HEALTH CARE IN CHINA

Health Minister Chen Zhu

CHINA'S LATEST HEALTH REFORMS
Tsung-Mei Cheng  Interviews Health Minister Chen Zhu [excerpts]
Chen Zhu, a hematologist and Ph.D. systems biologist, became Chinese health minister in 2007; he is a member of three national academies of science (Chinese, U.S., and French) and is not a member of the Communist Party.

ACCESS TO HEALTHCARE

Cheng: It can safely be said that every country is now engaged in some kind of health reform. Most of the problems addressed by the reformers are the same the world over: namely,

(1)  the strain that the provision of modern health care puts on household, government, and business budgets;

(2)  the high variance in the quality of care among the providers of care; and

(3)  the associated high variance in the cost-effectiveness of medical treatments—that is, the relationship between the cost of care and the benefits it yields.

Minister Chen: The Chinese government’s most pressing concern now is with delivering on its principles of "equalization of access to public services" and "everyone enjoys," meaning that all Chinese should enjoy equal access to basic health care and medical services. To put these principles into practice, the government seeks effective systems changes in order to

(1)  provide our whole population equitable and universal basic health care and medical services, to improve the health status of every Chinese.

(2)  through improving our public health system, our health care systems, our health insurance systems, and the safety and availability of our drug supply systems, we will improve our capacity to cope with the new challenges posed by changing disease patterns and the burden associated with our aging population and ongoing urbanization, thereby contributing to China’s sustained, coordinated, and comprehensive economic and social development.

(3)  through innovations in systems reengineering, we would like the government to play the leading role in overcoming the failure of the market to provide health care and insurance efficiently and to provide people with protection from the cost of illness.

Cheng: When health policy people talk about health reform, they usually talk about

(1)  the overall social goals to be achieved with the reform--the ethical values the system should pursue; and

(2)  the operational steps or functions that must be performed to achieve those social goals.

Minister Chen: The Chinese government has clearly stated its objective of achieving a "harmonious society" as a national priority. What this means is that the government intends to build a socialist harmonious society in which every Chinese enjoys

• the benefit of education,
• income from work,
• health care when sick,
• care when old, and
• a home to live in.

HEALTH CARE IS A RIGHT

Underlying all this is the government’s core central value and belief that health care is a right as well as a foundation for the realization of an individual’s full potential. The right to health care is not only the ultimate objective of social development, but it also is a means to economic and social development; it is an important indicator of a harmonious society.

Since China’s opening and reform, which began thirty years ago, there has been continued growth in health care spending, from RMB 11 billion in 1978 to RMB 984.3 billion in 2006.1 In terms of percentages of GDP [gross domestic product], health spending grew from 3 percent in 1978 to 4.67 percent in 2006.

COSTS AND BUDGETS

In recent years, the share of government investment in health care has been growing, and this has resulted in a corresponding reduction in the share of out-of-pocket spending for health care services by the public. In 2006, the combined government-budgeted health care expenditure and social health care expenditure constituted 50.6 percent of China’s total national health spending.

Government-budgeted health expenditure includes

• public health spending;
• medical insurance for civil servants and employees of public institutions (for example, teachers);
• administrative costs;
• government subsidies to various population groups such as the aged, children, and unemployed; and
• government’s share of the contribution to the basic medical schemes like the NRCMS [New Rural Cooperative Medical Scheme], etc.

"Social health care expenditure" in China is best understood as a form of third-party coverage (outside of government and individual out-of-pocket) for health care and medical benefits, which includes premiums for basic social medical insurance, commercial health insurance premiums, start-up costs for private clinics and hospitals, contributions to premiums and reimbursements by enterprises (both state-owned and private), etc.

Out-of-pocket spending by the people was 49.4 percent of China’s total national health expenditure in 2006.

COVERAGE

As of the end of 2007, rural residents in 86 percent of China’s counties were covered under the NRCMS, accounting for 730 million of China’s rural population. Subsidies to the medical assistance scheme for the poor have reached more than RMB 7.0 billion.

In 2007 we began pilot trials for the urban basic health insurance scheme, which covers elementary and middle school pupils, teenagers and young children, the elderly, the disabled, and other nonworking urban residents. To date, 40.68 million people are enrolled in this scheme. Urban and rural commercial health insurance schemes have also picked up speed.

To date China has close to one billion people participating (enrolled) in basic health insurance of one type or another, and the rudimentary framework for a basic health protection system with Chinese characteristics has been established.

