Elsevier

The Lancet

Volume 372, Issue 9652, 22–28 November 2008, Pages 1846-1853
The Lancet

Series
Reform of how health care is paid for in China: challenges and opportunities

https://doi.org/10.1016/S0140-6736(08)61368-9Get rights and content

Summary

China's current strategy to improve how health services are paid for is headed in the right direction, but much more remains to be done. The problems to be resolved, reflecting the setbacks of recent decades, are substantial: high levels of out-of-pocket payments and cost escalation, stalled progress in providing adequate health insurance for all, widespread inefficiencies in health facilities, uneven quality, extensive inequality, and perverse incentives for hospitals and doctors. China's leadership is taking bold steps to accelerate improvement, including increasing government spending on health and committing to reaching 100% insurance coverage by 2010. China's efforts are part of a worldwide transformation in the financing of health care that will dominate global health in the 21st century. The prospects that China will complete this transformation successfully in the next two decades are good, although success is not guaranteed. The real test, as other countries have experienced, will come when tougher reforms have to be introduced.

Introduction

To implement the ambitious strategy that China is now rolling out to improve its health system,1, 2 several key challenges need to be met. One challenge is already being resolved: the central government's spending on health, after languishing for many years at exceptionally low levels compared with that in other countries, is now being increased substantially.3 Other financial and systemic issues include reversal of the upward spiral in the out-of-pocket payments that households pay to get health services; achievement of adequate financial protection for the entire population through insurance or other prepaid coverage; control of the rapid escalation of health-care costs; curtailment of inefficiencies and reducing waste; improvement of the quality of care; and enhancement of equity, including addressing disparities among China's diverse regions.

These challenges affect global health, not only because China's 1·3 billion people comprise a fifth of the world population, but also because its innovations and experiences will be helpful and influential for other countries. China's renewed quest to modernise its health system is part of a larger process worldwide. If the 20th century was transformed by two great health-related transitions (the demographic revolution that increased longevity and reduced fertility and the epidemiological revolution that reduced the incidence of many infectious diseases), the 21st century may be fundamentally changed by a third great transition in how health care is financed, provided, and organised. Some countries are well advanced in this third transition, having already replaced arrangements in which the cost of health care is borne mainly by the few who get sick, with policies by which cost is shared by all, equitable access to services is assured, and protection against financial ruin because of illness is widespread. But many countries still have a long journey ahead, and their citizens are impatient for faster advances.

In China major steps toward this third transition were made in the four decades after 1949 and the formation of the People's Republic, but advances then stalled and were partly reversed in subsequent years.4, 5, 6, 7, 8, 9 Now China is trying to recover lost ground and finish the job, helped by a strong economic base and a new development policy centred on people rather than economic growth alone.

Section snippets

Current challenges

Health care has become the number-one concern of China's population, according to a January, 2008, survey of 101 000 households in 5000 communities.10 A new saying appears frequently in Chinese media: “It's too difficult to see a doctor, and too expensive to seek health care!” And government officials have noted publicly the gap in meeting “the people's new expectations”.1

Lessons from other countries

What does the evidence from elsewhere in the world say about the challenges described above? Although much more needs to be done to assess the experiences of other countries, several lessons can be learned from other countries and insurance schemes.22, 30, 31, 32, 33, 34, 35, 36, 37

Conclusions

China has already taken significant steps to correct one problem: government spending on health is now on the rise sharply, after years at extraordinarily low levels relative to other countries. Further increases may be needed in the years ahead, and pressures to allow spending to stagnate or decrease—as other issues compete for attention—will need to be resisted. Fortunately, China's strong economic growth, fiscal position, and huge financial reserves make it one of the few countries in the

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