- 19 Apr 2009 17:53
#1878415
China to revamp health care
Greater insurance subsidies, more hospitals and clinics are among first steps
By Gordon Fairclough
The Wall Street Journal Asia
SHANGHAI -- China pledged to expand medical insurance and build thousands of hospitals and clinics over three years, the first steps in a decade long plan to repair an ailing health-care system that has fueled popular discontent.
On Tuesday, the State Council, China's cabinet, offered details on the $120-billion-plus initial phase of the revamp, which it outlined in January. Among the plans: a construction surge that by 2011 will give every village a medical clinic and every county at least one hospital.
The government and ruling Communist Party are trumpeting the blueprint with a major public-relations push, signaling the political importance of rebuilding a social safety net that was largely dismantled during the country's shift to a market economy over the past 30 years.
"The plan is a necessary support for developing a harmonious and stable society," said Jia Kang, director of the Research Institute of Fiscal Science, a think tank affiliated with the Finance Ministry, who said it is focused on "providing basic medical guarantees to the lowest-income people."
Under the plan, government subsidies for insurance premiums aim to extend at least basic coverage to 90% or more of China's 1.3 billion people within three years.
Chinese people are covered by a patchwork of government-run plans supplemented by some private insurance. The government estimates that about 90% of rural people are already enrolled in its insurance program, which requires them to pay premiums. Coverage is more spotty in urban areas, especially among the unemployed.
By 2020, the government says, all citizens should have access to basic health services. The proportion of medical expenses covered by state insurance plans will increase over time, and prices of so-called essential drugs, such as widely prescribed antibiotics, will be pushed down.
In the near term, many Chinese could still have to pay a significant part of health-care costs -- a factor that will weigh on domestic consumption as families continue to eschew spending and save to be prepared in case illness strikes.
China's state spending on health has failed to keep up with its booming economy. In 2006, China's government health outlays amounted to less than 1% of gross domestic product, putting China 156th out of 196 countries surveyed by the World Health Organization.
Government spending has tended to favor urban populations. In 2005, according to the WHO, 25% of public-health money was devoted to rural areas, home to roughly 60% of the population.
The plan is designed to start narrowing that gap. The current "resource allocation is unreasonable," the State Council said Monday, leading to relatively weak "rural and community medical services."
Important aspects of the plan have yet to be worked out. The government is drawing up a new essential drug list, and will announce recommended retail prices for medicines. Local governments will buy the drugs from low bidders in a public tender and distribute them.
Decisions on one thorny issue -- how to remake the public hospital system -- have been put off pending the outcome of studies. Hospitals, which have been pressed to generate income, rely on drug sales and expensive tests to boost revenue, critics say.
Beijing wants to sharply limit hospitals' ability to earn money from drug sales, and instead push them to cover their costs by charging for physicians' work and other services. Most prescription drugs in China are sold through hospitals and clinics.
The new policies are expected to lead to downward pressure on drug prices, at least for those on the list of essential medicines. Government guidelines have also said that hospitals should buy medical devices "more suitable" to the China market, which some see as a push for less-expensive locally made products.
To boost rural residents' access to health care, the State Council said construction of 29,000 new village and township medical centers would be completed this year, while 2,000 new county hospitals are to be built over three years. New community clinics will also be built in urban areas.
Improving care could be harder, analysts say, due to a shortage of qualified personnel. Nationwide, about 17% of public hospital medical staff members had a bachelor's or graduate degree. In village and township hospitals, just 2.2% had a university education, according to health ministry figures.
Paying for treatment will remain a challenge for many. China's health minister, Chen Zhu, said that by 2010, insurance payments should cover about 50% of rural people's regular medical expenses, up from 30% last year.
The maximum annual insurance outlay for an individual's medical expenses will be capped at six times the average annual income for the locality where the person lives. On average, that means a rural resident can receive up to about $4,200 a year. An urban resident can get nearly $14,000.
The Health Ministry in 2008 estimated the average cost of treatment in a Chinese hospital for a heart attack was about $1,700. Treatment for stomach cancer carried roughly the same price tag.
