China's Health Reform Push Faces Challenges at Local Government Level

Health disparities remain significant between urban and rural areas, and among different localities and socio-economic groups in China, and more equitable allocation of government health resources is needed in order to fully achieve health reform objectives, according to a new report prepared jointly by staff of the World Bank and UNICEF. The report, entitled Equity and Public Governance in Health System Reform: Challenges and Opportunities for China, uses official data to analyze possible challenges to the implementation of China's current health system overhaul.

"Important health outcomes, such as maternal, infant and child mortality have improved in both rural and urban areas across provinces in China during the past 10 years. This has been achieved largely due to overall improvements in social determinants of health and thanks to targeted national funding for specific initiatives, such as hospital delivery. The challenge, however, remains how to align the resources and responsibilities of provincial and sub-provincial governments with the national policy priorities included in China's health reforms," said Hana Brixi, World Bank Senior Economist.

According to the report, despite weaker health status in China's poorer rural communities, per capita government allocations increasingly favour wealthier areas, and better quality health services are increasingly centralized in urban areas. The risk of financial catastrophe due to ill health remained much higher for rural residents, but was also increasing for urban residents when last surveyed in 2008. This risk is not being reduced by the new health insurance programs, which only provide a low level of benefit for members at this stage.

The report infers that one main objective of China's health reforms, namely improving the accessibility and affordability of health care, will be difficult to achieve because of local reliance on national earmarked funding rather than adequate prioritization of basic services in provincial and sub-provincial government resource allocations. It suggests that the increasing disparity in public expenditure on social services, including health and education, requires better alignment of government priorities at provincial and sub-provincial levels with those developed at national level. Fully addressing the weaknesses identified may require complementary reforms to improve local governance and central-local fiscal relationships, the report concludes.

In particular, the report suggests that given China's size and decentralization in financing and delivery of public services, it may be crucial to strengthen the role and accountability of provincial governments. Provincial governments may have to become explicitly responsible for equity and efficiency in public resource allocation, for national policy implementation, enforcement of laws, standards and regulations, and for adequate health system performance within the entire province.

Finally, the reports' authors noted that China's policy makers would benefit from much greater availability and analysis of local data, including surveys of citizens' perspectives on social services. This would more readily enable refinement of policies and evaluation of policy implementation at the local level.