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Drawing lessons from China’s healthcare development

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A village doctor treats villagers in Chengziling village of Zhangjiakou City, North China's Hebei Province on 16 January 2023. (Photo: Sipa USA/Reuters)

In Brief

China has translated its economic development into improved social welfare. China’s quest for Universal Health Coverage (UHC) for all while lifting 800 million people out of poverty is an example. Its experience in healthcare development provides transferrable lessons for developing countries in making progress towards UHC.


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The first steps involved institution building. The Labor Security System (LSS) and the Rural Cooperative Medical System (RCMS) — both healthcare schemes — operated in urban and rural areas, respectively, for decades. But open market reforms, the transformation of the economy and urbanisation accelerated their collapse.

Their successors, the Urban Employee Basic Medical Insurance scheme and the New Rural Cooperative Medical Scheme (NRCMS) were established in 1998 and 2003, respectively, to target urban employees in formal employment and rural residents. A third scheme, the Urban Resident Basic Medical Insurance (URBMI) scheme was introduced in 2007 to cover the remaining urban population.

The three schemes use risk pooling and management practices from their institutional predecessors. This made it easier to fit them into the existing healthcare infrastructure and required less initial investment. It also permitted greater fiscal space to subsidise health insurance enrolment and improve healthcare infrastructure. The integration of the URBMI and the NRCMS was a big step forward to reduce the disparities between China’s parallel urban and rural systems and to promote equitable healthcare for all.

From the 1990s, China’s public health system did not develop at the same speed as its economy. Government subsidies were insufficient. Along with a dearth of health insurance coverage after the collapse of the RCMS and LLS, people relied on out-of-pocket payments to get care. The difficulty and cost of seeing doctors became a social concern. Reforming the health system and reducing the financial burden of healthcare became a top priority for the Chinese government.

From 2008 to 2017, government spending on healthcare quadrupled in China. Financial resources have been needed to advance every dimension of UHC, including increasing population coverage, improving service coverage, providing better financial protection and supporting the vulnerable. Though China’s healthcare services delivery system still needs to be upgraded to meet growth in demand, China has been able to use its rapid development to reallocate government revenue to improve healthcare.

Leveraging resources and mobilising stakeholders are key to the sustainability of UHC. Several policy levers have been used so far to this end in China’s case. Regardless of the regional disparities, UHC has a centralised policy design in China which ensures basic standards across the country. Still, Provincial, prefectural and county governments are entitled to tailor the implementation of UHC to regional needs.

Individuals must also pay a premium to access UHC — though China’s Ministry of Civil Society covers premiums for the poor. Individual’s premium contributions can also be banked in a ‘medical savings account’ and used later to pay for future healthcare expenses.

Risk pooling has also been an essential tool to bring down healthcare costs in China. China’s poor are included in the existing health insurance scheme alongside wealthier citizens with the help of government subsidies. Still, efficiency and sustainability can be improved. China should consider increasing the level of risk pooling and cross-subsidisation among populations with different financial risk.

Containing healthcare costs while ensuring quality has also been a challenge. China has made strategic purchasing approaches in its healthcare system to deal with this challenge. Efficiencies have been made in services selection, providers’ accreditation decisions and provider payment methods. The National Health Security Administration was established to manage all insurance schemes and strategic purchasing has also been used in insurance listing and drug procurement.

In terms of private partnerships, commercial insurance companies have been selected to operate China’s Insurance Programs for Catastrophic Diseases program since 2015. They bring in modern management and actuary expertise so that government agencies can focus on supervising the market.

There is no one-size-fit-all approach for UHC. But to achieve UHC through publicly financed health insurance, considering the local context and making improvements on the existing system could prevent ‘reform shock’ and free up resources for welfare improvements in other areas. Still, changing demographics, disease burden and constraints on domestic financing are emerging challenges for China’s UHC system.

China is ‘growing old before it gets rich’. In Shanghai and Beijing, for example, the share of the population over 65 years old has increased steadily. China’s former ‘one child policy’ means that many elderly are left without sufficient care from their own children. Increasing care needs are burdening the health financing and service delivery system. Cities have started to explore long-term care insurance. But long-term care facilities are lacking and there is no grading mechanism to assess where resources are needed most. These issues require policymakers’ attention.

With slower economic growth projected for the next few years, financing for China’s health insurance schemes will likely grow at a much slower speed. It is high time for China to improve efficiency by providing more cost-effective services such as preventive care and primary health care.

Wenhui Mao is Assistant Director of Programs at the Duke Global Health Innovation Centre, Duke Global Health Institute, Duke University.

Ipchita Bharali is a policy associate at the Centre for Policy Impact in Global Health, Duke Global Health Institute, Duke University.

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