Healthcare reform will be meaningless unless government actually invests in healthcare

One of the longest standing and most intensely-felt grievances of ordinary workers in China is the high cost of healthcare. Serious injury or occupational disease can bankrupt poor working families, and even minor ailments can create endless difficulties.

Emergency services responding to the massive Kunshan factory explosion in 2014

Reform of the healthcare system ranked third on the issues of greatest public concern during the National People’s Congress this March, behind income inequality and the fight against corruption. And in response, the State Council has once again come up with a series of measures designed to improve services in public hospitals and reduce the cost burden for patients.

One of the key platforms of the new program, to be rolled out in 100 major cities over the next two years, is to scrap the controversial 15 percent mark-up on drug sales which has been major source of revenue for public hospitals over the last few years. The State Council said that local governments should invest more in public hospitals to make up the shortfall, and encourage the more efficient use of those funds.

This would be a good first step, if were actually to go ahead. The State Council can say what it likes but more than 99 percent of all government expenditure on healthcare already comes from local governments, and each local government will decide what its own priorities and abilities are in terms of funding public hospitals.

In most places, government expenditure on healthcare is about the same as (official) expenditure on public security. In Beijing, the city’s expenditure on public security was 26 billion yuan in 2013, compared with 28 billion yuan on public health and family planning, in Shanghai the figures were 23 billion yuan on security and 21 billion yuan on health, while Guangdong spent 65 billion yuan on security and 57 billion yuan on public health in 2013.

Given the current administration’s obsession with the maintenance of social stability, it seems more likely that it is public security that gets a financial boost rather than public health.  As a result, if the drug surcharge is cancelled, funding for public hospitals could be reduced dramatically. Indeed, Chinese media reported that most county town hospitals in Guangdong were now operating at a loss after cancelling the drug surcharge in a pilot project last year.

The Chinese government is still trying to solve the healthcare problem by increasing insurance coverage, even though increases in coverage have singularly failed to lessen dissatisfaction with the system. Even those now covered, often have to pay upfront and get reimbursed later or have to pay a large proportion out of their own pocket because certain drugs and treatments are not covered.

The only real solution is for the government to stop tinkering with a failing system and fundamentally re-order its priorities. Overall government spending on healthcare has gone up over the last decade but, in 2013, it was still only about 1.5 percent of gross domestic product, or about 637 yuan per capita per year. The Chinese government simply has to invest more in public hospitals in order to make sure that the country’s elderly, injured and disabled workers have the care they need. The consequences of not doing so are obvious; more public discontent and more social instability, precisely what the government is trying to avoid.

Section: 
Back to Top

This website uses cookies that collect information about your computer. Please see CLB's privacy policy to understand exactly what data is collected from our website visitors and newsletter subscribers, how it is used and how to contact us if you have any concerns over the use of your data.