No country uses a single subsidy scheme. Based on China’s situation, our guiding policy is to insist on the principle of having tax financing play the leading role in safeguarding equity in basic health care for all Chinese through using, to the fullest extent, China’s public delivery system built over sixty years of the history of our country that covers both the rural and urban areas of China, so that the public delivery system can serve its dual functions of service provision and access protection.

At the same time, we are also seeing to it that the private sector performs fully its role in spreading the availability of basic health care services. For example, "purchasing services" from private care facilities by the government as a way to procure services can be tried in certain regions of the country and for selected service items.

PROBLEMS AND SOLUTIONS

We should make it clear that the main body of our health care providers—rank and file of the "health care troops"—are good and decent. The broad masses of health care workers are committed to service of the health care of the people. They work conscientiously and diligently in their exalted and honorable position as guardians of their patients’ health, contributing selflessly their wisdom and capabilities to the welfare and health of countless numbers of families, to the development of health care services and medical science, and to the promotion of social and economic development.

Nevertheless, problems do exist, which are the consequences of insufficient government investment in the health care sector, which in turn has resulted in hospitals’ attempting to make up for their lack of funding to cover costs through sales of drugs, which has led to over-prescription of drugs, which then has created not only waste of medical resources but also increased financial burden on patients and their families.

To address this set of interconnected problems, we must, on the one hand, change the service mentality of providers to reduce their profit-driven motive and redirect their thinking toward service of their patients’ medical needs; and, on the other hand, take aim specifically at the current situation in which the unreasonable payment system with its fee-for-service payment method can easily lead to induced demand.

We will in future reforms take steps to have government, in its role as regulator and overseer, cooperate closely with market forces in the delivery of health care services, pricing pharmaceuticals, setting a fee schedule for public provider organizations, and exploring alternative methods of paying providers such as DRGs and prepaid capitation to control health care costs and increase the overall efficiency in the utilization of our health care resources.

We will also carry out a series of major reforms aimed at overhauling the overall operations of our health system, including the practice of "selling drugs to subsidize medical services," in order to make sure that public provider institutions once again return to their original station as agents that serve the public good, so they can fully concentrate on meeting the real health care and medical needs of the patients.

For three consecutive years now we have been developing a national initiative on hospital management based on "patient-centered care, with quality improvement as focus." We have also delved deeply into dealing with commercial fraud and bribery through discounts and kickbacks between the sell side (suppliers of pharmaceuticals and devices) and the buy side (providers) for drugs and medical services through a special initiative to curb unethical practices and abuses of the system. In our future endeavors we aim to systematically improve our public hospitals’ financial accounting and management systems, to better regulate the public hospitals’ revenues and expenditures, and to strengthen their financial oversight and overall efficiency.

Traditional Chinese medicine

Traditional Chinese Medicine is a great creation of the Chinese. Not only has it historically made incalculable contributions to the continuity, health, and prosperity of the Chinese people, but also it plays today an irreplaceable role in the health maintenance and health promotion of the Chinese people. Traditional Chinese medicine is an important component of our health care, and as a matter of policy we must always value both traditional Chinese and Western medicine.

Since opening and reform began three decades ago, our traditional Chinese medicine has enjoyed rapid development. Service networks of traditional Chinese medicine have been building up and improving, and the capacity to deliver services and the quality of services are both further improving—in recent years, in particular, traditional Chinese medicine has played an important role in both the NRCMS and the urban community health centers, welcomed by broad masses of people. Furthermore, traditional Chinese medicine also has been drawing growing attention from the international community.

The government will firmly stay the course on its policy of "equal emphasis on both traditional Chinese and modern Western medicine" and will lend strong support to the development of traditional Chinese and ethnic medicine. It will play the leading role in promoting the coordinated development of both Western and traditional Chinese medicine, and traditional Chinese medicine and drugs for Chinese medicine. There will be continued further increases in both investment in and policy initiatives that favor traditional Chinese medicine to help retain its special characteristics to meet the demand of the public for it, and also so that it may better play its important role in advancing every citizen’s right to enjoy basic health care and medical services.

INFORMATION TECHNOLOGY

The Chinese government will work hard to build a national health and medical information system that is practical (user-friendly) and can be used by every party concerned. We will speed up the standardization of information and the building of an information platform for public service on which to build a highly efficient, integrated health information system with interoperability. Such an IT system will facilitate the transfer and sharing of information, be easy to use, and allow real-time monitoring. It will also improve transparency and enhance management and service capabilities. Patients would also benefit from the convenience such an efficient IT system offers.

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