ABSTRACT
The three most crucial programs in SPF in China are MLSS, Resident Pension Schemes, and Resident Health Insurance Schemes: MLSS has played a substantial role in reducing poverty but identification of the poor is always a problem, as in many other countries. Recipients are reluctant to exit the program, since obtaining MLSS benefits are often associated with other preferential programs. Decentralisation of social expenditure responsibility of local governments has resulted in potential regional imbalance in the MLSS.
Due to significant government subsidy, the Resident Pension Scheme in both rural and urban areas expanded rapidly. The scheme shows problems in adequacy of the security, incentive for participation and fiscal sustainability. The potential to raise the benefit lies in expanding coverage of formal urban social insurance and a slower increase of pensioners in the resident pension system.
Resident Health Insurance Schemes involve a large government subsidy. There are a number of studies evaluating the effects of resident health insurance. Some find that resident health insurance increases the utilisation of formal medical services. However, the supply-induced demand issue and low reimbursement rate provided by the schemes limit the demand for health care, especially the demand from rural residents.
In the future, there are ways to further develop the social protection system in China: reprioritising public spending to increase social expenditures, exploring alternative fiscal resources, including dividends from stated-owned enterprises and foreign exchange reserves, increasing fiscal capability of local governments, and improving efficiency in delivery of social protection.
