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Stanford University
Walter H. Shorenstein Asia-Pacific Research Center
Asi a Heal th Pol i cy Program

Worki ng paper seri es
on health and demographic change in the Asia-Pacific



Health Care for 1.3 Billion:
An Overview of Chinas Health System


Karen Eggleston, Stanford University


Asia Health Policy Program working paper # 28

January 9, 2012

http://asiahealthpolicy.stanford.edu

For information, contact: Karen N. Eggleston ()
Walter H. Shorenstein Asia-Pacific Research Center
Freeman Spogli Institute for International Studies
Stanford University
616 Serra St., Encina Hall E311
Stanford, CA 94305-6055
(650) 723-9072; Fax (650) 723-6530
karene@stanford.edu
1

!"#$%& (#)" *+) ,-. /0$$0+12
An 0veiview of China's Bealth System

Kaien Eggleston
1

Stanfoiu 0niveisity

}anuaiy 9, 2u12



Abstiact. What kinu of a health caie system uo China's 1.S billion tuin to when
ill, injuieu, oi in neeu of caie. This aiticle pioviues a biief oveiview of how
China's health system has tiansfoimeu alongsiue China's society anu economy
since the Nao eia, incluuing how the cuiient system is financeu, oiganizeu,
iegulateu, anu being iefoimeu. I fiist pioviue a biief uesciiption of the Nao-
eia health system anu China's uemogiaphic anu epiuemiologic tiansitions.
Then I oveiview China's contempoiaiy health caie system, incluuing the
uiamatic expansion of health insuiance ovei the last eight yeais anu the
piogiess of national health system iefoims initiateu in 2uu9.

A conuenseu anu ieviseu veision of this papei will be publisheu in The Nilken
Institute Review.

1
I am giateful to Shannon Baviuson anu Rong Li foi excellent ieseaich assistance. A conuenseu anu ieviseu
veision of this papei will be publisheu in !"# %&'(#) *)+,&,-,# .#/&#0.
2



A half centuiy ago, in the eaily Nao eia, China's population of half a billion people was
young (S6% age less than 1S), 8u peicent iuial, one-thiiu illiteiate, anu living in absolute poveity.
By 2u1u, China's 6
th
population census - the laigest social suivey evei conuucteu - ievealeu a
population of 1.SS97 billion that was funuamentally uiffeient: ageing (1S.S% ovei age 6u anu only
16.6% below age 1S); half (49.7%) uiban; 96% liteiate, with 2S% attaining a high school oi college
euucation; anu the seconu laigest economy in the woilu, with pei capita income ovei 0S$4uuu
(ovei $7uuu pei capita uBP in puichasing powei paiity teims).
2
Life expectancy has incieaseu fiom
less than 4u in 1949 to 72.S foi men anu 76.8 foi women in 2u1u.
S

What kinu of a health caie system uo China's 1.S billion tuin to when ill, injuieu, oi in neeu
of caie. This aiticle pioviues a biief oveiview of how China's health system has tiansfoimeu
alongsiue China's society anu economy, incluuing how the cuiient system is financeu, oiganizeu,
iegulateu, anu being iefoimeu. I fiist pioviue a biief backgiounu on the Nao-eia health system anu
China's uemogiaphic anu epiuemiologic tiansitions. Then I uesciibe China's contempoiaiy health
caie system, incluuing the uiamatic expansion of health insuiance ovei the last eight yeais anu the
piogiess of national health system iefoims initiateu in 2uu9.

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Buiing the Nao eia (the 19Sus thiough 197us), China's mostly iuial population hau access
to basic health seivices unuei coopeiative meuical schemes manageu by agiicultuial communes.
The small but giowing uiban population was laigely coveieu by woik-unit-baseu health insuiance
eithei thiough the Laboi Insuiance System oi the uoveinment Insuiance System. The famous
"baiefoot uoctois" of the late 196us anu 197us pioviueu basic meuical seivices anu health
piomotion such as immunizations to China's vast iuial population. Although the stanuaius of caie
weie minimal (village uoctois usually hau only a few months tiaining aftei seconuaiy school),
wiuespieau availability anu use of basic meuicines, incluuing tiauitional Chinese meuicines, anu
active emphasis on contiol of infectious uisease contiibuteu to uiamatic health impiovements.
Inueeu, the inciease in life expectancy at biith fiom SS~4u in 1949 to 6S.S in 198u iepiesents the
most iapiu sustaineu inciease in uocumenteu global histoiy (Nillei, Eggleston, anu Zhang, 2u11).

2
For the 2010 census results, see Peng (2011) and Charts of Major Figures from Population Censuses (Quanguo
Renkou Pucha Zhuyao Shuju Tubiao), National Bureau of Statistics of China, 2011; the latter includes comparisons
to the first two censuses in 1953 and 1964.
3
See discussion and sources in Miller, Eggleston and Zhang (2011) and in Eggleston (2011).
3

Recent empiiical analysis suggests that in auuition to China's ietuin to stability aftei uecaues of
wai anu bettei nutiition, significant ueteiminants of this health impiovement incluueu wiuespieau
public health inteiventions anu incieasing levels of euucational attainment (ibiu).
Although China's uevelopment stiategy hau always ielieu on significant uecentialization,
uecentialization of financial management to local goveinments anu inuiviuual enteipiises was a
uefining featuie of the 198us anu 199us. 0iban aieas saw the implementation of usei fees as public
funuing ueclineu, anu the uissolution of iuial coopeiatives anu association of coopeiative meuical
schemes with the iauicalism of the Cultuial Revolution (Buckett 2u11) causeu insuiance coveiage
levels in iuial aieas to uiop to 7% of counties by 1999 (Tam, 2u1u; Nanning, 2u11; Baibei anu Yao,
2u11), with village uoctois becoming fee-foi-seivice piivate pioviueis. The majoiity of China's
population uiu not have health insuiance between 198u anu 2uuu. Supply-siue subsiuies typically
coveieu less than 1u% of pioviuei expenses, with the iemainuei eaineu thiough fee-foi-seivice
payment fiom uninsuieu patients.

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In auuition to China's economic tiansition fiom cential planning to a maiket-baseu
economy, China's health system has hau to auapt to laige changes in the population anu uisease
buiuen. Bemogiaphic tiansition fiom high moitality anu high feitility to ielatively low moitality
anu low feitility occuiieu quite iapiuly. The total feitility iate ueclineu fiom aiounu 6 in 19Su-SS to
aiounu 2 in 199u-9S, with the most iapiu uecline in the 197us piioi to the beginning of the one-
chilu policy. The total feitility iate is now below ieplacement level (Peng, 2u11). As a iesult of
ieuuceu moitality anu incieaseu human capital investment pei chilu, by 198u at the beginning of
the iefoim eia China hau alieauy attaineu bettei health anu highei euucational attainment than
othei countiies of similai pei capita income (Eggleston 2u11). Although health piogiess in the eaily
iefoim eia was less uiamatic (life expectancy hau ieacheu 69.9 foi women anu 66.9 foi men by
199u), by 2u1u life expectancy was 76.8 foi women anu 72.S foi men.
0vei the past quaitei centuiy, China's piimaiy buiuen of uisease has shifteu uefinitively
fiom infectious to chionic non-communicable uisease, although the buiuen of some infectious
uiseases such as tubeiculosis iemains laige.
4
In both uiban anu iuial aieas, cancei, heait conuitions,
anu ceiebiovasculai uiseases aie now top killeis. }iang Be anu colleagues (2uu9) show that

