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China's health care reform: A tentative assessment

Listed author(s):
  • Yip, Winnie
  • Hsiao, William

China has recently unveiled an ambitious new health-care reform plan, entailing a doubling of government health spending as well as a number of concrete reforms. While the details of the plan have not yet been completely announced, we offer a preliminary assessment of how well the reform is likely to achieve its stated goal of assuring every citizen equal access to affordable basic health care. The reform is based on three fundamental tenets: strong role of government in health, commitment to equity, and willingness to experiment with regulated market approaches. Within this framework, the reform offers a number of laudable changes to the health system, including an increase in public health financing, an expansion of primary health facilities and an increase in subsidies to achieve universal insurance coverage. However, it fails to address the root causes of the wastes and inefficiencies plaguing China's health care system, such as a fragmented delivery system and provider incentives to over-provide expensive tests and services. We conclude that China should consider changing the provider payment method from fee-for-service to a prospective payment method such as DRG or capitation with pay-for-performance, and to develop purchasing agencies that represent the interests of the population so as to enhance competition.

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Article provided by Elsevier in its journal China Economic Review.

Volume (Year): 20 (2009)
Issue (Month): 4 (December)
Pages: 613-619

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Handle: RePEc:eee:chieco:v:20:y:2009:i:4:p:613-619
Contact details of provider: Web page: http://www.elsevier.com/locate/chieco

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  1. Gerdtham, Ulf-G. & Jonsson, Bengt, 2000. "International comparisons of health expenditure: Theory, data and econometric analysis," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 1, pages 11-53 Elsevier.
  2. Wagstaff, Adam & Lindelow, Magnus & Jun, Gao & Ling, Xu & Juncheng, Qian, 2009. "Extending health insurance to the rural population: An impact evaluation of China's new cooperative medical scheme," Journal of Health Economics, Elsevier, vol. 28(1), pages 1-19, January.
  3. Hsiao, William C., 2007. "The political economy of Chinese health reform," Health Economics, Policy and Law, Cambridge University Press, vol. 2(03), pages 241-249, July.
  4. Wanchuan Lin & Gordon G. Liu & Gang Chen, 2009. "The Urban Resident Basic Medical Insurance: a landmark reform towards universal coverage in China," Health Economics, John Wiley & Sons, Ltd., vol. 18(S2), pages 83-96, July.
  5. Adam Wagstaff & Magnus Lindelow & Shiyong Wang & Shuo Zhang, 2009. "Reforming China's Rural Health System," World Bank Publications, The World Bank, number 2646, May.
  6. Win Lin Chou & Zijun Wang, 2009. "Regional inequality in China's health care expenditures," Health Economics, John Wiley & Sons, Ltd., vol. 18(S2), pages 137-146, July.
  7. Xiaoyan Lei & Wanchuan Lin, 2009. "The New Cooperative Medical Scheme in rural China: does more coverage mean more service and better health?," Health Economics, John Wiley & Sons, Ltd., vol. 18(S2), pages 25-46, July.
  8. Winnie Yip & Karen Eggleston, 2001. "Provider payment reform in China: the case of hospital reimbursement in Hainan province," Health Economics, John Wiley & Sons, Ltd., vol. 10(4), pages 325-339.
  9. Adam Wagstaff & Winnie Yip & Magnus Lindelow & William C. Hsiao, 2009. "China's health system and its reform: a review of recent studies," Health Economics, John Wiley & Sons, Ltd., vol. 18(S2), pages 7-23, July.
  10. Yip, Winnie & Eggleston, Karen, 2004. "Addressing government and market failures with payment incentives: Hospital reimbursement reform in Hainan, China," Social Science & Medicine, Elsevier, vol. 58(2), pages 267-277, January.
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