Forecasting China's Medical Insurance Policy for Urban Employees Using a Microsimulation Model

This paper uses microsimulation techniques to model individual's medical behavior and forecast the effects of different settings of medical insurance policies. The aim of the simulation is to measure the possible change and difference in policies in the process of implementation of the medical insurance policy settings for government policy makers. Based on predicting the medical expenses for urban employees in Zhenjiang, Jiangsu Province of China, the medical insurance policy was simulated over the five-year forecast period 2002 2006. The results estimated that the medical expenses of medical insurance participants in Zhenjiang will increase over this period. Retirees were found to be the main group of participants receiving the highest share of medical resource expenditure, with their medical expenses accounting for more than 45% of total medical expenses of all age groups. The proportion of medical expenses paid by the social pool funds for all groups of participants will increase annually. In addition to the base case forecasting the current policy setting, this paper also modeled two other policy settings to investigate what happens to key output variables if the policy settings are changed.