China unveils ambitious plan to overhaul health care sector

Via Xinhua

BEIJING, April 7 (Xinhua) — China unveiled a three-year plan on health care reform Tuesday, which it said would lay a solid foundation for equitable and universal access to essential health care for all in China by 2020.

Under the 850 billion yuan (124 billion U.S. dollars) plan for 2009 to 2011, the government promised universal access to basic health insurance, introduction of an essential drug system, improved primary health care facilities, equitable access to basic public health services and pilot reform of state-run hospitals.

The document from the State Council, or Cabinet, detailed tasks and goals for the 2009-2011 period as the government explained how it would implement its long-term health care reform plan, which it announced Monday.

The plan did not elaborate how the 850 billion yuan, including 331.8 billion yuan from the central budget, would be used.

But it is widely expected to be spent on subsidizing basic medical insurance programs, supporting grassroots-level health facilities and in underdeveloped western and rural regions.


After more than 20 years of transition from a socialist planned to a market economy, China’s cradle-to-grave social security network was gradually dismantled, leaving many vulnerable.

Efforts in the past decade to reform the health sector were also regarded as unsuccessful.

Between 1980 and 2005, annual disposable income per capita increased by almost 20 times in China, while annual health expenditure per capita increased by 133 times, according to figures from the Ministry of Health.

According to the 2007 World Health Statistics, available on the ministry website, government and private expenditures on the health sector in China were respectively 38 percent and 62 percent in 2004, compared with 54.1 percent and 45.9 percent in Brazil, 17.3 percent and 82.7 percent in India, 86.3 percent and 13.7 percent in Britain, and 44.7 percent and 55.3 percent in the United States.

In the same year, China’s total health expenditure accounted for 4.7 percent of its GDP, against 15.4 percent in the United States, 8.8 percent in Brazil, 8.1 percent in Britain, and 5 percent in India.

“The three-year reform mainly targets the pressing problem that medical care is too expensive and hard to get, which has drawn many complaints from the people,” said the document.

The current system had many problems, the government admitted.

“Some people are not covered by medical insurance, the public health sector has been weak for a long period, and state-run hospitals are too profit-obsessed,” said the document.

“These problems must be solved to lay a solid foundation for the long term and for overall health care reform,” it said.

China wants to have more than 90 percent of its population covered by some sort of basic medical insurance by 2011.

Three different insurance programs already exist for urban employees, unemployed urban residents and rural residents, into which governments, employers, and individuals contribute.

More than 200 million urban workers, 100 million urban residents and some 800 million rural residents have already joined the three programs respectively, according to the Development Research Center under the State Council.

The health insurance subsidy offered by the government for unemployed urban residents and farmers will rise from 80 yuan per person to 120 yuan per person as of next year, according to the action plan.

The level of reimbursement an inpatient or an outpatient can get from one of the three programs will be gradually raised.

The reformers also intend to have more vulnerable people covered by insurance, such as retirees from bankrupt or financially troubled companies that can no longer pay for insurance, migrant workers and the self-employed.

In some places where pilot work was carried out, progresses have been made in bringing more people under the shelter of medical insurance.

Li Liang, a farmer in Ejin Horo County, north China’s Inner Mongolia Autonomous Region, said he only paid 10 yuan (1.46 dollars) a year to join the New Rural Cooperative Medical Care system, into which the central and local governments contribute 130 yuan.

Meanwhile, Li is entitled to have as much as 50,000 yuan reimbursed every year to pay his medical bill, if there is any.

“Now I feel quite relieved because 50,000 yuan can be a huge burden for me and my family,” said Li.

Fu Wei, an official with the health ministry, said the reimbursement level would be further raised to ease rural residents’ financial burden.


The broad principles contained in China’s new reform “are in line with what the World Health Organization (WHO) is promoting. For example, the principle of equity, the principle of having the poor (covered by) health policies,” WHO Director-General Margaret Chan told reporters in Beijing on Tuesday.

The government promised good management and supervision of funds for the insurance programs, and it said it would explore more rational and convenient methods for people to use the programs.

To lower prescription costs, which have drawn much criticism, the government will promote a system of essential medicines for state-run hospitals, clinics and pharmacies. A list of essential drugs will be published this year.

Due to longstanding low government funding for state-run hospitals, which in many places only covers 10 percent of operating costs, doctors often aggressively prescribe expensive, sometimes unnecessary medicines and treatment, in order to make profits for the hospital.

This situation has meant high medical bills and corruption in the medical profession.

The reformers want to designate essential drugs, at controlled prices, to cut the cost of hospital services, while promising to increase funding to non-profit state-run hospitals and clinics, which account for 80 percent of medical institutions in China.

This forms part of the arduous reform of state-run hospitals to improve efficiency and quality. The plan said pilot work would be carried out this year in chosen hospitals, without giving details.


To improve primary health care facilities, China will give priority to construction of about 2,000 county-level hospitals so each county would have at least one hospital that was essentially in compliance with national standards.

The central government will fund the construction of 29,000 township hospitals this year and the upgrading of 5,000 township hospitals, under the plan.

The central government will also finance the construction of village clinics in remote areas so that every village will have a clinic in the next three years.

It said 3,700 community health centers and 11,000 community health stations would be set up or upgraded in cities.

Liu Xinmin, an official with the health ministry, said the plan is aimed at improving the medical service network at grassroots level so that patients do not have to travel far to see a doctor.

He said the distribution of hospital resources was extremely unbalanced at present, with about 80 percent of hospital resources in cities.

Even in places where village or township clinics are available, many patients opt for big hospitals in the city just because they do not trust local medics, he said.

In the next three years, China will train 1.37 million village doctors and 160,000 community doctors. Also, city-level hospitals, which usually have better expertise and equipment, will each be required to help three county-level hospitals to improve the skills of medics.

Doctors at city hospitals and disease control agencies will be asked to serve in rural hospitals for at least one year before they can be promoted.

Other measures include setting up a universal medical records database, which will be strictly managed, regular exams for those older than 65 or younger than three, and pre-natal check-ups.

In addition to programs to prevent or control major diseases such as tuberculosis and HIV/AIDS, China will launch new projects to help those below the age of 15 receive hepatitis B vaccines, eliminate risks from coal-burning fluorine poisoning and improve rural water and sanitation facilities.

It will also provide folic acid to rural women who intend to get pregnant or are in the early stages of pregnancy, to prevent birth defects.

China Central Television, the state broadcaster, has been ordered to open a TV channel for health education.

According to the plan, China will increase investment in the public health service at a standard of 15 yuan per person a year in 2009, and 20 yuan by 2011. This translates to a huge investment of between 19.5 billion yuan and 26 billion yuan each year.

“Such investment is very necessary for China because people must understand that disease prevention and control will eventually help save more money,” Liu Xinmin said. “In China, many people become ill just because they don’t know how to prevent.”

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