic hospital expenses, the state will concentrate on building and upgrading hospitals, he said.
The state authorities are now working on establishing two kinds of hospitals, central and community.
Community hospitals will be smaller and will handle common ailments, while central hospitals will focus on treating more serious diseases.
This is expected to ease the load of large hospitals, which were taking most of the burden for medical care in large cities.
Until now, patients could go only to hospitals which had an agreement with their working units. Patients, whose employers did not have an agreement with the hospitals, would have to pay out of their own pockets.
This led hospitals to take in more patients than they could cope with, in a bid to boost revenue.
Dr Zhang said this was one of the main reasons for the chaotic situation.
In the past years, complaints about poor medical care have been rising.
Hospital staff, on the other hand, said their workloads were heavy and remuneration was meagre.
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