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As early as 10 years ago， basic medical insurance was virtually nonexistent for China’s vast rural population. Back then， farmers had to pay every cent of their medical bills out of their own pockets.
According to a nationwide survey on medical services conducted by the Ministry of Health （MOH） in 2003， 45.8 percent of Chinese farmers refused to seek treatment and 30.3 percent refused hospitalization when necessary simply due to financial difficulty. The Chinese Government announced a plan to install the New Rural Cooperative Medical Scheme in October 2002.
The word “new” in this title of the reform indicates five characteristics that distinguish it from previous schemes： mainly financed by government subsidies； family-based voluntary participation； county-based fund pooling and management； mainly supporting treatment of critical illnesses； and supplemented by a medical aid system.
So far， 80 percent of the funds for the New Rural Cooperative Medical Scheme come from government investment. Last year， the annual premium paid by farmers was 60 yuan （$9.64） per person， which was subsi- dized by the government at 240 yuan （$38.54） per person. For the last three years， pilot programs on the coverage of critical illnesses， such as congenital heart diseases， childhood leukemia， end-stage renal diseases， severe mental illnesses， breast cancer and cervical cancer， have been carried out in many places and are still expanding. More than 70 percent of hospitalization expenses for the treatment of these diseases are refundable， compared with 48 percent in 2008.
More than 805 million people participated in the scheme in 2012， covering more than 98 percent of the total rural population and making it the largest basic medical insurance program in the world in terms of the number of participants.
“The Chinese Government has pooled a huge amount of money to ensure that more people， especially those in the countryside， have access to medical services. This is a remarkable achievement，” World Health Organization Director General Margaret Chan told China Radio International in May 2012.
China’s urbanization rate reached 51.27 percent in 2011， when China’s urban population surpassed its rural population for the first time. The accelerating urbanization process entails innovative research and new policies so that social changes won’t affect health care provisions and the whole population can benefit from coordinated disease prevention and control efforts. “The New Rural Cooperative Medical Scheme has become the original model for China’s medical programs for people without stable employment， which has accumulated precious experience in promoting social reforms，” said Jiang Zhongyi， a senior research fellow at the Research Center for Rural Economy under the Ministry of Agriculture. He said that this scheme inspired designers of other social security systems， such as urban resident medical scheme and rural pension plans， and laid a solid foundation for the building of an all-inclusive basic medical insurance system in China.
The Chinese Government in April 2009 unveiled an 850-billion-yuan （$136 billion） threeyear program for health care reform. With the funds， the government promised universal access to basic health insurance， the introduction of an essential medicines system， improved community-level health care facilities， equitable access to basic public health services and pilot reforms of public hospitals.
According to a white paper on medical and health services in China issued by the Information Office of the State Council last December， the Chinese population’s general health conditions have been ranked the best among developing countries. The report said that from 2002 to 2011 the country’s maternal mortality rate went down from 51.3 to 26.1 per 100，000， the infant mortality rate dropped from 29.2 to 12.1 per 1，000， and the mortality rate of children under the age of 5 dropped from 34.9 to 15.6 per 1，000.
A pioneering reform
“At the beginning， I was driven more by determination and courage than confidence in pushing forward the health care reform，” said Vice Premier Li Keqiang at a conference last April. At the beginning of his speech， he recalled his anxiety when presiding over the conference to kickstart the reform three years ago.
Li was entrusted with the daunting task of designing and promoting a health care reform program with the largest number of beneficiaries ever in 2008. On October 14 of the same year， a draft reform plan was publicized to solicit public opinions， which drew around 36，000 suggestions and comments from across the country within just one month.
“Health care reform is no easy task for any country， especially one with 1.3 billion people，”said Minister of Health Chen Zhu.
Between 2009 and 2012， the Central Government issued 14 documents on health care reform and more than 50 supplementary documents were issued by various government departments， which have formed a policy framework. China’s achievement of universal coverage of basic medical insurance has been spoken highly of by the international community. “China’s health reform process， solutions and lessons will provide evidence to inform debate and， ultimately， enhance global health care outcomes，” wrote an editorial on China’s health system published by renowned medical journal Lancet in March 2012.