4
Noncommunicable uiseases accounteu foi ovei 7u% of China's uisease buiuen by 2uu1, a iise of 2u% in its
ielative shaie since 199u, accoiuing to the NIBWBWB0 Bisease Contiol Piioiities Pioject; see Lopez et al.
2uu6 anu "Buiuen of uisease in China in 2uu1," Bisease Contiol Piioiities Pioject, Apiil 2uu6, available at
www.ucp2.oig.
4

hypeitension is the leauing pieventable iisk factoi foi piematuie moitality in China, accounting foi
2.SS ueaths in 2uuS. Nost bloou piessuie-ielateu ueaths weie causeu by ceiebiovasculai uiseases
(ibiu). By in 2uu7-2uu8, the age-stanuaiuizeu pievalence of uiabetes among auults in China was 9.7
peicent (Yang et al. 2u1u), with the majoiity of patients unuiagnoseu anu untieateu.
S
China's health
system faces the challenge of tiansitioning fiom focus on acute caie anu contiol of communicable
uisease to a system suppoiting pievention anu cost-effective management of chionic uisease.

;#2'," ?25# C&)2)3&)4 &) ,"# .#D65> :528 E .#)#0#7 .6'# D65 F-G'&3 C&)2)3#
Spenuing on health iepiesents a ielatively mouest shaie of China's uBP (S.u1% in 2u1u) -- a
highei shaie than Inuia oi Inuonesia, a little less than Russia oi Tuikey, anu fai less than the 0ECB
aveiage of 9.S%.
6
Bowevei, since the pace of uBP giowth has been unpieceuenteuly iapiu, anu
health spenuing has incieaseu as a shaie of uBP (fiom S.6S% in 1994), the giowth of China's health
spenuing has been one of the most iapiu in woilu histoiy.
7

At fiist, this giowth of spenuing came piimaiily fiom incieases in out-of-pocket spenuing,
but moie iecently China has gieatly incieaseu goveinment funuing, mostly thiough public
subsiuies foi voluntaiy eniollment in social insuiance piogiams in iuial anu uiban aieas. Piivate
spenuing as a shaie of total spenuing initially incieaseu uuiing the iefoim eia, ieaching almost two-
thiius of spenuing (64.4S%) in 2uu1. In 2uu2, with the beginning of goveinment-subsiuizeu health
insuiance foi iuial Chinese, the piivate shaie of health spenuing staiteu a giauual uecline, ieaching
4S.94% by 2u1u.
8
Thus, public spenuing now constitutes a little ovei half of China's total health
spenuing, much highei than many low- anu miuule-income countiies anu a similai piopoition as in
the 0S anu South Koiea, but significantly lowei than the aveiage of 72% foi 0ECB countiies.
uiven the ielatively small maiket foi commeicial insuiance in China, piivate spenuing is
oveiwhelmingly "out-of-pocket" spenuing by patients anu theii families (i.e., uiiect payment foi

5
These tienus aie closely ielateu to changes in uiets, uibanization anu moie seuentaiy lifestyles. Ng anu
Popkin (2u1u) highlight China as one of 4 countiies with the steepest incieaseu in pievalence of oveiweight
anu obesity in the past 2u yeais (alongsiue Nicaiagua,

Peiu, anu Inuonesia). Bata fiom the China Bealth anu
Nutiition Suivey shows that the pievalence of oveiweight incieaseu fiom 12.8% in 1991 to 27.2% in 2uu6,
with the steepest inciease among the pooiest (as measuieu by the pooiest

income teitile: 8% to 2S.S%; Bu,
Wang, anu Popkin 2uu9).
6
All health expenuituie uata is fiom the National Bealth Account estimates of the China National Bealth
Bevelopment Reseaich Centei (2u11). The mouest shaie of uBP spent on health caie paitly ieflects China's
oveiall low consumption shaie of uBP. China's extiaoiuinaiily high savings iate is itself linkeu to the lack of a
compiehensive safety net, anu the population's piecautionaiy savings foi meuical expenuituies as well as
olu-age suppoit, housing, chiluien's euucation, anu othei majoi expenses.
7
Pei capita health spenuing giew moie than ten-folu between 1994 anu 2u1u (fiom 146 to 1,487 RNB pei
peison in nominal teims).
8
China National Bealth Bevelopment Reseaich Centei, 2u11, Table S, p.9.
5

seivices at the moment of neeu). 0ut-of-pocket spenuing as a shaie of total health spenuing
incieaseu fiom 2u.4S% in 1978 to a peak of S9.97% in 2uu1 anu then ueclineu to SS.S2% in 2u1u.
9

This significant uecline in out-of-pocket spenuing as a shaie of the total, while total
spenuing has continueu to giow iapiuly, ieflects the impact of China's uiamatic expansion of social
health insuiance ovei the last eight yeais. uoveinment financing has tiansfoimeu fiom uiiect
subsiuies of goveinment-iun pioviueis to subsiuies foi householus to enioll in social health
insuiance. This financing change, often calleu "moving fiom subsiuizing the supply siue to
subsiuizing the uemanu siue," has been most uiamatic in iuial aieas, wheie as iecently as 2uu1
goveinment subsiuies weie almost exclusively in the foim of supply-siue buugetaiy suppoit of
healthcaie pioviueis. 0nly 8 yeais latei, ovei half (S4.8%) of goveinment spenuing foi iuial health
took the foim of uemanu-siue subsiuies (subsiuies foi NCNS).
1u
This change in financing stiategy
has intiouuceu a puichasei-pioviuei split in China, especially in uiban aieas wheie the Ninistiy of
Buman Resouices anu Social Secuiity now functions as puichasei. (In iuial aieas both the
insuiance (NCNS) anu the piovision aie manageu thiough the Ninistiy of Bealth).
China's spenuing on phaimaceuticals as a shaie of total expenuituies on health has been
peisistently high by inteinational stanuaius (though not so atypical foi low income countiies oi foi
East Asia); uiug spenuing was about half of all health expenuituies in 1992, subsequently ueclining
somewhat to 4u% by 2u1u.
These aggiegate statistics can only poitiay a iough pictuie of China's health system, since
China is a laige anu uiveise countiy, with iegions vaiying significantly in economic uevelopment
anu socio-uemogiaphic piofiles. Noieovei, China's system of health financing, like the financing of
many public seivices, is quite uecentializeu, exaceibating iathei than mitigating iegional anu
uiban-iuial uispaiities. Pooiei piovinces ieceive some financial suppoit fiom cential goveinment,
but such ieuistiibution is iathei limiteu anu laige uiffeiences in spenuing peisist. Foi example, the
iatio of uiban to iuial pei capita health spenuing was less than 2 in the eaily 199us, incieaseu to
S.6S in 2uuu, anu then ueclineu somewhat since the implementation of NCNS anu the iecent
iefoims, to 2.67 in 2u1u. This laige uiban-iuial gap aiose not because the health spenuing in iuial
aieas stagnateu; inueeu, iuial pei capita health spenuing incieaseu 17-folu ovei the last two
uecaues (in nominal teims); but uiban spenuing, like uiban incomes, incieaseu even fastei: HH9D6'7
uuiing those same two uecaues (China National Bealth Bevelopment Reseaich Centei, 2u11). The

