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China Attempts To Create A National Health System

March 12, 2009

China Attempts To Create A National Health System Martin McCauley writes: ‘Don’t fall ill in China,’ is a truism. If you can pay, you get treatment, if you can’t – tough luck. A bit like in the United States.

The fast majority of people in China do not have access to modern medicine. There was rudimentary health provision until the pro-market economic reforms were launched three decades ago. Beijing then decided it could simply not afford to run a proper national health service.

Now a plan is to be launched to provide basic health care for the whole population by 2020.

Between the mid-1980s and mid-1990s there was a boom in medical provision but it was financed by private capital. It was concentrated in urban areas and the lack of accessibility and cost put it out of the reach of the vast majority of the population.

The health reform of 1997 attempted to redress some of the imbalances in health provision. The beginnings of health insurance got under way and medical cooperatives were planned for rural areas. However, little came of this except that health insurance became popular in urban areas. The reform failed for two main reasons: lack of political will and resources.

Under the new reform, the central government will finance a basic health service. It will be standard for every citizen but local governments can add extra services according to local needs. State run hospitals will receive more support. Concessions will be granted to encourage the construction of many new private hospitals and clinics.

The government’s aim is to extend social health insurance to about 90 per cent of the population by 2020. Efforts will be made to include rural migrants in the new system. At present, if they are not registered as urban residents they do not qualify for health care.

A key role will be played by the pharmaceutical industry. An essential list of drugs will be drawn up and doctors will only be permitted to prescribe these. Of course, a patient may buy more drugs privately.

The new health service has been divided into five sectors: finance; health care provision; health care delivery; medical staff; and management.

During the next three years, the aim is to improve the social health security system; provide basic medicines; expand health care in rural areas; and reduce the dependency of hospitals on the sale of drugs. A major problem is to devise a system for rewarding efficiency in the delivery of health care.

A total of 850 billion yuan ($125 billion) is to be allocated over the next three years to achieve these objectives. A target is to increase central subsidies from 80 yuan ($12) to 120 yuan ($18) per insured person in 2010. About 850 million out of a total population of 1.3 billion will be covered by the new scheme. The pharmaceutical industry and rural medical facilities will be allocated part of the budget. However, how the cake is to be divided up has not yet been agreed.

There are two main reasons for the new health reform: a growing awareness of the importance of public health for the socio-economic development of China, and the availability of central resources as the Chinese GDP grows.

A major reason why reform failed in the past was the lack of coordination of agencies concerned with the health service. This problem has now been addressed. The agencies responsible for drugs and food have been merged with the Ministry of Health. A proposal has been put forward to establish a committee within the State Council to coordinate the activities of all ministries and agencies concerned with the new health reform. It will include representatives of the Ministry of Finance and the National Reform and development Commission.

One has to be an optimist to believe that the reform will succeed. Institutional interests will inevitably get in the way. The legitimacy of the Communist Party is based on economic growth. Will scarce resources be directed into health care instead of manufacturing? The richer provinces themselves will be able to improve health provision but the poor will not.

In the present economic downturn, the central government may prefer to fund projects which promise a greater return. However the fiscal stimulus package announced by Beijing includes resources for the construction industry. One hopes some of this money will be devoted to the building of hospitals and clinics.

A realist would say that the health system underlines the fact that China now consists of two societies: the urban – which is further subdivided into the cities of the eastern provinces and the rest -and the rural. The poor rural areas of the south and west are falling farther behind.

The dream of a universal health service is still a long way off.

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