Transcript Document

Government and Health Care in China
Ling Li
China Center For Economic Research
at Peking University
Chinese health care system

When health care was lead by government, during the period
between 1950 to 1978, China had many achievements in
health field to be proud of



rapid and large reductions in mortality rate, despite China’s low
income per capita at the time
create a low cost, wide coverage primary health care model
When health care is based on market mechanism



After 20 years of economic reform, China’s healthcare system has not
improved as well as the economy has. Instead, it has deteriorated in
many aspects
Patients, providers and government are all unsatisfied
Medical costs are escalating rapidly
The existing problems


Rapid increase in health care
expenditure
Increase share of personal income
spent on health care



Limited access to health care service



Decrease in government health input
Decrease in health insurance coverage
High medical expenses
Poor service qualities
Health Inequality


Regional
Economic
Rapid increase in health care
expenditure （1978-2004）
NHE per capita
NHE as % of GDP
6
5
700
600
500
4
Yuan
%
400
3
300
2
200
1
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
0
Source: Health Statistic Yearbook
100
0
The Growth of NHE and GDP
（1978-2004）
25
GDP
NHE
20
19.47
15.28
%
15
10.57
10
9.5
7.6
5
Source: Health Statistic Yearbook, 2003; Statistic Yearbook, 2003
20
04
20
02
20
00
19
98
19
96
19
94
19
92
19
90
19
88
19
86
19
84
19
82
19
80
19
78
0
Decreased share of govt. exp. and
increased share of out-of-pocket
（1990-2004）
% of total health expenditure
70
Govt. Exp.
60
Soc. Exp.
50
Out-of-Pocket
40
30
20
10
0
1980
1990
1995
Source: Health Statistic Yearbook, 2003
2000
2002
2003
2004
Increased of Gov. Exp. on Health but
decreased share of total Gov. Exp.
25
120
80
%
15
60
10
40
5
20
Govt. Exp. On Health
% as Govt. Exp. on Science, Education, Culture, Health
% as Total Govt. Exp.
Source: Health Statistic Yearbook, 2005
20
04
20
03
20
02
20
01
0
fi
rs
tfi
se
ve
co
nd
-f
iv
e
ad
ju
st
in
th
g
ir
dfi
fo
ve
ur
th
-f
iv
fi
e
fi
th
-f
iv
e
si
xt
hfi
se
ve
ve
nt
hfi
ve
ei
gh
th
-f
iv
e
ni
nt
hfi
ve
0
Billion yuan
100
20
China’s out-of-pocket share is
high by regional standards
India
Indonesia
Viet Nam
Singapore
China
Philippines
Malaysia
Rep. of Korea
Thailand
Japan
Australia
New Zealand
0
20
40
60
80
100
Out-of-pocket payments as % Total Health Expenditure
Source: World Health Organization. The World Health Report 2002. Reducing risks. Promoting
healthy lives. Geneva: The World Health Organization, 2002.
Out-of-pocket spending—an ever
larger share of HH expenditure
urban
rural
Source: China Statistic Yearbook
20
04
20
02
20
00
19
98
19
96
19
94
19
92
19
90
19
88
19
86
19
84
19
82
6
5
4
3
2
1
0
19
80
% living expenditure
8
7
% of people who should see a doctor
choose not to do so because of the cost
Big
city
Middlesize city
Small
city
Rural 1
Rural 2
Rural 3
Rural 4
inpatient
1993
34.09
33.87
53.47
47.95
63.15
61.14
67.72
1998
53.12
58.43
70.77
63.80
54.12
70.26
69.38
2003
64.4
35.6
74.8
77.6
74.9
75.5
73.6
Outpatient
1993
3.21
2.40
9.58
15.10
21.36
19.55
24.42
1998
36.69
23.48
42.96
30.09
31.67
42.29
38.72
2003
30.8
32.7
47
29.2
33.9
41.2
49.1
Source：The national health service survey, 1993、1998、2003
# of people who should see a doctor
choose not to do so because of the
poor service quality
Beijing
500
415.4
10 thounsand
400
300
200
142.4
100
0
1998
Source：The national health service survey, 1998、2003
2003
Regional disparity of health resource
allocation: Rural Vs Urban Per capita NHE
urban
rural
1400
1000
800
600
400
200
0
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
yuan
1200
Health finance in China

Urban health insurance models are developed along the three
stated goals by the central government:
 wide insurance coverage for basic services;
 establishment of individual savings account;
 social insurance (social pooling account).

