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Brief analytical summaries or syntheses #41

Health care for 1.3 billion. An overview of China’s health system

Summary

This Stanford University paper provides a brief overview of how China’s health system has transformed alongside society and economy since the 1960s. The paper describes how the Chinese system is financed, organized and regulated, and why it is currently being reformed.

Background

A half century ago, in the early Mao era, China’s population of half a billion people was young (36% aged less than 15), 80 percent rural, one-third illiterate, and living in absolute poverty. By 2010, China’s 6th population census — the largest social survey ever conducted — revealed a population of 1.3397 billion that was fundamentally different: ageing (13.3% over age 60 and only 16.6% below age 15); half (49.7%) urban; 96% literate, with 23% attaining a high school or college education; and the second largest economy in the world, with per capita income over US$4,000 (over $7,000 per capita GDP in purchasing power parity terms). Life expectancy has increased from less than 40 in 1949 to 72.5 for men and 76.8 for women in 2010.

During the Mao era (the 1950s through 1970s), China’s mostly rural population had access to basic health services under cooperative medical schemes managed by agricultural communes. The small but growing urban population was largely covered by work-unit-based health insurance, either through the Labor Insurance System or the Government Insurance System. The famous “barefoot doctors” of the late 1960s and 1970s provided basic medical services and health promotion such as immunizations to China’s vast rural population. Although the standards of care were minimal (village doctors usually had only a few months training after secondary school), widespread availability and use of basic medicines, including traditional Chinese medicines, and active emphasis on control of infectious disease contributed to dramatic health improvements.

In addition to China’s economic transition from central planning to a market-based economy, China’s health system has had to adapt to large changes in the population and disease burden. Demographic transition from high mortality and high fertility to relatively low mortality and low fertility occurred quite rapidly. Over the past quarter century, China’s primary burden of disease has shifted definitively from infectious to chronic non-communicable disease, although the burden of some infectious diseases such as tuberculosis remains large. In both urban and rural areas, cancer, heart conditions and cerebrovascular diseases are now top killers.

Analysis and results

In terms of local service provision, China has inherited a largely hospital-based delivery system managed through the Ministry of Health and local government, supplemented by a vast cadre of village doctors and a newly developed system of grassroots providers in urban areas. Like many other health systems in Asia (including Japan and Korea), a large share of outpatient visits, even for relatively minor conditions and first-contact care, is to secondary and tertiary hospital outpatient departments.

China’s recent reforms promote development of a primary health care system of “grassroots providers,” strengthening the quality and funding for village clinics, township health centres, urban community health centers, and launching a new program for GPs designed to bring “barefoot doctors” into the 21st century in terms of training and quality. The effort to build up a reliable network of non-hospital-based primary care providers is a difficult and long-term process, since patients have a well-founded distrust of the quality of primary care providers.

In sum, China has achieved wide, shallow coverage, and is proceeding to deepen coverage while putting in place additional mechanisms to try to assure that the additional health spending achieves “value for money spent,” including improvements in personnel training, provider organization governance, clinical service delivery, payment and contracting, and population health services. The next phase of reforms, to be announced in detail in 2012, appear to be intended to further deepen the 2009 reforms: enriching insurance benefits, improving portability, encouraging private sector delivery, reforming county-level hospitals, extending the essential medications system to private primary care providers, and further strengthening population health initiatives.

Conclusion

China has now achieved universal coverage, since 1.295 out of 1.3397 billion people — fully 95% of the population — have health insurance, and out-of-pocket spending is 35.5% of total expenditure on health. However, the government hails this triumph of risk pooling not as universal coverage but as achieving the interim goal of expanding basic coverage articulated in the 2009 reform plan. The system continues to have many weaknesses in providing access to quality services. The challenge is to continue to deepen risk pooling, strengthen primary care, raise clinical quality, improve incentives, and re-engineer service delivery to better fit the needs of China’s increasingly urban, affluent, and aging society.

Implications and recommendations

In April 2009, the China Central Communist Party along with the China State Council announced a comprehensive healthcare reform initiative and issued a new healthcare reform plan named “Implementation Plan for Deepening Pharmaceutical and Health System Reform 2009-2011.” The government adopted five key reform priorities for the first three years of reform: accelerating the expansion of the basic health insurance system; establishing a national essential drug list system; improving primary health care services through s renewed system of grassroots providers; promoting the equalization of basic public health services; and facilitating pilot reform programs in public hospitals.

Of the five priorities announced in 2009, expansion of health insurance coverage has almost surely been the most successful. The central role of health insurance is to protect enrolees from the risk of high medical expenditures. Protection from risk is also likely to support better access and utilization of “needed” services.

China’s recent health reforms also recognize the need to improve incentives throughout the system. For example, a key component of plans to strengthen primary care is improving the performance appraisal system for health workers in government-owned primary care organizations.

Source

Health care for 1.3 billion. An overview of China’s health system