High levels of out-of-pocket medical expenses, increasing costs and stalled progress in providing adequate health insurance for all have been set-backs for China's health goals. But the government is determined to address the issues – it is already significantly increasing health spending and is committing to reaching 100% health insurance coverage by 2010. The issues are addressed in this sixth paper in The Lancet Series on Health System Reform in China, written by Dr David de Ferranti, The Brookings Institution, Washington, DC, USA, and colleagues.
As a proportion of total health expenditure, out-of-pocket payment costs rose from 20% in 1980 to 59% in 2000, before falling back to 49% in 2006. This is above the level found in countries to which China compares itself: South Korea (45%), Sweden (16%), Japan (15%), and France (11%). The average cost of a single hospital admission is now equivalent to China's annual income per head, and more than twice the average annual income of the lowest 20% of the population. And 35% of urban households and 43% of rural households have difficulty affording healthcare and often go without. The authors say: "The major changes that are required to reduce dependence on patient payments at the point of service, and replace them with prepaid coverage, are yet to gather steam. It is urgent to push forward on this front with high priority, and to recognise that getting to the end of this difficult transition is a long and sometimes difficult process, as other countries have learned."
Improving health insurance coverage and quality goes hand-in-hand with lowering out-of-pocket payments. Government insurance schemes have expanded in recent years, yet many OECD countries provide more comprehensive coverage in terms of the services covered and the portion of the costs than China does; also a much larger proportion of the Chinese population have excessively high health-care expenses relative to their annual disposable income compared with OECD countries. The authors say these differences require further study.
China must also vigorously tackle rising costs and the distribution of funds. The authors say: "As long as providers in China continue to be paid on the current fee-for-service basis, escalating costs will undermine even the best-conceived reforms." Current arrangements mean providers can prescribe drugs or procedures which are inappropriate to drive profits; the authors look at the per-patient-episode system, used by several countries, with South Korea reducing costs by 14% and length of hospital stays by 6% using this system. How money is distributed needs urgent attention as the current system favours city-based hospitals (which receive over half of all health funding), and leaves village health clinics and community health centres with disproportionately little. Countries such as Thailand, which have shifted more resources to clinics, are showing encouraging results. The authors says China can look to the examples set by Colombia, Thailand, and Mexico, who have all succeeded in substantial increases in coverage, despite difficulties.
The authors conclude: "The challenges are daunting, but China has enormous strengths it can bring to bear…Its ability to design, develop, and implement new policies and programmes, once its leadership puts full support behind a change in direction, is impressive, far surpassing that of many other nations."
Dr David de Ferranti, The Brookings Institution, Washington, DC, USA T) +1 202-468-1301 E) david@deferranti.org / ddeferranti@resultsfordevelopment.org
Full paper: http://press.thelancet.com/china6.pdf
Journal
The Lancet