A county-level social experiment, studied on paper

Education, health, life — one shared pool

The residents of a county pay into one fund for education, medical care and pensions, by income, and draw from it when they need to. After a single government seed injection, can it run for decades without outside money?

A research project: it raises no money and accepts no contributions.

EducationMedicalLifeShared pool

Three funds

Each fund has personal accounts and a shared pool. A personal account records what the member owns; the shared pool spreads the risk.

Education

Tuition for growing up

Pays for

  • Pre-school (first two years)
  • Academic high school
  • University
  • Adult vocational training

Not compulsory schooling, not living costs.

Personal 50% · Shared 50%

Medical

The part public insurance leaves

Pays for

  • Out-of-pocket costs after public medical insurance
  • 60% of the amount above a 1,000-yuan deductible
  • Up to 50,000 yuan per claim, 100,000 yuan a year

It does not replace the existing resident medical insurance.

Personal 30% · Shared 70%

Life

Living long, without the risk

Pays for

  • A monthly pension from age 60, target 200 yuan
  • The shared pool keeps paying once the personal account runs out
  • A shared top-up after 15 years of contributions

Pensions depend only on the member's own contributions.

Personal 80% · Shared 20%

How it works

Members with an income pay into all three funds every month, whether they need them now or not. Family members without an income benefit too.

  1. 1

    Seed

    The government injects start-up capital once. No top-ups and no subsidies follow.

  2. 2

    Growth

    Residents join voluntarily and pick one of 8 contribution tiers by income. In the study county the tiers run from 530 to 6,400 yuan a year.

  3. 3

    Maturity

    Policy makes membership mandatory. Every legal resident is a beneficiary from birth and starts paying once they earn.

Three key rules

Pooled lending

When one shared pool runs short it may borrow from the other two. Every loan is booked, bears interest and is repaid — never simply taken.

Transfer at death

When a member dies, the personal balances move to the shared pools and pay the pensions of members who live longer.

Run protection

When solvency falls below 100%, members who leave are paid out over 3 years, so a run cannot drain the fund.

Key findings

The study county is a mountain county in western China: 197,500 residents, strong youth out-migration, a weak budget. An individual-level simulation, calibrated on public data, runs 50 years. These are the v1 results.

Ceiling of voluntary participation
13%Even after 50 years it stays below the 30% needed to switch to mandatory membership. To cover the county, policy has to set the date.
Median solvency at year 50
1.8With the switch to mandatory membership in year 10, none of the 50 runs defaulted.
Seed capital needed with pooling
0With the switch in year 10, separate pools need 35.2 million yuan; pooled lending needs none. The medical and pension pools built up in the voluntary years lend to the education pool.
Average contribution, share of income
5.4%2,463 yuan per person a year on average, on top of existing resident medical and pension contributions — a real burden for low-income rural households.
Minimum seed capital (million yuan)Separate poolsPooled
Minimum seed capital (million yuan)
Separate poolsPooled
Mandatory from year 193.7527.34
Mandatory from year 1035.160

Smallest injection that keeps the default probability at or below 5%. The gap sits in the year membership becomes mandatory, when every child in the county starts drawing education benefits. The largest value is about 11.8% of the county's own budget revenue.

What history taught us

We studied more than ten mutual-aid and social-security cases. These lessons went straight into the fund's rules.

  • Singapore CPF

    Personal accounts have worked for 70 years — but the government pays for the interest floor, which this design cannot copy.

  • China's pooled + personal pensions

    About 2.22 trillion yuan of empty personal accounts: lending between pools without booking or repaying is taking.

  • British Friendly Societies

    As members lived longer, sickness pay turned into pensions. Long-term liabilities eat short-term pools.

  • Ant Group's Xianghubao

    Once the cost share rose past a threshold, young healthy members left together — an adverse-selection spiral.

  • Rwanda's community health insurance

    Coverage above 80% came from mandatory enrolment plus subsidy. Purely voluntary schemes rarely grow large.

  • China's rural credit cooperatives

    The first risk of a county money pool is failed governance and misappropriation, not actuarial imbalance.

Lessons from cases

Limits and next steps

Limits of v1

  • Liabilities count personal accounts and pensions in payment only, not future education and medical benefits, so solvency reads high.
  • Medical costs do not grow faster than incomes in the model.
  • Join and exit behaviour are assumptions, not local data.
  • Each scenario ran only 50 times.

Next

  • A stress test with medical costs growing 1–2% a year faster than incomes
  • Future expected benefits counted as liabilities
  • The same calibration for an ageing county in eastern China, as a control
  • The legal feasibility analysis
Read the full results