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National Healthcare Needs Gradual Reform

The ongoing reform of China's public healthcare system will accelerate to full speed in line with the latest government work report delivered to the National People's Congress earlier this month.

As early as 1997, a public healthcare insurance plan was launched in cities but it only covered those who were formally employed. A recent government initiative aimed at correcting this imbalance will set up an extensive healthcare insurance plan covering all rural and urban residents.

Three measures were outlined to finish the mission: First, the current public healthcare insurance plan will be extended to all urban residents; second, a "new cooperative medical plan," namely a voluntary public healthcare insurance plan, will be consolidated and expanded in rural areas; third, universal access to primary healthcare will be guaranteed in the near future.

A major question remains before these three measures are taken: Should primary healthcare be a natural result of the first two measures or a new, separate system developed independently?

Different answers to this question mean totally different policy choices and the wrong decision will probably threaten the whole reform package.

Currently public health insurance in cities only benefits employees with regular jobs while children, unemployed, self-employed, and migrant workers are not covered. Although the authorities decided to include self-employed and migrant workers over the past years, it seems that this measure has not worked well.

By the end of 2006, public health insurance covered about 160 million out of the country's 500 million urban residents. The first measure mentioned, extending coverage to all urban residents, aims at extending this insurance plan to cover all urban residents within five years.

The new cooperative medical plan in rural areas is publicly subsidized health insurance for those willing to pay an annul fee of about 10 yuan (US$1.28) or more in better developed areas.

Since it's start in 2003, it has covered about half the rural residents. The enrollees can have up to 60 percent of their healthcare costs reimbursed, but they are required to first pay the costs themselves.

Many farmers are reluctant to enroll because their co-payment is still considered high and the procedure of reimbursement is cumbersome.

These problems must be resolved to enhance the attractiveness of the cooperative medical care system for farmers.

Clearly, current healthcare insurance systems in both rural and urban areas are problematic. They are questioned by the public and healthcare providers as well as decision-makers.

However, these flaws mostly resulted from immature institutional design. If fixed, the plans would improve remarkably. After all, there are rich international experiences to refer to, and an exchange of practices among different local authorities across China would be mutually beneficial.

In other words, universal coverage for primary healthcare could be realized by gradual and incremental reforms to the current healthcare system.

Yet, it seems that a different approach to establishing universal healthcare is gaining wide support among academics, officials and the public.

According to advocates of this approach, the government should set up a separate system to provide primary healthcare services in cities and villages. Basically, this involves establishing a mini national health service (NHS). Comprised of community health centers and clinics, this mini-NHS would offer low-priced or even free services to citizens with minor diseases and transfer patients with more serious problems to big hospitals.

If such a system is established, the government will be burdened with heavy operating costs. A public agency would have to be established to allocate public money among community health centers and clinics. Worse, this public agency would have to exist at all levels of government to keep an effective watch over all community healthcare providers around the country.

Such an institutional design featuring the planned economy would be awkward in our country. Run by the State, the community healthcare providers would have to look to the government for resources they need according to standards set by the government. But the government would find it difficult to objectively assess the large number of subordinate agencies.

Many supporters of free healthcare services by public institutions believe that China could at least afford a free healthcare system for treating minor diseases.

But even a mini-NHS may not be feasible in China. Such a system would only lead the medical care system into the dead end of low efficiency and meager service.

The brighter path toward universal healthcare coverage should be careful incremental adjustments to current public health insurance programs.

The author is a professor at the Institute of Social Development and Public Policy, Beijing Normal University

(China Daily March 26, 2007)

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