The Chinese National Health Insurance Administration’s new health insurance regulations officially came into effect on April 1st, with the pretext of combating insurance fraud, significantly expanding administrative control powers. The regulations grant the managing agencies the authority to suspend settlements and enforce penalties, but with minimal constraints on their power boundaries. Experts point out that while addressing insurance fraud is superficial, the fundamental issues lie in the systemic unfairness and financial crisis.
On April 1st, 2026, the “Detailed Rules for the Implementation of Medical Insurance Fund Supervision and Management Regulations” were officially implemented. As a supporting document to regulations from 2021, the introduction of these detailed rules marks a new phase of strengthening supervision within the Chinese health insurance regulatory system.
The official positioning of these new regulations is to enhance “fine-grained supervision” and “governance efficiency.” However, upon closer examination of the specific provisions, it becomes evident that the core of the new regulations lies in constructing a comprehensive monitoring system covering pre-, intra-, and post-processes.
Technically, designated hospitals and pharmacies are required to integrate health insurance codes, video surveillance, drug tracking systems, with all fund usage data uploaded in real-time. Structurally, monitoring costs are borne by medical institutions, while data control is centralized in administrative departments. In terms of regulatory methods, the operation of medical institutions is subject to normal and real-time control.
Regarding the distribution of powers, the new regulations strengthen administrative disposal capabilities. Health insurance managing agencies can now directly suspend health insurance settlements with relevant institutions in cases involving “suspected insurance fraud and lack of cooperation in investigations” without requiring judicial procedures.
Penalties for insured individuals are also subject to tiered management: violating amounts of over 1,000 yuan trigger a settlement suspension mechanism, with serious offenders facing potential suspensions of up to 12 months. During the suspension period, patients must bear medical expenses themselves, placing additional medical pressure on vulnerable groups with limited financial capabilities.
Additionally, the new regulations introduce a “credit management mechanism” to exert continuous restrictions on violators, including limiting the scope of medical treatment and strengthening the review of cross-regional medical treatments, establishing long-term controls beyond one-time punishments.
In response to these new regulations, various observers and experts have pointed out that insurance fraud is merely the tip of the iceberg, while the root cause lies in the structural flaws of the entire health insurance system.
Davy J. Wong, an economist living in the United States, analyzed for a media outlet that the strengthened supervision is directly tied to the aging population and the intensified contradictions in health insurance fund revenues and expenditures. “The essence of regulation is to control expenses to ensure that the funds do not collapse in the coming years,” he analyzed. He pointed out how past health insurance management leaned towards passive payments, but now through intrusive monitoring interventions into clinical behaviors, it reflects the central government’s adjustments to its reliance on local finances.
Wong emphasized that insurance fraud is the “mark,” while systemic issues are the “root.” He mentioned that the majority of health insurance funds are allocated to care for system employees, resulting in fewer resources for those outside the system, highlighting a structural contradiction.
Meanwhile, China’s medical system has developed a distorted incentive mechanism with “treating illnesses to benefit pharmaceuticals, and treating hospitals for income,” where public hospitals are motivated to maintain operations by increasing check-ups and surgeries. Wong pointed out that what is called strict regulation is actually violently dismantling the enormous gray industry profits existing in the previous medical system.
Chinese issues expert Wang He also shared a similar assessment. He told a media outlet that China’s core health insurance problems lie in unfairness – with government officials, especially high-ranking ones, receiving very high health insurance benefits while rural residents have a vast discrepancy in their coverage. He also highlighted the enormous financial pressures and unprecedented sustainability challenges of the system.
He believes that authorities are accustomed to using superficial means to address problems: “They never take responsibility for themselves but instead push issues like insurance fraud onto the public, onto grassroots levels. Yet, many problems stem from inherent flaws in the system’s design.”
A white-collar worker in mainland China shared from personal experience with the media, stating, “80% of China’s high-quality medical resources are monopolized by privileged classes, leaving only 20% for the public, which is obviously very scarce.”
“The more government regulation there is, the more hidden rules and tricks prevail, these practices address the symptoms rather than the root cause,” he predicted, warning that these political campaign-style efforts to combat insurance fraud may end up with minimal impact, allowing those with connections to continue their activities undeterred.
The current healthcare insurance dilemma did not arise out of nowhere but rather demonstrates the concentrated manifestation of a systemic crisis accumulated over many years.
On the insured side, the number of insured urban and rural residents has been declining for six consecutive years since surpassing the peak of one billion in 2019. According to China’s annual “National Economic and Social Development Statistics Bulletin,” the number of insured individuals has decreased by over 81.94 million from 2020 to 2025. One of the primary reasons for this exodus is the continuous rise in insurance premiums.
When the new Cooperative Medical Care for New Agriculture was established in 2003, individuals paid only 10 yuan; by 2024, this had risen to 400 yuan, representing a 40-fold increase over two decades, far surpassing the growth rate of ordinary household incomes.
During this year’s National People’s Congress and the Chinese People’s Political Consultative Conference, the government work report proposed raising the average financial subsidy for urban and rural residents’ health insurance by 24 yuan, widely considered insufficient by public opinion.
On the supply side, private medical institutions are rapidly withdrawing from the health insurance system. Since the second half of 2025, over 600 healthcare institutions nationwide have terminated their health insurance service agreements, with the majority being private medical institutions.
In response to the proactive withdrawal of medical institutions from health insurance, the Chinese National Health Insurance Administration previously issued regulations stipulating that institutions applying to terminate agreements will undergo scrutiny of their health insurance fund usage for nearly one to two years, with the termination of agreements not exempting them from potential retrospective liabilities. This provision further intensifies the hesitance and withdrawal sentiments among private medical institutions.
Regarding the reinforced supervision by the authorities, Wong believes that the extensive monitoring through big data in Chinese health insurance is a natural extension of the “digital Leviathan (absolute power)” in the field of livelihoods.
He noted that health insurance monitoring highly relies on intelligent platforms, not only for auditing purposes but also for behavioral corrections: by tracking medical behaviors, instant controls are initiated over medical institutions, doctors, and patients.
Wang stated that authorities “want to oversee every aspect of your life,” with health insurance involving enormous financial resources and distribution of interests, naturally becoming a significant area for all-round monitoring investments.
However, whether amplifying monitoring can genuinely solve the issues remains doubtful among experts. Wong’s analysis highlighted that enforcement resembling a campaign often leads to three consequences: first, “innovations in healthcare are stifled as doctors avoid using new medications or technologies due to fears of regulatory boundaries, and might even refuse to treat critically ill patients”; secondly, “doctor-patient relationships deteriorate further, with doctors reduced to mere form fillers, fostering centrifugal forces within the regulatory system”; and thirdly, “the high-pressure posture being sustained long-term will lead to local governments and hospitals evolving into more covert countermeasures, distorting data and creating governance traps.”
According to Han Yuxin, “If a fair, reasonable, and effective social security system is not fundamentally established to prevent the exploitation of ordinary people by privileged classes, relying solely on political campaign-style efforts to combat insurance fraud amounts to a passing trend. The real masterminds behind the scenes and those with connections will likely escalate their activities.”
Indeed, the current health insurance predicament is not a sudden occurrence but rather the concentrated manifestation of systemic crises accumulated over many years.