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The following OECD assessment and recommendations summarise chapter 8 of the Economic Survey of China published on 2 February 2010.
Progress with health care has been genuine but incomplete
In many respects, health outcomes in China have improved tremendously over past decades, in no small part thanks to the near eradication of some traditional infectious diseases. Overall, health outcomes are not so different from those in lower-income OECD countries such as Mexico and Turkey, despite lower incomes in China. However, health status varies widely across the country and in general death rates from chronic diseases have been on the rise, not least owing to changes in life styles, including greater tobacco consumption. Improving health outcomes will require addressing a number of imbalances and incentive problems plaguing the health care system, in a context of rapidly rising demand for care. Health care is overwhelmingly publicly provided and hospitals have been absorbing a growing share of public funding, at the expense of primary care. The number of doctors has increased rapidly but their qualification levels are often modest and their geographical distribution does not match local needs. Hospital budgets and their doctors’ pay are partly based on the pharmaceuticals they prescribe and sell, the prices of which are regulated and involve considerable cross-subsidisation. Against this backdrop, household out-of-pocket medical expenses have soared. Many of these problems have long been recognised and since 2003 the government has launched several reforms to address them, notably the introduction of new urban and rural insurance schemes. As a result, coverage and use of medical facilities has increased considerably, except for migrants. Even so, both catastrophic and chronic illnesses continue to push people into poverty, especially in the poorer regions. Given that risk pooling at the national level remains limited, it is often impossible to provide patients with the reimbursement rates they are legally entitled to.
Proportion of population with insurance
Source: Health Statistics Yearbook.
A set of ambitious health care reforms are being rolled out but more may still be needed
A new set of reforms was announced in April 2009, aiming at universal, safe, affordable and effective basic health care by 2020. They involve additional spending of RMB 850 billion over 2009 11 (equivalent to 0.8% of GDP over that period). While sizeable, this represents just a down-payment on the extra spending that will be needed in the health sector over the longer haul. These reforms include investment in medical infrastructure, generalising insurance coverage, more focus on prevention, retraining less-qualified doctors, a new essential drugs system and far-reaching reorganisation, including of hospital budgets. It will be important to ensure that primary care plays a greater role in health care delivery to reduce the inappropriately high demands on hospitals for minor health problems. It will also be important that hospitals are managed more efficiently, with less hierarchical structures, and that the link between pay and prescriptions is abolished. Prices paid by the insurance system also need to reflect actual costs. Indeed, failing to address these supply-side issues would reduce the effectiveness of increasing insurance coverage, as many countries have found. Progress will also require changes in relative prices, in the form of more attractive wages for doctors, less distorted prices for pharmaceuticals and higher taxes on and prices for tobacco. Once near universal coverage is achieved, including of migrants in their place of residence rather than their place of origin, the different insurance systems should be merged and a greater portion of their funding should be shouldered by the central government
How to obtain this publication
The complete edition of the Economic Survey of China is available from:
The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.
For further information please contact the China Desk at the OECD Economics Department at email@example.com.
The OECD Secretariat's report was prepared by Richard Herd, Samuel Hill and Yu-Wei Hu under the supervision of Vincent Koen. Research assistance was provided by Thomas Chalaux.