9
China National Bealth Bevelopment Reseaich Centei, 2u11, Table S, p.6.
10
uonggong Caizheng Zhuanxing, Yiliao Tizhi uaige yu Zhengfu Weisheng Chouzi Zeien ue Buigui, Zhongguo
}ingji Tizhi uaige Yanjiuhui uonggong Zhengce Yanjiu Zhongxin, 2u11, p.18.
6

almost thiee-folu gieatei pei capita health spenuing in uiban aieas compaieu to iuial ones is
actually lowei than the foui-folu uiffeience in uiban-iuial pei capita incomes.
11


I542)&J2,&6) 6D "#2'," +#5/&3# 7#'&/#5=
In teims of the locus of seivice piovision, China has inheiiteu a laigely hospital-baseu
ueliveiy system manageu thiough the Ninistiy of Bealth anu local goveinments, supplementeu by a
vast cauie of village uoctois anu a newly uevelopeu system of giassioots pioviueis in uiban aieas.
Like many othei health systems in Asia (incluuing }apan anu Koiea), a laige shaie of outpatient
visits, even foi ielatively minoi conuitions anu fiist-contact caie, is to seconuaiy anu teitiaiy
hospital outpatient uepaitments. 0nsuipiisingly, spenuing on inpatient seivices iepiesents the
laigest categoiy of piovision, incieasing in the iefoim eia to ieach a peak of 68.88% of total health
spenuing in 2uuS anu then ueclining slightly to 61.61% in 2u1u.
12

China's iecent iefoims piomote uevelopment of a piimaiy health caie system of "giassioots
pioviueis," stiengthening the quality anu funuing foi village clinics, township health centeis, uiban
community health centeis, anu launching a new piogiam foi uPs uesigneu to biing "baiefoot
uoctois" into the 21
st
centuiy in teims of tiaining anu quality.
1S
The effoit to builu up a ieliable
netwoik of non-hospital-baseu piimaiy caie pioviueis is a uifficult anu long-teim piocess, since
patients have a well-founueu uistiust of the quality of piimaiy caie pioviueis. 0nlike in some othei
ueveloping countiies, howevei, China uoes not face the same challenges of iampant absenteeism
anu ciumbling infiastiuctuie. But the ubiquitous slogan "(2) G&)4 )2)K (2) G&)4 4-&" (getting health
caie is uifficult anu expensive) captuies the aveiage Chinese patient's concein about access to
appiopiiate anu high-quality caie.
China has nevei imposeu gatekeeping iequiiements; patients tiauitionally have been fiee to
self-iefei to any pioviuei, although social health insuiance piogiams limit coveiage foi pioviueis
outsiue the given locality (county oi municipality). Again, this tiauition of patient choice is quite
similai to othei health systems in East Asia (}apan, South Koiea, Taiwan), wheie gatekeeping is
viitually nonexistent.

11
The 4-fold difference in urban and rural per capita income is estimateu by Li Shi, Teiiy Siculai anu colleagues
baseu on uetaileu uata fiom the China Bouseholu Income Pioject, a collaboiative suivey ieseaich pioject
monitoiing changes in incomes anu inequality.
12
China National Bealth Bevelopment Reseaich Centei, 2u11, Table 9, p.66.
1S
The official uefinition of "giass-ioots health caie institution" incluues community health centeis,
community health stations, sub-uistiict health centeis, village clinics, fieestanuing outpatient uepaitments,
anu othei clinics.
7

China's hospitals, anu a laige shaie of its giassioots pioviueis, aie goveinment owneu anu
manageu. The latest available statistics, coveiing }anuaiy thiough 0ctobei 2u11, show that piivate
hospitals accounteu foi 6.1% of uischaiges anu 8.2% of outpatient visits.
14
The piivate sectoi
accounts foi a laigei shaie of seivices at the giassioots level, incluuing 18.6% of visits to
community health centeis anu stations. Although most township health centeis aie goveinment-
iun, almost half of all visits to giassioots pioviueis weie to village clinics, most of which aie piivate.
It is uifficult to uocument piecisely how much China's piivate sectoi ueliveiy has giown uuiing the
iefoim eia because China's official statistics only iecently began sepaiately categoiizing public anu
piivate ueliveiy.
1S
Bealth seivice pioviueis also incluue specializeu public health oiganizations
such as the China Centei foi Bisease Contiol (CBC), specializeu uisease pievention anu tieatment
oiganizations, health euucation centeis, mateinal anu chilu health centeis, anu family planning
seivice centeis.
Some national health iefoim goals aie uefineu in teims of the futuie ecology of pioviueis.
Specifically, authoiities call foi iejuvenating the thiee-tiei netwoik of pioviueis, with a goal of each
county having at least one "uiaue 2B" hospital (seconuaiy "meuium-level" hospital) anu seveial
cential township hospitals; each auministiative village having a clinic; anu each |uibanj
neighboihoou having a community health facility.

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As noteu eailiei, out-of-pocket spenuing incieaseu to 6u% of total health spenuing in the
iefoim eia (even without incluuing the ubiquitous infoimal "ieu packet" payments to uoctois),
uespite effoits to tiy to ievive iisk pooling. In 1996, the Cential uoveinment conveneu a national
meeting on health iefoim anu issueu a policy uocument encouiaging local goveinments to
expeiiment with the ie-establishment of coopeiative meuical schemes (CNS) in iuial aieas.
Bowevei, significant coveiage expansion uiu not occui until the goveinment announceu uiiect
buugetaiy suppoit foi the new CNS (NCNS) in 2uu2, with matching contiibutions fiom local

14
See the Ministry of Health website for current statistics, available at
http://www.moh.gov.cn/publicfiles/business/htmlfiles/mohwsbwstjxxzx/s7967/201112/53508.htm.
1S
Accoiuing to the official uefinition, public (46)4'&) hospitals incluue state-owneu anu collective-owneu
hospitals. Non-public (>&)=&)4) hospitals incluue joint ventuies, coopeiatives, puiely piivate, anu hospitals
funueu fiom souices in Bong Kong, Nacao, Taiwan, oi foieign countiies. Piioi to 2uu9, ueliveiy oiganizations
weie categoiizeu as foi-piofit oi not-foi-piofit, but not by public anu piivate owneiship. In 2uu8, foi-piofit
hospitals accounteu foi 4.u% of uischaiges anu 4.4% of visits. Foi-piofit pioviueis account foi a laigei, albeit
still minoi, shaie of specializeu inpatient seivices (1S.7% of visits anu 14.9% of uischaiges in 2uu8).