Low insurance coverage in rural areas
 Voluntary new cooperative medical scheme (NCMS) since
2003
 Less generous than urban scheme (50 vs. 700 RMB), so
large copayments and out-of-pocket payments for
uncovered care
Health insurance coverage—
stubbornly low
rural
80
urban
72.7
70
55.9
coverage %
60
55.2
50
40
30
20
15.9
21
12.7
10
0
1993
1998
Source：The national health service survey, 1993、1998、2003
2003
Insurance coverage lower
among the poor
% with health insurance
70
60
50
1987
1991
1993
1997
40
30
20
10
0
Poorest 25%
2nd poorest
25%
2nd richest
25%
Richest 25%
Wealth quartile
Source: Akin JS, et al. Did the distribution of health insurance in China continue to grow less
equitable in the nineties? Soc Sci Med 2004;58(2):293-304.
The poor get less—inpatient
utilization in rural China
inpatient admission rate
per 1000 rural China
45
40
poorest quintile
2nd poorest
middle quintile
2nd richest
richest quintile
35
30
25
20
1993
1998
income quintiles
Source: Gao J, Tang S, Tolhurst R, Rao K. Changing access to health services in urban China:
implications for equity. Health Policy Plan 2001;16(3):302-12.
Health service delivery in China
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1980s reforms restricted budget support to providers
Providers paid fee-for-service (even typically by insurers), no incentive to contain
cost
Regulated prices are distorted
 Low (or negative) margins on basic care
 High margins on high-tech care & drugs
Providers shift demand to high-tech care & drugs
 Asymmetric information makes hard to monitor appropriateness of care
 Result is over-supply of care
• 18-20% of all expenditures for appendicitis & pneumonia estimated to be
unnecessary (33% in case of drugs)
• Rapid and seemingly unjustified increase in Cesarean section
• Drug exp. now 52% of total health spending (15-40% elsewhere)
Sources: Liu, X. and A. Mills, "Evaluating payment mechanisms: how can we measure unnecessary care?" Health Policy Plan, 1999.
14(4): pp. 409-13. Cai, W., et al., "Increased cesarean section rates and emerging patterns of health insurance in Shanghai, China."
American Jnl of Pub Hlth, 1998. 88(5): pp. 777-780. Lei Haichao, Hu Shanlian, Li Gang, 2002
Structure of Hospital revenue per
patient （general hospitals within health sector ）
Revenue
per
outpatient
（yuan）
Revenue
from
medicine
（%）
Revenue
from
medical
examinati
on （%）
Revenue
per
inpatient
（yuan）
Revenue
from
medicine
（%）
Revenue
from
medical
examinati
on （%）
1990
10.9
67.9
19.3
473.3
55.1
25.7
1995
39.9
64.2
22.8
1667.8
52.8
30.4
1998
68.8
62.1
16.4
2596.8
49.2
28.1
1999
79
59.9
18.2
2891.1
47.2
29.7
2000
85.8
58.6
19.6
3083.7
46.1
31.7
2001
93.6
57.7
20.1
3245.5
45.5
31.2
2002
99.6
55.4
28
3597.7
44.4
36.7
2003
108.2
54.7
28.5
3910.7
44.7
36.1
2004
118.0
52.5
29.8
4284.8
43.7
36.6
2005
126.9
52.0
29.8
4661.5
43.9
36.0
Source: Health Statistic Yearbook
Public health in China
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Decentralization
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Most spending financed by county governments
Poor counties have fewer resources for health &
lower capacity, despite facing tougher health
challenges & spillover effects associated with
public health programs
Lack of clarity on roles of different levels of
government
The consequence of local financing:
poorer provinces spend less on public
health despite tougher challenges
Disease control expenditure per capita (RMB)
14
Shanghai
12
Beijing
10
Qinghai
8
Neomengguo
Zhejiang
Xinjiang
Hainan
Liaoning
Guangdong
Ningxia
Tianjin
Jilin
Yunnan
6
4
Shanxi
Fujian
Heilongjiang
Gansu
Jiangsu
Hebei
Shandong
Hubei
Jiangxi
Anhui
Hunan
Shaanxi
Guizhou
Henan
Chongqing
2
Guangxi
Sichuan
0
0
20
40
60
80
100
120
TB incidence
Source: Disease control expenditure data from Gong, X. (2003). Institutional Analysis of Chinese Public Health. Chinese Health
Economics(11), 9-11. TB incidence data are for 2003 and are from China Health Statistics Yearbook 2004 (p.210). MOH defines TB
incidence as reported active TB cases in a given year in a given region per 100000 population.
China’s unbalanced development—
1960-80 vs. 1980-2000
图：中国人口平均预期寿命
Chinese Life Expectancy
80
70
去
年
去
年
60
50
40
30
20
10
0
1960 1961 1962 1963 1967 1970 1972 1974 1982 1987 1990 1992 1997 1998 2001
female
Source: Wang Shaoguang, 2003
male
Ave.
Life Expectancy under-five mortality Increase of
（‰）
（year）
Life
1980
1998
1980
1998 Expectancy
Decrease
of underfive
mortality
China
68
70
42
31
2
-11
Australia
74
79
11
5
5
-6
Hong Kong
74
79
11
3
5
-8
Japan
76
81
8
4
5
-4
Korea
67
73
26
9
6
-17
Malaysia
67
72
30
8
5
-22
New Zealand
73
77
13
5
4
-8
Singapore
71
77
12
4
6
-8
Sri Lanka
68
73
34
16
5
-18
Source: Wang Shaoguang, 2003
China’s unbalanced development—
1960-80 vs. 1980-2000
under-five mortality
250
1960
200
China 1960-2000
Indonesia 1960-2000
1965
1970
1965
150
1975
1980
1970
100
1985
1990
1975
1980
50
1995
1985
1990
2000
1995
0
0
200
400
600
800
1000
1200
per capita income 1995 prices
Source: World Bank. World Development Indicators 2002. Washington DC: The World Bank,
2002., UNICEF. Progress since the World Summit for Children: A Statistical Review. New York:
UNICEF, 2001.
Reasons of the problems
above


Government failure
 the absence of government role to insure people’s basic
health care needs
• the weakness of the public health system
• the invalidation of the three-tiered health system
• the lack of government regulations.
Market failure
 Asymmetric information
• Insurance market—selection problems
• Health care market—FFS encourages over-provision
 Externalities & public goods
China’s Health Care Reform
China’s commitment to balanced development
 Health is the goal of economic and social
development
 Government should take the responsibility to
protect people’s basic health needs
 Government takes a leading role in health care
sector, private market acts as a supplement
