China Power

Getting Health Reform Right?

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China Power

Getting Health Reform Right?

China is in the process of implementing ambitious health reforms. But are they enough?

So, what exactly does China have planned for health care reform? As I mentioned ahead of this series on health care, which concludes today, the government last January passed a far-reaching medical reform plan pledging 850 billion yuan ($123 billion) by 2011 to help provide universal (well, 90 percent of the population) primary medical insurance coverage.

I asked Drew Thompson, Director of China Studies and Starr Senior Fellow at The Nixon Center in Washington, D.C., how serious the situation was facing the health care system in China, and the extent to which he felt reform was necessary.

He told me:

‘The Chinese health care system has not fared well since the system underwent a privatization process beginning in the mid-1980s. At the same time that government funding was being reduced, insurance coverage rates were dropping as well, so the system was underfunded and hospitals had to rely too heavily on fee-for-services without sufficient oversight, resulting in rampant over-prescription and often, outright corruption.’

Meanwhile, according to the official Xinhua News Agency, individual spending on health care jumped from 21 percent in 1980 to 45 percent in 2007; over the same period, government funding fell from 36 percent to 20 percent.

I’ve talked about how the SARS outbreak was a wake-up to Chinese policymakers, and Thompson believes that the crisis revealed not just the inadequacy of infectious disease control, but the underfunding of public health generally. He said that in the aftermath of the epidemic, the government began to look seriously at health care reform, beginning with government-sponsored assessments that found the health care system to be in ‘dire straits’.

According to Thompson, it took about five years of studies and internal negotiation between numerous stakeholders in the government to produce the first set of reform guidelines that emerged in 2008.

A blueprint for health reform was unveiled in April last year, which as Xinhua notes, included plans to: improve the medicine supply system to ensure public facilities are supplied properly (and at regulated prices); improve management of medical institutions; and increase funding for public hospitals and supervision of health insurance providers.

Following the announcement, WHO Director General Margaret Chan is reported by Xinhua as having said:

‘The broad principles contained in the Chinese government’s new health-care reform are in line with what the WHO is promoting, for example, the principle of equity, the principle of having the poor (covered by) health policies.’

Thompson has a great document on the Nixon Center site that gives plenty of background on the issue of reform, and the process involved in bringing the blueprint to fruition. I asked him what he thought of the process and whether he felt the reforms go far enough.

‘The political process to reform the health care system in China was very inclusive and relatively transparent,’ he told me. ‘Global experts were consulted and public opinion was even sought on drafts that were posted on the internet.’

But he said the wide consultations mean that the resulting plan for reform is a compromise, and so for many doesn’t go far enough. He notes, for example, that many hospitals are owned by the government bureaus that also regulate them. To reform this conflict of interest, he suggested, future rounds of reform ‘should consider establishing holding companies that can take ownership of hospitals, distancing them from the government offices that are responsible for overseeing them.’