8

goveinments anu householus (CCCPC, 2uu2, citeu by Bloom, 2u11). NCNS iisk pooling is at the
county level, anu it was implementeu as a voluntaiy health insuiance piogiam with householu-
baseu annual eniollment. By 2uu9, 94% of iuial counties offeieu NCNS (Baibei anu Yao, 2u11).
Between 2uuS anu 2uu8, piemium subsiuies incieaseu fouifolu fiom 2u RNB pei capita pei yeai to
8u RNB pei capita (Wang, 2uu9), anu aie slateu to fuithei inciease, with wealthiei iegions able to
offei moie geneious benefit packages.
In uiban aieas, the 0iban Employees' Basic Neuical Insuiance system (0EBNI) was
establisheu in 1998 to ieplace woik-unit-baseu coveiage with municipality-level iisk pooling (Liu,
2u11). By the enu of 2uu6, 0EBNI coveieu 64% of the uiban employeu population but only S1% of
the total uiban population (Wang et al., 2u11). To expanu insuiance coveiage fuithei, in 2uu7 the
goveinment launcheu pilot piogiams of the 0iban Resiuents' Basic Neuical Insuiance piogiam
(0RBNI) in seveial cities, anu iapiuly iolleu out the piogiam to all municipalities nationwiue. This
insuiance piogiam pioviues voluntaiy coveiage foi uiban iesiuents not eniolleu in the employee
insuiance piogiam, incluuing stuuents, ietiiees, anu othei uepenuents. The goveinment subsiuy
unuei this piogiam in 2uu9 iangeu fiom 4u RNB to 8u RNB pei capita, uepenuing on the iegion's
economic status anu the social vulneiability of population gioups (Lin et al. 2uu9; Wang et al. 2u11).
Nigiant woikeis can obtain insuiance thiough NCNS, 0RBNI, oi in some cities, piogiams
specifically uesigneu foi migiant woikeis.
The goveinment emphatically ieasseiteu its iole in the health sectoi with majoi piogiams
of health iefoim announceu in 2uu9, backeu with funuing estimateu at 8Su billion RNB, oi ioughly
0S $124 billion (Yip et al. 2uu9; Tam 2u1u; Eggleston 2u1u; Nanning 2u11). The fiist of the five
piioiities announceu in 2uu9 was fuithei expansion of social health insuiance coveiage. Cuiiently,
9S% of Chinese have health insuiance.
16
The voluntaiy goveinment-subsiuizeu piogiams of NCNS
anu 0RBNI have lowei piemiums anu less geneious benefit packages than the manuatoiy anu
longei-stanuing insuiance piogiams foi uiban employees anu goveinment woikeis. China has
expanueu iisk pooling thiough "wiue but shallow coveiage" that is giauually ueepeneu ovei time to
achieve univeisal coveiage with a iobust benefit package; this appioach is sometime calleu "equal
access by 2u12 anu univeisal coveiage by 2u2u" (Yip, Wagstaff et al. 2uu9).
Commeicial insuiance companies' involvement in the iefoims has been mostly as
supplementaiy insuiance coveiage foi the wealthy oi foi specific uieau uiseases, oi in pioviuing

16
According to Li Keqiang at a national meeting on health reform on November 29, 2011 in Beijing; see
http://sub.ldws.gov.cn/xhx/ReadNews.asp?NewsId=617.
9

auministiative-seivices foi social health insuiance plans (,N&)4G2)).
17
The peicentage of social
health insuiance funus involveu in contiacting out to commeicial insuieis foi auministiative
seivices iemains limiteu, though it might expanu in the futuie.
18

China oveiall achieveu its five aiticulateu goals foi 2uu9-2u11: extenuing basic health
insuiance coveiage to 9u% of the population, expanuing the public health seivice benefit package,
stiengthening piimaiy caie, implementing an essential uiug list foi all giass-ioots seivice
pioviueis (incluuing sepaiation of piesciibing fiom uispensing in piimaiy caie), anu
expeiimenting with iefoims of goveinment-owneu hospitals.
19

In }uly 2u11, the State Council issueu a uocument entitleu "Biiections on the Establishment
of the ueneial Piactitionei System,"
2u
announcing that a geneial piactitionei (uP) system will be
implementeu thioughout China by 2u2u. The uocument lists piinciples foi establishing the new
system to ensuie the quality of uPs, with a focus on impioving theii capabilities in clinical piactice,
stanuaiuizing ciiteiia foi tiaining, anu cieating stiict iequiiements foi licensuie anu ceitification.
The plan calls foi two oi thiee uPs in piactice foi eveiy 1u,uuu uiban anu iuial iesiuents. The
goveinment will pioviue subsiuies to uPs who aie willing to woik in iemote aieas in the cential
anu westein paits of the countiy. The initiative also envisions enabling local iesiuents to establish
stable contiact-baseu ties with uPs to ieceive appiopiiate anu cooiuinateu seivices.
In sum, China has achieveu wiue, shallow coveiage, anu is pioceeuing to ueepen coveiage
while putting in places auuitional mechanisms to tiy to assuie that the auuitional health spenuing
achieves "value foi money spent," incluuing impiovements in peisonnel tiaining, pioviuei
oiganization goveinance, clinical seivice ueliveiy, payment anu contiacting, anu population health
seivices. The next phase of iefoims, to be announceu in uetail in 2u12, appeai to be intenueu to
fuithei ueepen the 2uu9 iefoims: eniiching insuiance benefits, impioving poitability, encouiaging

17
Also using CBNS uata, Liu anu colleagues (2uu9) useu a uiffeience-in-uiffeience appioach to analyze effects
of the NCNS on piivate health insuiance puichasing uecisions in iuial China. Theii piimaiy finuings
suggesteu that auults weie 2.1 peicent moie likely to puichase piivate health insuiance when NCNS became
available, anu that the effect of NCNS on auult piivate coveiage was laigei in highei income gioups anu in
communities that pieviously hau CNS.
"#
Fiom }an-Sep 2u1u, commeicial insuieis weie involveu in NCNS in 128 counties. They insuieu S4S.S
million iuial citizens anu coveieu health payment of 1,82u million RNB (oi $266 million) uuiing the peiiou.
(http:www.moh.gov.cnpublicfilesbusinesshtmlfilesmohncwsglssSS822u1u12Su149.htm) Also see
N0B, Q&A about commeicial insuieis' iole in health iefoim, available at
http:www.moh.gov.cnpublicfilesbusinesshtmlfilesmohzcfgss96642uu9u44uu4S.htm |accesseu 1
}anuaiy 2u12j.
19
For more detail on the five priority areas of the 2009 national reforms and the explicit targets set for the 2009-20ll
period, please see the appendix.
2u
See "Biiections on the Establishment of the ueneial Piactitionei System"(
), }uly 1, 2u11. http:www.nuic.gov.cnshfzyywstzggygzct2u11u7u7_421847.htm.

10

piivate sectoi ueliveiy, iefoiming county-level hospitals, extenuing the essential meuications
system to piivate piimaiy caie pioviueis, anu fuithei stiengthening population health initiatives.
21


!"# F6'&,&32' :36)6>= 6D ;#2'," <=+,#> .#D65> 0&," ?"&)#+# ?"2523,#5&+,&3+
As I have aigueu elsewheie (Eggleston 2u1u), only in the eaily yeais of the twenty-fiist
centuiy, almost thiity yeais into China's iefoims, uiu the political economy of the seveie acute
iespiiatoiy synuiome (SARS) ciisis anu othei links to social instability uiive policymakeis to
ieassess the pioblems in China's health-caie system as a whole. The goveinment has iaiseu
expectations that it will ieuiess the pioblem of "(2) G&)4 )2)K (2) G&)4 4-&" (meuical caie being
uifficult to access anu expensive). The cieuibility of its piomises aie now on the line as it moves
past the initial stage of insuiance expansion anu giapples with how to uelivei high quality caie at
ieasonable cost to its 1.S billion citizens.
Since health iefoims impinge upon the juiisuictions anu inteiests of multiple goveinment
ministiies anu agencies, the iefoim piocess since 2uu9 has been cooiuinateu not fiom the Ninistiy
of Bealth uiiectly, but iathei fiom a special unit uiiectly unuei the State Council (the Bealth Refoim
0ffice of the State Council). The National Bevelopment anu Refoim Commission anu the Ninistiy of
Finance aie key playeis in almost all aspects of iefoim. The Ninistiy of Buman Resouices anu
Social Secuiity is in chaige of the uiban insuiance plans. The Ninistiy of Civil Affaiis iuns the
Neuical Aiu piogiam, pioviuing financial aiu to the pooi to be able to affoiu basic health insuiance
coveiage. The China Insuiance Regulatoiy Commission has playeu a stiong iole in encouiaging
commeicial health insuiance. Stieamlining uiug manufactuiing anu uistiibution anu piovincial-
level uiug piocuiement foi all goveinment-iun piimaiy caie pioviueis involves cooiuination with
the Ninistiy of Inuustiy anu Infoimation Technology, the Ninistiy of Commeice, anu the State Foou
anu Biug Auministiation. Questions of peisonnel anu staffing, such as the iefoim towaiu allowing
health woikeis to piactice anywheie within the same locality (iathei than only have a license to
piactice at a given hospital oi clinic), iequiies involvement of the 0ffice of Cential Institutional
0iganization. The Ninistiy of Euucation becomes involveu in ievamping euucational iequiiements,
such as the new uP system (oi effoits to impiove health euucation anu mental health seivices in
schools).
Bealth system iefoims in China not only constitute an impoitant chaptei of global health
system impiovement, but also embouy anu illustiate China's bioauei economic anu social iefoim

