Public debt of medical security system: Is China following in America's footsteps?

China's social medical security system includes medical insurance for urban workers, medical insurance for urban residents, new type of rural cooperative medical care and medical assistance. To solve the problem of inadequate and unaffordable medical services, the government has provided a large number of public financial subsidies for this system. But similar to America, China's population aging and rapidly rising medical costs will cause a growing fiscal subsidy burden. In this paper, by means of insurance actuarial methods, we predict the medical insurance system's long-term balance of payments, medical assistance cost and their public debt risk. Results show that China is following in America's footsteps: A great gap between revenue and expenditure will arise under PAYG system, which is beyond government's financial capability. We should reform its financing model and strictly control the rising medical costs, so that the medical security system can possibly achieve sustainability.