HONG KONG—China has unveiled a U.S. $124.3 billion health-care reform plan aimed at bringing coverage to 200 million uninsured Chinese.
Poor and middle-income Chinese list health-care provision as one of their biggest concerns, as the illness of one family member can wipe out years of savings in medical bills.
The worries around health care are contributing to a high domestic savings rate and low domestic consumption amid the global economic downturn, making the recession bite harder than it otherwise might.
Hu Xiaoyi, vice minister of human resources and social security, said China's 200 million uninsured would be top priority for the government in the next three years.
But the plan still relies on the regulation of drug prices and limited participation by international insurers.
The plan requires 520 billion yuan (U.S. $76 billion) in funding from the coffers of China's local governments. This represents around 60 percent of the total cost of the program.
This is considerably less than the 73 percent required of local governments in recent years, but the collapse of the real estate market and the removal of grains taxes could put a further strain on local government budgets.
Under the ambitious plan, thousands of county hospitals and township clinics will be built or upgraded, with a hike in the insurance subsidy available to those from rural communities to 120 yuan (U.S. $18) annually.
While the plan calls for the increased use of commercial insurance, the market remains largely closed to international players, in spite of their much greater experience in the field.
Drew Thompson, director of China Studies at the Nixon Center in Washington, said the global financial crisis didn’t help international insurance companies make the case to Chinese regulators that they had valuable experience and contributions to make.
However greater market access would result in health care sector competition, he said.
The new health plan calls for a cap on the amount that hospitals and distributors can charge for drugs and seeks to regulate the gap between patent and generic drugs.
Chinese people frequently complain that hospitals pad their revenues and doctors' salaries by prescribing expensive or unnecessary medication.
Peng Sen, vice director of the National Development and Reform Commission, said the government aimed to gradually cut the profit margin of drugs sold at medical institutions and to require the nonprofit sales of drugs at local public clinics.
Exactly which drugs will be covered won’t be known until the end of the year.
The aim of the plan is to relieve the pressure on specialized city hospitals with the provision of health care for common complaints conducted mostly by neighborhood hospitals and rural clinics.
But local clinics lack equipment and well-trained staff, giving them a bad reputation among Chinese rural communities.
Vice Minister of Finance Wang Jun said it is important to boost the status of clinics and primary care facilities, which can only happen when people trust the medical care system.
The new plan will experiment with better pay structures for doctors, government support of hospital upgrades, and partial privatization of some facilities.
According to the World Health Organization (WHO), health insurance coverage at the end of 2005 was approximately 40 percent, including the urban basic health insurance scheme, new rural cooperative medical scheme, and other health insurances.
WHO cited “widespread reliance on service fees and long-standing underinvestment in public health services resulting in huge inequalities between eastern and western China, rich and poor, and urban and rural populations.”
Mortality rates for infants and children under age five remain high where medical care isn’t accessible, and noncommunicable diseases and injuries account for more than 80 percent of deaths in China.
Leading causes of death include cerebrovascular disease, heart disease, cancer, suicide, and road accidents, WHO said.
Original reporting by RFA's Mandarin and Cantonese services. Mandarin service director: Jennifer Chou. Cantonese service director: Shiny Li. Written for the Web in English by Luisetta Mudie. Edited by Sarah Jackson-Han