21
See the summary of the national meeting on health reform on November 29, 2011 in Beijing, available at
http://sub.ldws.gov.cn/xhx/ReadNews.asp?NewsId=617.

11

piocess, incluuing the style anu management of iefoims thiough what Chenggang Xu calls
"iegionally uecentializeu authoiitaiianism" (Xu 2u11). Refoim pioposals anu guiuelines set
paiameteis anu goals foi iefoims, but uelegate to local authoiities - at the piovincial, anu then
lowei levels - the autonomy anu accountability foi implementing iefoims. The Bealth Refoim
0ffice of the State Council signs "accountability foims" with piovincial goveinments, who uelegate
tasks thiough contiacts with local goveinments uown to the county level. Noieovei, officials'
evaluation ciiteiia foi piomotions have been expanueu to incluue some taigets of health iefoim,
such as ovei 9u% eniollment in the voluntaiy social health insuiance piogiams (NCNS anu
0RBNI).
22
Not achieving these taigets ieflects pooily on local officials' leaueiship skills anu impacts
futuie piomotion, so they spenu consiueiable time anu iesouices to encouiage eniollment. Keeping
eniollment voluntaiy, in tuin, gives highei-level authoiities an impoitant signal about whethei the
populace peiceives the new insuiance piogiams to be woithwhile anu effective.
0nfoitunately, many chaiacteiistics of a mouein, equitable, anu efficient health system aie
not so easily uefineu by objective, easily obseivable anu quantifiable taigets foi local authoiities.
0ne paiticulai quanuaiy foi China is how best to impiove goveinance of health seivice pioviueis,
especially goveinment-owneu uiban hospitals, the "commanuing heights" of China's health seivice
ueliveiy system. Numeious Chinese authois uesciibe the foimiuable uifficulties of public hospital
iefoim anu piopose uiamatically uiffeient appioaches (Li 2u1u; uu anu Yu 2u11; Xiong 2u1u; Zhou
2u11; Yu 2u11; Cai 2u11). 0fficial goveinment iefoim uocuments since 2uu9 have calleu foi "bolu
anu innovative" local expeiiments, incluuing owneiship iestiuctuiing. Bowevei, the political stakes
aie high, the inteiest gioups stiong, the financial flows laige, anu the iisk of mismanagement
appeai to outweigh the iewaius fiom such bolu iefoims. Nany analysts anu officials piivately
expiess uoubts that much will ieally happen until the cential authoiities aiticulate a cleai policy
iegaiuing hospital iefoim.

*>B56/#7 E33#++ 2)7 .&+( F56,#3,&6)
0f the five piioiities announceu in 2uu9, expansion of health insuiance coveiage has almost
suiely been the most successful. The cential iole of health insuiance is to piotect eniollees fiom the
iisk of high meuical expenuituies. Piotection fiom iisk is also likely to suppoit bettei access anu
utilization of "neeueu" seivices. Bowevei, insuiance may also inuuce ovei-use (moial hazaiu) on

22
Although it is not entiiely cleai which health system-ielateu objectives aie incluueu in the assessment
ciiteiia foi piomotions, it is cleai that officials uo iesponu to those incentives. Thiee of the bettei-known
components of the cauie evaluation system aie local economic giowth, social stability, anu meeting family
planning goals.
12

both the uemanu siue anu the supply siue. Noieovei, with voluntaiy coveiage (as foi NCNS anu
0RBNI), auveise selection coulu cause uniaveling of coveiage if eniollment iates aie low.
An incieasing numbei of empiiical stuuies confiim that China's iecent expansion of
insuiance has achieveu ielatively high eniollment, avoiueu significant auveise selection, impioveu
access to caie, anu ieuuceu catastiophic spenuing -- albeit with wiue iegional anu sub-population
uispaiities anu some anomalies (Liu et al. 2uu9; uu 2u1u; Song 2u11). Foi example, Wagstaff anu
Linuelow (2uu8) use thiee suiveys fiom the eaily yeais of China's insuiance expansion to show
that aftei accounting foi the enuogeneity of insuiance, health insuiance coveiage &)35#2+#+ the iisk
of high anu catastiophic spenuing. Theii analyses piobing this pattein suggest that the eaily limiteu
insuiance coveiage hau this impact because it encouiageu access to caie anu use of highei-level
pioviueis, without benefit packages iich enough to offset the oveiall inciease in meuical
expenuituies. Similaily, Wagstaff anu colleagues (2uu9) finu that NCNS boosteu access to caie (in
teims of highei outpatient anu inpatient utilization) anu township health centeis' ievenues, but uiu
not ueciease out-of-pocket spenuing oi expenuituies pei case at township health centeis.
0ne of the fiist economic analyses of the new 0RBNI by Lin anu colleagues (2uu9) useu
householu suivey uata to show that paiticipation was highest among the veiy iich oi the veiy pooi,
anu that the most significant benefits anu satisfaction weie expeiienceu by the pooi anu those who
hau pieviously utilizeu inpatient seivices. Those patients with pievious inpatient caie weie moie
likely to enioll in the piogiam, as weie those with chionic uisease, suggesting some auveise
selection into paiticipation. The pooiest patients iepoiteu the highest satisfaction (Lin et al. 2uu9).
Coveiage foi migiant woikeis has been especially pioblematic, but localities have maue some
piogiess in integiating migiants into the existing patchwoik of social insuiance funus. Foi example,
Qing anu Liu (2u11) finu that the 0iban Employee Basic Neuical Insuiance has been effective in
loweiing the out-of-pocket inpatient cost, incieasing the numbei of physical exams, anu impioving
the self-iateu-health foi migiant woikeis eniolleu in that piogiam. Stuuies of the elueily (e.g. Liu
et al. 2u11)

finu that insuiance has incieaseu access anu ieuuceu financial buiuens foi family
membeis.
Lei anu Lin (2uu9) finu that while NCNS has incieaseu pieventive caie, it has not impioveu
oveiall health status, uecieaseu out-of-pocket expenuituie, oi incieaseu utilization of foimal
meuical seivices. Babiaiz anu colleagues (2u11) finu that NCNS uiu significantly ieuuce the iisk of
catastiophic meuical expenuituies foi iuial iesiuents. NCNS also appeaieu to encouiage utilization
at the giassioots level (village anu township pioviueis iathei than uiban hospitals) to a milu extent.
13