“Reform is China’s biggest dividend and we must make sure that ordinary people benefit the most from the reform. This goal has guided health care reform for the last three years，” said Li at a meeting of the Leading Group for Health Care Reform of the State Council， China’s cabinet， on January 5.
Before the initiation of the latest reform， the public’s complaints about the medical sector were mainly directed at difficulties seeking and paying for health care and the enormous gaps in quality of services between different regions as well as between urban and rural areas. While designing the reform， policymakers decided to strengthen the government’s role in providing basic health care and enhance the fairness in its provision. The birth of this guiding principle was significant as it symbolized a reversion for the market-based resources distribution that dominated the medical sector for more than 20 years.
Between 2009 and 2011， the government invested about 1.52 trillion yuan （$244 billion） into health care， an increase of 1.24 trillion yuan （$199 billion） over the figure before the reform started. In 2011， private medical spending accounted for 34.77 percent of total health care expenses， the lowest proportion in nearly 20 years. Last August， six ministries jointly issued a policy to promote critical illness insurance among urban and rural residents so that the sick won’t lose everything because of an illness.
The Central Government also set goals for local health care reforms， which are mainly evaluated by local governments’ investment into these initiatives.
“China is a big country with a large population and unbalanced development in different regions. The poor conditions in China’s community-level facilities particularly affected ordinary people’s access to quality basic health services. These conditions required us to choose a reform path that was tailored for the country，” said Sun Zhigang， Vice Minister of the National Development and Reform Commission.
Zeng Yixin， President of Peking Union Medical College， who participated in the drafting and revision of the health care reform program， said that ensuring the provision of basic health services， improving community-level medical facilities and instituting stronger regulatory systems are the critical success factors for China’s health care reform. China has more than 50，000 publicly funded community-level medical facilities across the country. Zeng said that ensuring basic health services was to make them affordable and build a cost-sharing mechanism. He explained that when people complained about the difficulties of receiving treatment， they mainly referred to seeing renowned doctors in top-rate facilities. “What motivates patients to queue up all night to make an appointment with prestigious doctors is their lack of faith in the quality of community-level medical services，” he said， adding that for the last three years， the government has put improving community-level facilities high on its reform agenda by investing generously in upgrading their equipment and training their doctors.
In 2010 the Chinese Government released a plan to train up to 300，000 general practitioners within 10 years to satisfy the needs of community-level medical facilities. Under the plan， community-level general practitioners will provide primary care， treating acute and chronic illnesses. They will also provide preventive care for local residents.
“Once community-level medical institutions are equipped with qualified general practitioners， people would not all flood into large hospitals to treat even a mild condition，”Zeng said. He suggested the government come up with more incentives to encourage qualified medical personnel with five years of training in a medical school and three years of clinical general practitioner training to work at communitylevel facilities.
Zeng said that an important measure for instituting stronger regulatory systems is the increased supervision on large hospitals to make sure their services are adequate and efficient. Health authorities in recent years have launched campaigns against rampant breaches of ethics codes， such as accepting bribes from patients or kickbacks from pharmaceutical companies， which contributed to the establishment of stronger regulatory systems. “The two initiatives of strengthening primary care and regulatory systems are mutually complementary， which are both indispensable to the success of China’s health care reform，” he said.
Cutting off interest chain
Hospitals making money through drug sales has long been regarded as a root cause of expensive medical bills and poor quality of medical services in China. Due to insufficient government funding， pubic hospitals have been allowed to supplement their expenditure by selling medicines with profit margins of less than 25 percent. However， in practice the markup often surpasses 40 percent or even 60 percent. Sometimes， physicians even prescribe unnecessary drugs for patients simply to meet a prescription quota set by their employers. Pharmaceutical representatives have also become infamous for lubricating the channels so that certain drugs are sold in hospitals and maneuvering profits that are distributed among doctors， hospitals and themselves. To solve this problem， on August 18， 2009， the MOH and other government departments concerned jointly launched policies on essential medicines.
