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The Chinese healthcare system

Structure, problems and challenges

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Abstract

We describe the structure and present situation of the Chinese healthcare system and discuss its primary problems and challenges. We discuss problems with inefficient burden sharing, adverse provider incentives and huge inequities, and seek explanations in the structural features of the Chinese healthcare system. The current situation will be further challenged in the future by an aging population, an increasing need for privatization and growing expectations about quality of healthcare.

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Table I
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Notes

  1. The hukou system is a population-registration system in which people are classified according to their geographical location. The individual hukou status may change in connection with job changes. For instance, if a student with rural hukou moves to a city university he/she will receive a temporary city hukou, which may become permanent if this person gets a job in the city after graduation - but there are also many instances in which a person with a rural hukou is actually working in the city without a change of hukou.[14]

  2. According to Zhou Tianyong from the Central Party University, the number of group A members is approximately 70 000 000.[17] According to the Chinese Ministry of Labor and Social Security,[18] the number of group B members actually covered is 180 200 000. Finally, according to Lin et al.,[19] the number of (theoretically covered) group C members is approximately 420 000 000.

  3. In fact, individuals typically do not have to contribute to the individual account if their wage is below 60% of the local average wage and they only have to pay a maximum of 2% of three times the local average wage if their income is above this amount. Both the average wage and the actual upper and lower thresholds vary among provinces and may be used as a means to control healthcare expenses.[21]

  4. Moreover, the size of the migrating labour force (floating between provinces) is around 140 million.[27]

  5. In short, there are three layers of government: Central Government, Provincial Government and City/Regional/County Government. Central Government is responsible for general system design and for formulating policy and reform programmes; it does not perform any direct reallocation of tax revenues, but there is some element of vertical transfer of funds to provinces in need of extra resources for healthcare programmes. The size of these funds is based on a bargaining procedure between the Central Government and the provinces. Provincial Governments collect their own tax revenues and administer the healthcare plans. They also share responsibility with City/ Regional/County Government for providing the services.

  6. In particular, inpatient expenses above Y50 000 per year are covered with 95% compensation. Expenses below this are covered with 90% compensation. Individual burden of inpatient expenses (including individual account expenditure) are covered with 95% for retired officers and officers at the rank of Chief of Bureau and above, and with 90% otherwise. Outpatient expenses (including individual account expenditure) are covered with at least 90% compensation if the expenses exceed Y1300 per year.[15]

  7. 20% in the range Y500-1000, 35% in the range Y1000-2000, 40% in the range Y2000-5000, 50% in the range Y5000-10 000, 60% in the range Y10 000-20 000 and, finally, 70% ofthat >Y20 000, with a total maximum benefit level of Y20 000. Where the individual chooses a higher level of hospital, these percentages decrease. The full details of the plan are available.[41]

  8. For example, in the Shandong Province, a retired Provincial Government official (that is, member of group A)was treated for pneumonia in a top-ranking hospital for 22 days. He eventually died and total charges reached Y20 000. Interestingly, it eventuated that he did not use all prescribed drugs since family members attained more than 100 unopened drug packages from hospital after his death. Medical records show that he was prescribed 171 different types of drugs and, as the bill is paid per day, the maximum charge for a single day reached Y5576.[48]

  9. People (especially in rural areas) are typically distrustful of local (Provincial and Regional/County) Government insurance fund management and are worried that their insurance premiums might be diverted to other uses; in fact, this may be seen as one of the reasons for making the New Cooperative Medical Scheme voluntary.[26]

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Acknowledgements

The authors are grateful to two anonymous referees and the Editor, Tim Wrightson, for valuable comments.

No sources of funding were used to prepare this article. The authors have no conflicts of interest that are directly relevant to the content of this article.

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Correspondence to Jens Leth Hougaard.

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Hougaard, J.L., Østerdal, L.P. & Yu, Y. The Chinese healthcare system. Appl Health Econ Health Policy 9, 1–13 (2011). https://doi.org/10.2165/11531800-000000000-00000

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