uiassioots pioviueis benefiteu fiom gieatei ievenues, anu since the NCNS was implementeu unuei
the existing system of incentives, it hau little impact on ievenue fiom uiugs. 0sing a uiffeience-in-
uiffeience analysis foi 1uu villages within 2S iuial counties acioss five Chinese piovinces in 2uu4
anu 2uu7, Babiaiz anu colleagues finu a 19% ueciease in out of pocket meuical spenuing anu a 24-
6S% ueciease in financial iisk, as measuieu by the piobability of boiiowing oi selling assets to
finance meuical caie oi the piobability of incuiiing out-of-pocket health expenuituie above the 9u
th

peicentile of spenuing among the uninsuieu. 0thei stuuies also show that NCNS is associateu with
impiovements in TBCs' financial situation anu some eviuence of impioveu iisk piotection.
Yan anu colleagues (2u1u) use a mix of qualitative anu quantitative uata fiom six iuial
counties to show that local goveinments expeiience pioblems in manageiial capacity that affect the
ability to manage NCNS, paiticulaily in the aieas of inauequate staffing, pooi oiganizational
iesouices anu conflicting iesponsibilities. Yu anu colleagues (2u1u) useu cioss-sectional householu
uata fiom Shanuong anu Ningxia piovinces to show that NCNS only incieaseu inpatient seivice
utilization foi high-income gioups, anu theie was no significant change in outpatient seivice
utilization foi any income gioups. Foi pooi patients, NCNS appeais to have helpeu to some uegiee
with catastiophic inpatient expenses (Sun, 2uu9; Yi et al., 2uu9; Zhang, 2u1u). Bai anu colleagues
(2u11) founu that iuial elueis weie the most satisfieu with the NCNS, but that while NCNS has
impioveu health-caie utilization foi some, theie still iemain impoveiisheu iuial elueis with pooi
physical health anu functional limitations that lack sufficient access to basic health caie seivices.
Seiious challenges to access iemain, such as lack of poitability of benefits, ieliance on local
goveinment capacity anu voluntaiy contiibutions, ielatively low ieimbuisement ceilings anu iates,
inauequate catastiophic coveiage, anu incentives foi unnecessaiy caie anu waste (Wang et al.,
2u11; Bloom, 2u11; Baibei anu Yao, 2u11).
Stiategies to contiol cost anu impiove quality incluue stiengthening the quality of piimaiy-caie
piovision, ueveloping mixeu pioviuei payment mechanisms, anu implementing essential meuicines
policies (Baibei anu Yao, 2u11).
2S


23
Bai anu colleagues (2u11) suggest that stiictei iegulation foi uoctois' piesciiptions, clinical piactice anu
uisease management is neeueu to piomote iuial elueis' access to health-caie seivices. A qualitative stuuy by
Bloom (2u11) suggests that tiust-baseu ielationships between useis, pioviueis anu funueis of health seivices
aie essential foi the uevelopment of an effective health sectoi. Blomqvist (2uu9) aigues foi a compiomise
mouel in which competing piivate pioviueis have a iole in both the piouuction of health seivices anu in the
piovision of health insuiance, but in which the goveinment inteivenes to piomote equity thiough iegulation
anu uiiect piovision to coiiect foi maiket failuie. 0n the othei hanu, Wang (2uu9) aigues that effective
iefoims will uepenu on ieevaluating the histoiically ambiguous iole of the goveinment in health caie, as the
14


A&+,65,#7 *)3#),&/#+
China's iecent health iefoims also iecognize the neeu to impiove incentives thioughout the
system. Foi example, a key component of plans to stiengthen piimaiy caie is impioving the
peifoimance appiaisal system foi health woikeis in goveinment-owneu piimaiy caie
oiganizations. Tienus in goveinment subsiuies foi uisease contiol oiganizations pioviue anothei
example. uoveinment subsiuies as a shaie of total ievenues foi uisease contiol oiganizations
ueclineu in the 199us to only S8.66% by 2uuu, befoie incieasing to S7.8% in 2u1u. Neveitheless,
moie than 4u% of the ievenue of oiganizations taskeu with almost a puie public goou - uisease
contiol - still comes fiom souices othei than goveinment buugets.
24

Similaily, the essential meuications system aims to ieuuce the uistoiteu incentives cieateu
by high pioviuei piofits fiom uispensing meuications, a featuie with ueep histoiical anu cultuial
ioots in the health systems of East Asia (Eggleston 2u11). Foi example, Cuiiie anu colleagues
(2u11) employ an auuit stuuy to show that Chinese physicians ovei-piesciibe antibiotics: 62
peicent of 'simulateu' patients weie piesciibeu antibiotics even when the patients iepoiteu
symptoms that uiu not waiiant antibiotics; anu S9 peicent of physicians still piesciibeu antibiotics
when the simulateu patients signaleu to uoctois that they knew that taking antibiotics woulu be
inappiopiiate.
Bowevei, iemoving half oi moie of pioviuei ievenueas the essential meuication system
has foi giassioots pioviueiscauses majoi uisiuptions, anu localities uiffei in theii ability to
manage anu finance viable alteinatives. In some aieas, giassioots pioviueis have boiioweu anu
accumulateu substantial uebt. In }uly 2u11, the State Council, National Bevelopment anu Refoim
Commission, anu Ninistiy of Bealth jointly issueu an official notice to piovincial anu local
authoiities launching a two-yeai plan foi getting iiu of the uebts accumulateu by goveinment-iun
piimaiy caie pioviueis. Pioviueis who uo not boiiow oi make up ievenue fiom seivices othei than
uiug uispensing might be suppoiteu thiough puie salaiy payment. Bowevei, pioviueis who ieveit
to salaiy-baseu positions ieminiscent of pie-iefoim "iion iice bowl" employment also lack

"auministeieu maiket mechanism" has cieateu pioblems thiough peimitting state-owneu hospitals' piofit-
seeking behavioi anu incieasing the vulneiability of the uninsuieu. Yip anu colleagues (2uu9) piopose that
the ioots of the pioblems in China's healthcaie sectoi will be best auuiesseu by changing the pioviuei
payment methou to a piospective payment methou such as BRu oi capitation with pay-foi-peifoimance, anu
ueveloping puichasing agencies to iepiesent public inteiests anu enhance competition. Yip, Wagstaff anu
colleagues (2uu9) call upon economic ieseaicheis to tuin a new page anu focus on iigoious anu eviuence-
baseu evaluation of the impacts of the cuiient iefoim, along with ciitical anu theoiy-baseu analyses of the
unueilying mechanisms.
24
China National Bealth Bevelopment Reseaich Centei, 2u11, Table 1u, p.18.
15

