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Buyer Community> Trade Intelligence> China Biz> A Big Umbrella: Chinese Healthcare Reform
Source: bjreview.com bjreview.com

A Big Umbrella: Chinese Healthcare Reform

Published: 19 Apr 2009 17:47:37 PST

China unveiled healthcare reform blueprints on April 6 that outline changes over the next decade meant to fix the country's ailing medical system and to ensure fair and affordable services for all citizens.
CHEAP DRUGS: A pharmacy in Yichang City, Hubei Province. As part of China's comprehensive healthcare reform, the government will regulate an inventory of essential medicines to control prices and make medical treatment cheaper (REN WEIHONG)
Concluding a drafting process that began in 2006, the Central Committee of the Communist Party of China and the State Council-the cabinet-jointly issued the Guidelines on Deepening the Reform of the Healthcare System. Officials released a draft of the plan for public debate last October and collected 35,260 comments and suggestions during the month-long debate.

The document says China's goal is to develop a basic healthcare system by 2020 that provides "safe, effective, convenient and affordable" health services to urban and rural residents. Drafters wrote that the plan's core principle is to provide basic health care as a public service to all citizens, which will require much more government funding and supervision.

"Robust government spending will drive down the proportion of individuals' spending on medical expenses," said Vice Minister of Health Zhang Mao at an April 8 press conference. He said the intention is to realize four goals: to improve people's overall health through government-subsidized checkups and vaccine programs; to make medical services more convenient by upgrading facilities and personnel training at local health centers, and by making changes at state-run hospitals; to make medical treatment affordable to all through expanded medical insurance packages that cover the whole population; and to make treatment cheaper by introducing an inventory of essential medicines whose prices will be regulated by the government. State-run medical institutions are not allowed to take profits by selling these necessary medicines.

For decades, the government covered more than 90 percent of urban residents' medical expenses after the 1949 founding of the People's Republic of China. Meanwhile, rural people had access to subsidized health clinics run by "barefoot doctors," who were often middle-school students trained in first aid. The essentially free primitive service played a vital role in doubling the country's average life expectancy from 35 years in 1949 to 68 years in 1978.

Then in the early 1980s, China launched market-oriented reforms on the country's healthcare system. With the goal of pushing hospital employees to work harder and improving the efficiency of hospitals, officials encouraged public institutions to generate their own incomes. Government investment in public hospitals gradually dropped.

But less government input and supervision resulted in the over-commercialization of hospital practices. They prescribed drugs aggressively to make higher profits. Soaring fees plunged many rural and urban Chinese back into poverty and made medical services harder for ordinary citizens to afford.

Key measures

As part of the reforms mentioned in the blueprint, the government will improve the public health network for disease prevention and control, health education, mother and infant health care, mental health and first-aid services.

Public nonprofit hospitals will continue to be the dominant providers of medical services, while higher priority will be given to developing local hospitals and clinics in cities and rural areas.

Patients will be encouraged to use their local hospitals and clinics, which will be able to provide more accessible and affordable services. Regional hospitals in big cities, meanwhile, will be asked to give more personnel, expertise and equipment to small, local providers.

The government plans to set up a diverse offering of medical insurance plans to cover urban employees, unemployed urban dwellers and rural residents. Those covered by basic medical insurance is expected to surpass 90 percent by 2011.

Separately, the government will improve the management and supervision of medical institution operations, develop health service plans, and improve the basic medical insurance system. Public hospitals will receive more government funding and will also be allowed to charge higher treatment fees. But eventually they will be banned from making profits by prescribing expensive medicines and treatments, which is currently a common practice.

Central and local governments will increase investment in the public health sector, local clinics, public hospital subsidies and basic medical insurance plans.

Governments will increasingly control medical service and pharmaceutical prices, with strict regulations limiting charges at non-profit hospitals and the essential drugs they use.

Supervision of medical institutions, health-insurance providers, and pharmaceutical companies and retailers will be strengthened. Governments will also tighten monitoring of drinking water and food and workplace safety.

Three-year plan

Separately, China unveiled a three-year action plan on healthcare reform on April 7 that promises to pump 850 billion yuan ($125 billion) into a three-year action plan from 2009 to 2011.

About 331.8 billion yuan ($48.8 billion) comes from the Central Government and the rest will be invested by local governments, said Vice Minister of Finance Wang Jun at an April 8 press conference. A majority of the Central Government subsidies, he said, will be directed toward China's central and western areas, while eastern provinces with larger local tax revenues will pay the majority of their own reform expenses.

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