China's State Council, or the Cabinet, pledged Monday to further upgrade the funding system for the country's medical institutions in small townships and cities.

To ensure low income-earners can afford essential medications, the government will provide additional funding to these hospitals, while improving the funding system.

Since August 2009, over half of China's medical clinics in rural townships and small urban communities have been offering essential medications at low prices thanks to the ongoing healthcare reform, according to a State Council executive meeting presided over by Premier Wen Jiabao.

However, some medical institutions were short of funds because of the lowered drug prices.

According to the meeting, under the new system the operational expenditure of government-run hospitals and clinics in townships or urban communities would be covered by government subsidies and medical service charges.

Also, government authorities were required to allocate enough funds so that medical institutions could purchase basic medical facilities and equipment, while also arranging subsidies for medical staff.

"Regular channels and ways of funding and subsidizing grassroots medical organizations should be established to ensure their smooth operation and development and the successful implementation of essential medical systems," a statement issued after the meeting said.

The statement called for government authorities to offer more subsidies for rural medical practitioners and village-based clinics.

Local authorities were also encouraged to support village clinics in terms of construction, equipment purchasing and personnel training.

Appropriate subsidies would also be provided to non-government run grassroots clinics for medical services that are open to the public. The medical insurance scheme would cover those qualified clinics.

Further, the statement called for an all-around reform of small township and city hospitals and clinics, including in the methods of medical staff selection and income distribution, to make those hospitals qualified providers of basic public healthcare and medical services.

(Xinhua News Agency December 7, 2010)