[Retrieved from Factiva]
Greater insurance subsidies, more hospitals and clinics are among first steps
By Gordon Fairclough
The Wall Street Journal Asia
SHANGHAI -- China pledged to expand medical insurance and build thousands of hospitals and clinics over three years, the first steps in a decade long plan to repair an ailing health-care system that has fueled popular discontent.
On Tuesday, the State Council, China's cabinet, offered details on the $120-billion-plus initial phase of the revamp, which it outlined in January. Among the plans: a construction surge that by 2011 will give every village a medical clinic and every county at least one hospital.
The government and ruling Communist Party are trumpeting the blueprint with a major public-relations push, signaling the political importance of rebuilding a social safety net that was largely dismantled during the country's shift to a market economy over the past 30 years.
"The plan is a necessary support for developing a harmonious and stable society," said Jia Kang, director of the Research Institute of Fiscal Science, a think tank affiliated with the Finance Ministry, who said it is focused on "providing basic medical guarantees to the lowest-income people."
Under the plan, government subsidies for insurance premiums aim to extend at least basic coverage to 90% or more of China's 1.3 billion people within three years.
Chinese people are covered by a patchwork of government-run plans supplemented by some private insurance. The government estimates that about 90% of rural people are already enrolled in its insurance program, which requires them to pay premiums. Coverage is more spotty in urban areas, especially among the unemployed.
By 2020, the government says, all citizens should have access to basic health services. The proportion of medical expenses covered by state insurance plans will increase over time, and prices of so-called essential drugs, such as widely prescribed antibiotics, will be pushed down.
In the near term, many Chinese could still have to pay a significant part of health-care costs -- a factor that will weigh on domestic consumption as families continue to eschew spending and save to be prepared in case illness strikes.
China's state spending on health has failed to keep up with its booming economy. In 2006, China's government health outlays amounted to less than 1% of gross domestic product, putting China 156th out of 196 countries surveyed by the World Health Organization.
Government spending has tended to favor urban populations. In 2005, according to the WHO, 25% of public-health money was devoted to rural areas, home to roughly 60% of the population.
The plan is designed to start narrowing that gap. The current "resource allocation is unreasonable," the State Council said Monday, leading to relatively weak "rural and community medical services."
Important aspects of the plan have yet to be worked out. The government is drawing up a new essential drug list, and will announce recommended retail prices for medicines. Local governments will buy the drugs from low bidders in a public tender and distribute them.
Decisions on one thorny issue -- how to remake the public hospital system -- have been put off pending the outcome of studies. Hospitals, which have been pressed to generate income, rely on drug sales and expensive tests to boost revenue, critics say.
Beijing wants to sharply limit hospitals' ability to earn money from drug sales, and instead push them to cover their costs by charging for physicians' work and other services. Most prescription drugs in China are sold through hospitals and clinics.
The new policies are expected to lead to downward pressure on drug prices, at least for those on the list of essential medicines. Government guidelines have also said that hospitals should buy medical devices "more suitable" to the China market, which some see as a push for less-expensive locally made products.
To boost rural residents' access to health care, the State Council said construction of 29,000 new village and township medical centers would be completed this year, while 2,000 new county hospitals are to be built over three years. New community clinics will also be built in urban areas.
Improving care could be harder, analysts say, due to a shortage of qualified personnel. Nationwide, about 17% of public hospital medical staff members had a bachelor's or graduate degree. In village and township hospitals, just 2.2% had a university education, according to health ministry figures.
Paying for treatment will remain a challenge for many. China's health minister, Chen Zhu, said that by 2010, insurance payments should cover about 50% of rural people's regular medical expenses, up from 30% last year.
The maximum annual insurance outlay for an individual's medical expenses will be capped at six times the average annual income for the locality where the person lives. On average, that means a rural resident can receive up to about $4,200 a year. An urban resident can get nearly $14,000.
The Health Ministry in 2008 estimated the average cost of treatment in a Chinese hospital for a heart attack was about $1,700. Treatment for stomach cancer carried roughly the same price tag.
[Retrieved from Factiva]
- By FiveofSwords
- By KurtFF8
- By Puffer Fish
- By litwin