incentive to pioviue quality seivices, insteau iefeiiing patients to highei-level pioviueis anu
exaceibating the ciowuing in China's uiban hospitals.
I have aigueu elsewheie (Eggleston 2u1u) that effectively expanuing China's health caie
coveiage anu ieuiessing pioblems in seivice ueliveiy will iequiie uifficult anu thoiough
iestiuctuiing of the uistoiteu incentives embeuueu in the cuiient system, which aiose eaily in the
iefoim eia. Following the success of uual-tiack iefoims in othei sectois of its economy, China
enacteu health policies intenueu to piotect a "plan tiack" of access to basic health caie even foi the
pooiest patient while at the same time encouiaging a "maiket tiack" foi pioviueis offeiing new,
high-tech, moie uiscietionaiy seivices to patients able to pay foi them. The plan foi basic access
was neithei uefineu noi piotecteu in teims of iisk pooling, so when oiganizeu financing laigely
collapseu (because it was linkeu to agiicultuial communes anu soft-buuget constiaints foi state-
owneu enteipiises befoie the 198us), little was put in its place. Foi two uecaues, the majoiity of
Chinese weie uninsuieu anu paiu foi caie uiiectly at time of use. 0vei the past uecaue, howevei,
China's top leaueiship has uevoteu consiueiable attention to health sectoi iefoims, with
encouiaging iesults. To a consiueiable extent, futuie success will uepenu on iemeuying the
uistoiteu incentives in the cuiient fee-foi-seivice system to make quality caie accessible anu
expanueu insuiance sustainable.
A national-level policy uocument issueu in Apiil 2u11 uiges localities to continue to
expeiiment with case-baseu payment methous, focusing on meuical conuitions that have cleaily
uefineu clinical pathways anu health outcomes. The uocument explicitly mentions the pioblems
aiising in pilot implementation, calling foi bettei supeivision anu oveisight: "health seivice
pioviueis cannot tuin away |iefuse to tieatj high-cost patients, oi without cause ieuuce length of
stay oi split tieatment acioss multiple aumissions."
2S
Cleaily, at least some pioviueis have
iesponueu to the incentives of case payment in the pilots by actively selecting piofitable patients,
uischaiging "quickei anu sickei," anuoi uischaiging anu ie-aumitting patients so that they can bill
foi multiple aumissions within the fixeu case payment ceiling pei aumission.
26
Although
complicateu, these pioblems aie not insuimountable, anu as implementation expeiience
accumulates, the necessaiy iegulatoiy context will giauually lay the founuation foi mixeu pioviuei
payment methous to spui bettei quality caie with gieatei efficiency.

!"# F2," ,60257 O)&/#5+2' ?6/#524#

25
See http://www.moh.gov.cn/publicfiles/business/htmlfiles/mohbgt/s7692/201104/51217.htm.
26
See http://www.moh.gov.cn/publicfiles/business/htmlfiles/mohbgt/s7692/201104/51217.htm.
16

In the histoiical saga of achieving "univeisal coveiage" aiounu the woilu, most nations have
chosen a system that is eithei pieuominantly baseu on health insuiance (a Bismaikian oi National
Bealth Insuiance mouel) oi a national health seivice (Beveiiuge mouel). Among nations choosing
insuiance, most have tieau the path of giauually expanuing a soliu insuiance package to a laigei
anu laigei shaie of the population, so that when coveiage ieaches the final segments of the
population (typically self-employeu anu infoimal sectoi woikeis anu theii uepenuents), the nation
achieves univeisal coveiage. Although some "unueiinsuiance" may iemain, out-of-pocket payments
iaiely account foi a laige shaie of total meuical spenuing when univeisal coveiage has been
achieveu.
In a meaningful sense, China has pioneeieu a uiffeient appioach. 0n the one hanu, the
piimaiy caie system is oiganizeu anu financeu incieasingly like a national health seivice, while the
bioauei aiiay of seivices is financeu thiough a patchwoik of voluntaiy (NCNS, 0RBNI) anu
manuatoiy (0EBNI) social health insuiance piogiams. Seconu, the expansion of social health
insuiance staiteu by putting in place iisk pooling mechanisms to enioll a laige shaie of the
population but only covei a small shaie of expenuituies. (Even "unueiinsuieu" was a geneious teim
foi NCNS in 2uuS, when piemiums weie only Su RNB -- about 0SB$8 -- pei yeai). Subsequently,
China has built on that institutional founuation to eniich the financing anu benefit package so that
insuieu patients anu theii families will incui less financial haiuship in paying foi highei-quality
health seivices.
A uefensible uefinition of univeisal coveiage incluuing both bieauth anu uepth of coveiage
might be as follows: moie than 9u% of the population has health insuiancecoveiage, anu moie
than 6u% of health caie spenuing is thiough insuiance oi othei iisk pooling (i.e., out-of-pocket
spenuing is 4u% oi lowei). By this uefinition, China has now achieveu univeisal coveiage, since
1.29S out of 1.SS97 billion people - fully 9S% of the population - have health insuiance, anu out-of-
pocket spenuing is SS.S% of total expenuituies on health. Bowevei, the goveinment hails this
tiiumph of iisk pooling not as univeisal coveiage but as achieving the inteiim goal PN&#7-2)Q&)4
3"#)44-6) of expanuing basic coveiage aiticulateu in the 2uu9 iefoim plan. The system continues
to have many weaknesses in pioviuing access to quality seivices. The challenge is to continue to
ueepen iisk pooling, stiengthen piimaiy caie, iaise clinical quality, impiove incentives, anu ie-
engineei seivice ueliveiy to bettei fit the neeus of China's incieasingly uiban, affluent, anu aging
society.

17


344"1506- (&01#78 9::; !"#$%&<#)" ="*+)> #15 %&" 9::;?,, @+)A4$#1
In Apiil 2uu9, the China Cential Communist Paity along with the China State Council
announceu a compiehensive healthcaie iefoim initiative
27
anu issueu a new healthcaie iefoim plan
nameu "Implementation Plan foi Beepening Phaimaceutical anu Bealth System Refoim 2uu9-
2u11". The goveinment auopteu five key iefoim piioiities foi the fiist thiee yeais of iefoim:
acceleiating the expansion of the basic health insuiance system; establishing a national essential
uiug list system (incluuing iemoval of uiug uispensing ievenues fiom goveinment-iun piimaiy
caie pioviueis); impioving piimaiy health caie seivices thiough a ieneweu system of giassioots
pioviueis; piomoting the equalization of basic public health seivices; anu facilitating pilot iefoim
piogiams in public hospitals.
28

In Febiuaiy, 2u11, the ueneial 0ffice of the State Council issueu "Najoi Woik Plan foi Five
Key Refoims to the Phaimaceutical anu Bealth Caie System in 2u11" (2u11 Woik Plan)
29
anu the
2u11 Woik Plan, followeu by a host of implementation iules anu policy uocuments in each of the
piioiity aieas.

1) Expanu the basic meuical insuiance coveiage

Accoiuing to the 2u11 Woik Plan, the goveinment aims to enioll a combineu 44u million uiban
employees anu iesiuents in 0iban Resiuent Basic Neuical Insuiance (0RBNI) (
) anu the 0iban Employee Basic Neuical Insuiance (0EBNI) () piogiams
anu to achieve the coveiage of meuical insuiance thiough the existing health coveiage piogiams
(0RBNI, 0EBNI, New Coopeiative Ruial Neuical Scheme (NCRNS) () foi moie
than 9u% of the population. 0nuei 0RBNI anu NCRNS, the patients aie ieimbuiseu foi about 7u%
of theii inpatient expenuituies. The subsiuy on 0RBNI anu NCRNS by goveinment buugets at
vaiious levels will be incieaseu to 2uu Yuan pei peison pei annum, fiom 12u Yuan pieviously. The

27
See Opinions of the CPC Central Committee and the State Council on Deepening the Health Care System Reform (
), April 6, 2009.
http://www.ndrc.gov.cn/shfz/yywstzgg/ygzc/t20090407_359819.htm
28
See Implementation Plan for Deepening Pharmaceutical and Health System Reform 2009-2011(
20092011), April 8, 2009. http://www.ndrc.gov.cn/shfz/yywstzgg/ygzc/t20090408_359820.htm

29
See Major Work Plan for Five Key Reforms to the Pharmaceutical and Health Care System in 2011(
2011), February 13, 2011.
http://www.ndrc.gov.cn/shfz/yywstzgg/ygzc/t20110217_395635.htm

18

2u11 Woik Plan also iequiies expanuing the oveiall scope of outpatient meuical caie anu
upgiauing the insuiance level of majoi uiseases.

