China is undergoing a demographic and epidemiological transition, a transition to a market economy and a transition to an urban, industrial society. These simultaneous transitions are affecting urban health systems in a number of ways. Many state-owned enterprises and local governments find it hard to fund health care for their employees and pensioners. Urban residents are increasingly worried about the rising cost of medical care.
Large scale rural-urban migration and the growing numbers of urban poor pose new health challenges. This paper describes the changing patterns of medical need and entitlement to health benefits. It discusses the need to reconcile the pressures to finance claims for benefits by retired workers and establish a new system of rules-based entitlements for younger urban dwellers. It presents a framework for analysing options for urban health reform and concludes that the outcome of present efforts to negotiate new rules of entitlement to urban health services will influence China’s health system for a long time to come.