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Posted on July 31st, 2012, by

The present health care system of China faces lots of problems. In this paper we’ll focus on the main and burning ones: high service fees, low coverage of medical services by insurance companies, difficultness of access to state medical services, especially for rural areas, and generally low level of treatment in hospitals.

A transition from the centralized planning to the market economy at the end of 1980s resulted in reduction of medical services provided to the society, particularly in rural areas, and in health care system’s privatization. Medical establishments are forced to develop, test and distribute medicinal preparations on their own in order to get at least some benefits (Wang, 2007). It resulted in their desire to make medical treatment very expensive, because hospitals are given a possibility by the government to set prices they want.

Average expenses of citizens on medical treatment grow considerably quicker, than their incomes. From 1998 till 2006 average annual value of ambulatory treatment per capita batch showed increase of 13%, and of hospital one – of 11%. According to sociological survey data, high price of medical services is considered by the Chinese population to be the most serious social problem. Medical expenses are yielding only to feeding and education expenses in family budget.

Social inequality in access to medical services grew. Presently, people in rural districts of the country (which make 75% of population) don’t have an opportunity to get an elementary medical help and have to go to a city to visit a doctor. About 400 million of the Chinese do not have access to any type of medical insurance. In 2003 medical insurance was fully absent for 44,8% of town dwellers and for 79% of rural population.

During latest years activities of medical service system creation are conducted in the rural districts. By the end of 2007 they covered 730 million people or 86% of rural population. However, the system suffers from the shortage of financial facilities and isn’t able to render support to rural population in the cases of serious diseases requiring hospital treatment. Average charges on serious disease treatment make about 1000 dollars, which exceeds the average annual income of a rural dweller in more than 3 times. Still, 80% of state assignations on health care are directed to cities and only 20% to villages.

At the same time the presence of serious unsolved problems is marked. AIDS starts spreading from the risk groups to the common population. The number of tuberculosis patients exceeded 4,5 million people. Hepatitis expansion is still out of control. 200 million people suffer from cancer, heart and respiratory system diseases, diabetes, traumas and poisonings. Mental disorders detected in 16 million cases. The level of maternity and infancy protection, especially among migrants, is low. (NBS of China; McGivering, 2008)

Financial facilities appropriated by the PRC’s Government on health care in 2006 made less than 1% from country’s GDP, which put China at 156th place out of 196 countries in WHO’s rating. In contemporary China sharp discussion is taking place concerning reasons of the unsatisfactory level of the heath care system and most optimal solutions.

Liberals, focused on market-based system, blame the former planned economics and its vestiges. In their opinion, the planned system is responsible for the fact that the service sphere in rural regions, as well as agrarian sphere on the whole, was for decades sacrificed for the sake of heavy industry development. Accordingly, the main misfortune of health care system is that it’s insufficiently involves in market relations. Formally any capital is allowed in the medical services sphere. But actually the conditions for non-state hospitals creation haven’t appeared for 20 years of reforms. Prices on medical services and medicinal preparations are still controlled by the state. Relying on long-term governmental support, several hospitals concentrated the best resources (96%) and occupied monopolistic position which non-state medical establishments cannot compete with. In market economy conditions of it is impossible to save nonmarket factors, and a health care system has no other choice but meet market reformation. Importance of this position is supported by the fact that the whole idea is connected with national and foreign capital interests, ready to invest in Chinese medicine considering it a potentially profitable investment sphere (Parker, 2006).

Opponents reckon that the health care system’s problem lies in the loss of social meaningfulness by public medical institutions, in their excessive race for financial benefits. In state noncommercial medical institutions employees’ salary and dividends, and current outlays are mainly financed due to their own commercial activity, the part of state financing doesn’t exceed 6%. That’s the reason of doctors’ aspiration to inscribe expensive medications, assessments and procedures. The state controls prices on approximately 20% of preparations and during last few years serially conducted price-cuttings. But in majority of hospitals additional charges to the cost reach 30-40%, far exceeding the set norm of 15%. From 1990 till 2004 expenses on ambulatory treatment showed an increase of 12 times, on in-patient – of 10 times, directly-proportionally to the increase of average annual earnings of doctors (Parker, 2006).

Opponents specify that during the last century more than 160 countries of the world created different systems of public welfare and medical insurance. Moreover, economic conditions neither in England of 100 years ago, in USA of 70 years ago nor in Japan of 68 years ago were no better, than in contemporary China. But all of them managed to provide deserving treatment to their citizens, using the limited financial resources of that time. Why isn’t China capable to do that? (Parker, 2006)

In 2005 Ministries of Health of the PRC acknowledged that market reform of health care system had failed, mostly because of superfluous orientation to the market and insufficient role of the state. Today Chinese Government again faces the dilemma of health care reform’s direction (Wang, 2007).

In January 2009 Chinese authorities reported that in nearest 3 year they plan to spend 124 mlrd dollars for the health care system improvement (Fairclough, 2009). A project supposes the creation of the system which guarantees the basic medical services to all town and village dwellers by 2020.

The program aims at strengthening government’s leading role, increase of it responsibility, reforming public medical institutions’ management, prevention of their race for income, facilitation of population’s expenses. It proclaims parallel development of Chinese and Western medicine. The emphasis is given to the health care in rural districts. Creation of non-state medical establishments is also encouraged (Fairclough, 2009).

Money will be used on medical insurance system improvement and on the increase of service standards in public hospitals. The aim of the Government is to have 90% of Chinese population ensured by 2011. Moreover, the Chinese officials will create a catalogue of most necessary medications, charges on which will be covered medical insurance.

Determining the further ways of the health care reform, China should attentively examine the experience of countries with transitional economy, like Hungary and Poland. While privatization level is high in the economics of these countries, there’s a small number of privatized hospitals. Medical establishments get money not directly from the state budget, but through the contracts with the medical insurance fund, in accordance with their activity.

In order to create the inexpensive and effective health care system, the state is called to buy services of medical establishments, using the methods of market competition. Avoiding the direct investment in the medical services system, it should invest in medical insurance in order to buy insurance for the citizens, guarantee them a freedom of choice of a medical establishment and to provide equal competition between organizations supplying medical services. Avoiding the direct participation in managing medical establishments, Government should encourage the development of corporate management, and stimulate attraction of both state and non-state capital in the development of Chinese health care system.

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