In Apiil 2u11, a uocument titleu "Implementation Plan foi New Coopeiative Ruial Neuical Scheme
in 2u11"
Su
was issueu by N0B anu two othei ministiies. The uocument uetails the implementation
policies on incieasing the subsiuies anu impioving the insuiance level foi iuial iesiuents in the
New Coopeiative Ruial Neuical Scheme. The plan also suggests a commitment to establishing thiiu-
paity puichasing, cieating a social health insuiance piogiam as an alteinative to continuing to
subsiuize pioviueis uiiectly.

2) Establish the national Essential Biug System () at all local levels
With iegaiu to ielevant policies, the goveinment issueu "Regulations on National Essential Biug
List"
S1
, "Implementation 0pinions on establishing the National Essential Biug System"
S2
, "0pinions
on Stiengthening the uoveinance of the Quality of Biugs"
SS
, uefineu piice guiues foi ietail uiugs
anu issueu a guiueline on the essential clinical uiugs.

Accoiuing to the 2u11 Woik Plan, the essential uiug system will covei all goveinment funueu
health institutions at the giassioots level anu these goveinment-uiiecteu giassioots level meuical
anu health institutions shall follow the piinciple of a "zeio peicent maik-up" (). The
goveinment also aims to establish a stanuaiu essential uiugs piocuiement mechanism anu iebuilu
the uiug supply system at the giassioots level. The piovincial goveinments shoulu be iesponsible
foi holuing public biuuing, puichasing, anu ueliveiing the uiugs to hospitals uiiectly.

S) 0pgiaue the piimaiy health caie seivices at the giass-ioots level


30
See Implementation Plan for New Cooperative Rural Medical Scheme in 2011 (2011
), April 6, 2011. http://www.ndrc.gov.cn/shfz/yywstzgg/ygzc/t20110420_406542.htm

31
See Regulations on National Essential Drug List (), August 18, 2009.
http://www.ndrc.gov.cn/shfz/yywstzgg/ygzc/t20090819_359834.htm

32
See Implementation Opinions on establishing the National Essential Drug System (
), August 18, 2009. http://www.ndrc.gov.cn/shfz/yywstzgg/ygzc/t20090819_359835.htm
33
See Opinions on Strengthening the Governance of the Quality of Drugs (),
September 22, 2009. http://www.ndrc.gov.cn/shfz/yywstzgg/ygzc/t20091016_359838.htm

19

Accoiuing to the 2u11 Woik Plan, the cential goveinment will give financial suppoit to
builu oi ienovate Suu county-level hospitals, 1,uuu township hospitals, anu 1S,uuu local health caie
facilities. A goal is that in each county, at least one hospital ieaches Tiei 2 level (), anu 1-S
township hospitals ieach the level of a stanuaiu hospital. Noie than S,uuu meuical school stuuents
will be subsiuizeu to woik foi township hospitals anu aimy units at giassioots level in the cential
anu westein paits of the countiy. The plan is to pioviue geneial piactitionei tiaining foi 1S,uuu
uoctois at health caie institutions at giassioots level anu to tiain 12u,uuu health caie piofessionals
at township health centeis anu 46u,uuu health caie piofessionals at village clinics.
In }anuaiy, 2u1u, the N0B anu NBRC issueu the "0pinions on Stiengthening Ruial Neuical
Team Builuing"
S4
to stiengthen the capacity builuing of local health piofessionals in iuial aieas.

4) Expanu the coveiage of basic public health seivices

Accoiuing to the 2u11 Woik Plan, the subsiuy foi each iesiuent's basic public health
seivices shoulu be incieaseu fiom 1S Yuan to 2S Yuan to covei nine categoiies of seivices,
incluuing planneu immunization, mateinal anu chilu health caie, folic aciu supplements foi iuial
women, mass scieening foi bieast cancei anu ceivical cancei, physical examination foi elueis, anu
the establishment of health iecoius. Su peicent of uiban anu township iesiuents shoulu have health
iecoius. The plan is to continue expanuing the coveiage of iegulai checkups foi chiluien, senioi
citizens anu piegnant women, as well as to continue implementing majoi public health piogiams
such as supplementaiy vaccination against Bepatitis B anu pievention anu contiol of BIvAIBs.

S) Auvance pilot public hospital iefoim

The N0B anu foui othei ministiies jointly issueu the "uuiuelines foi Pilot Public Bospital
Refoims"
SS
on Febiuaiy, 2u1u, which maikeu the official stait of pilot iefoims of goveinment-
owneu hospitals. The cential goveinment selecteu 16 iepiesentative cities to implement the pilot
iefoim, anu each piovince was authoiizeu to select 1 to 2 auuitional pilot cities.

34
See Opinions on Strengthening Rural Medical Team Building (), January 10, 2010.
http://www.ndrc.gov.cn/shfz/yywstzgg/ygzc/t20100119_359846.htm

35
See Guidelines for Pilot Public Hospital Reforms (), February 11, 2010.
http://61.49.18.65/publicfiles/business/htmlfiles/mohylfwjgs/s3585/201002/46062.htm

20

vice Piemiei Li Keqiang emphasizeu that the public hospital iefoim in 2u11 will be
paiticulaily focuseu on county-level hospitals. In Febiuaiy, 2u11, The ueneial 0ffice of State
Council issueu a uocument titleu "2u11 Woik Plan foi Pilot Public Bospital Refoims"
S6
, uiscussing
hospital opeiations, goveinance, payment anu incentives systems, anu othei ielateu issues. The
woik plan pointeu out that the pilot cities shoulu piomote the sepaiation of iegulation anu
management (), the sepaiation of goveinment owneiship anu paity leaueiship fiom uay-
to-uay opeiations (), the sepaiation of meuical seivices anu phaimaceutical sales (
), anu uistinguish foi-piofit fiom not-foi-piofit ().
To auuiess the pioblem of imbalanceu meuical iesouices, the plan suggests "optimizing the
stiuctuie of public hospitals," piioiitizing uevelopment township hospitals, establishing a
coopeiation mechanism between public hospitals anu iuial piimaiy health caie institutions, anu
upgiauing the infoimation infiastiuctuie in the health sectoi. Accoiuing to the plan, seveial
measuies will be taken to pioviue appiopiiate incentives foi meuical staff, such as impioving the
public hospital peisonnel anu income uistiibution system, cieating a favoiable enviionment foi
meuical piactice, pioviuing goou conuitions foi piofessional uevelopment, anu so on.


="*")"1<"8

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:36)6>&3 .#/&#0K LU(4), 6uS-612.
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36
See 2011 Work Plan for Pilot Public Hospital Reforms (2011), February 28, 2011.
http://www.ndrc.gov.cn/shfz/yywstzgg/ygzc/t20110310_399264.htm

21

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