China’s Mass COVID Testing Helps Elite Groups Get Rich, While Depleting Medical Insurance Funds

People line up to give a sample for nucleic acid testing for COVID-19 at a makeshift test site in Chaoyang District on April 25, 2022 in Beijing, China. China is trying to contain a spike in coronavirus cases in Beijing after dozens of people tested positive for the virus in recent days, causing local authorities to initiate mass testing in some areas and to lockdown some neighbourhoods in an effort to maintain the country's zero-COVID strategy. (Kevin Frayer/Getty Images)

Since the beginning of this year, a new round of virus outbreaks has swept across China, and many cities have adopted regular nucleic acid testing for all residents as a pandemic control measure.

The Chinese authorities tell the public that large-scale testing in China is provided free of charge as a best example of how they take good care of the Chinese people. As a result, very few people are aware that the frequent mass testing is exhausting their medical insurance fund, or that the huge profits from the testing are flowing into the pockets of China’s elite interest groups.

Battle Between Local Governments and Medical Insurance Fund

China’s National Medical Insurance Administration and three other government agencies jointly issued a notice recently, announcing that they would investigate how medical insurance funds have been used in the past two and a half years.

In addition to a routine inspection checklist, the administration will focus on any inappropriate charges for nucleic acid tests or antigen tests to screen for COVID-19.

At the same time, the National Medical Insurance Administration notified local governments that the cost of mass COVID-19 testing should not be the responsibility of medical insurance funds.

However, many local governments have been covering the cost of mass testing with medical insurance funds since the beginning of the pandemic.

The research team of Huachuang Securities looked into relevant regulations in Shenzhen, Qingdao, Suqian, and several other cities where nucleic acid testing has become normalized, and concluded that 70 to 95 percent of the mass testing costs are reimbursed by medical insurance, while the local governments pay only a small portion.

Official data shows that by the end of 2021, the cumulative balance of the basic medical insurance (including maternity insurance) fund is 3,612 billion yuan (approx. $542 billion). The balance is mainly concentrated in relatively wealthy provinces and regions with a larger population influx.

The Health Literacy Bureau, an information platform in China’s medical and health field, revealed in a May 26 article that there is a risk of exhausting the medical insurance funds in many provinces and cities.

For Beijing and Shanghai, the medical insurance balances can cover the cost for more than 600 days; while in provinces with large populations such as Shandong and Henan, the current balance can only support about 70 days of testing.

Chinese state media Yicai also confirmed that local governments had been using medical insurance to pay for large-scale nucleic acid testing. For instance, the media outlet reported that both Guangdong Province and Dalian city had covered testing costs using people’s collective medical insurance funds.

This indicates that local governments were able to spend the medical insurance money without supervision.

Current affairs commentator and China expert Li Yanming explained to The Epoch Times that this happens because the CCP is a chaotic system. The medical insurance fund is not an administrative expenditure of the government, but the local governments have the power to use it for special purposes.

Costly Pandemic Control Measure

Since April this year, numerous Chinese cities, such as Shenzhen, Wuhan, and Hangzhou, have successively implemented normalized nucleic acid testing. On May 9, the Chinese authorities called for the establishment of “15-min sampling circles,” which means, setting up abundant COVID sampling booths so that most residents can access a test site with a 15-minute walk.

Analysts at Soochow Securities estimated in early May that if all first- and second-tier cities in China implement normalized nucleic acid testing, the annual cost would reach 1.72 trillion yuan ($258 billion), accounting for 1.5 percent of China’s GDP in 2021, and surpassing the CCP’s 2022 defense budget, which is 1.45 trillion yuan ($217.5 billion).

Goldman Sachs estimated that testing 70 percent of China’s population every two days would cost $370 billion, or 2.2 percent of China’s 2021 GDP.

Elite Interest Groups

Since 2020, the nucleic acid testing market has expanded rapidly. According to Tianyancha, a Chinese business data and research platform, in 2021 alone, China added 437 business entities related to medical testing.

In February this year, a leaked audio recording of Huang Wansheng, a researcher at the Harvard-Yenching Institute, circulated online. The recording revealed that the Chinese regime’s elite interest groups have made a lot of money from pandemic control measures, such as vaccinations and testing. According to inside information he obtained, a company in China had made 670 billion yuan (about $105.8 billion) from nucleic acid testing alone at the time.

Commenting on Huang’s recording, Henry Wu Chia-lung, macroeconomist and Taiwan AIA Capital lead economics researcher, told The Epoch Times that in China, because the power is concentrated, there is a lack of checks and balances and supervision. It is therefore very easy for the CCP elites to use power for personal gains. The elite groups have turned this large-scale public crisis into an opportunity to make a fortune, he said.