Basic medical insurance and maternity insurance will be merged for urban residents in 12 cities from the end of June this year, as a pilot project, according to a circular issued by the State Council on Feb 3.

Medical insurance funds will cover the function of maternity insurance, including reproductive healthcare and birth allowance, it said.

The fund will be raised according to updated standards. The new premium employers would pay for employees will be the sum of the two insurance premiums.

The service that maternity insurance provides to urban residents will not be cut after the reform, the circular said.

Management of the two insurance systems will be integrated in terms of services, information processing and cash settlements.

According to the circular, the reform will improve the efficiency of public insurance and cut administrative costs.

The test of the reform will last for one year in 12 cities, including Handan of Hebei province, Jinzhong of Shanxi province, Shenyang of Liaoning province and Chongqing municipality. It is expected to explore an effective reform plan that suits the whole country.