The state essential medicine list contains 307 varieties， including chemicals and finished products of traditional Chinese medicine. More importantly， they are all covered by the country’s basic medical insurance program and enjoy a reimbursement rate remarkably higher than that of non-essential medicines.
Different provinces， autonomous regions and municipalities have added an average of 210 varieties of medicines to their own regional lists.
Provincial-level platforms for the centralized procurement of essential medicines have been established to seek procurement tenders from producers， while all essential medicines are required to be purchased directly from pharmaceutical firms.
Although the prices of essential medicines have been reduced by 30 percent on average after the reform， it has harmed the interests of many pharmaceutical companies， drug wholesalers and some local governments that rely on these companies for taxes.
A State Council Executive Meeting in February 2012 decided to complete the reform of county-level public hospitals and start an overall reform on public hospitals in cities in 2015， with the aim of eventually wiping out hospitals’ reliance on medicine sales while their services are undervalued.
All the essential medicines are sold at zero profit by community-level medical institutions run by the government， and most of these facilities find it hard to make ends meet as government funding remains insufficient. “More reforms must be conducted to ensure the normal operation of township-level clinics without the profits from medication sales. Otherwise， the essential medicines system will not be soundly implemented，” Sun said.
Governance restructuring
A strategy report titled Health China 2020 was released at the China Health Forum 2012 last August. The report， which was initially prepared by the MOH in 2008， suggested the establishment of a health and welfare ministry by merging related departments under the MOH， the National Population and Family Planning Commission， the Ministry of Environmental Protection and the General Administration of Sport.
The report said that issues related to public health fall under the jurisdiction of multiple government departments， which hinders work efficiency. It also called for setting up a cross-department coordinating organization headed by a central government leader and a national health commission based on the Leading Group for Health Care Reform of the State Council. The report predicted that China’s average life expectancy will increase to 77 years by 2020 from 74.83 years in 2010 and national health care input will account for 6.5 to 7 percent of the country’s GDP by 2020.
“With the progress of health care reform， we have to address more and much complicated concerns，” said Minister Chen at the forum. He said that in the future reform， key issues involving health insurance， drug supplies and medical services will require better coordination between concerned government departments， such as further reforms of public hospitals.
Professor Winnie Chi-Man Yip at the Department of Public Health， University of Oxford， expressed a similar opinion in a paper he co-authored， which was published in Lancet. The paper reviewing China’s health care reform stated that governance restructuring for public hospitals is the key to the success of the overall health care reform in China.
Preventive care prioritized
“What makes a good soup for the common cold are the white part of green onions， ginger and dark brown sugar.” This is one of the messages on a public billboard of health tips in Yuanming Village， Weiyuan County in northwest China’s Gansu Province.
Such billboards containing information on how to prevent and treat common illnesses， which are maintained and updated by local health authorities in every community in Gansu， are part of the province’s year-round program of educating the public on staying healthy.
In 2012， the Chinese Government allocated a total of 238 million yuan （$38 million） to support local governments’ similar educational programs， which include public awareness campaigns and lectures.
Chang Cuiqing， Director of the Research Division of Sports Nutrition and Biochemistry of the Peking University No.3 Hospital in Beijing， spends a considerable amount of her time every year touring the country and giving speeches on what to eat to stay healthy.
In 2007， Chang was invited by the China Nutrition Society to participate in the drafting of Chinese People’s Dietary Guidelines. “We tried to spread nutritional knowledge with the simplest language and an honest attitude，” Chang said.
Chen wrote in the preface of this publication， “The next 10 to 20 years are a strategic period for the shaping of Chinese people’s dietary habits. With proper guidance， people will adopt healthy diets and reap the benefits for a long time to come. If not， the health of several generations of people will be put at stake and the increased health care costs will eat up the fruit of economic development.” The Health China 2020 report identified a transformation of development models for China’s medical sector from focusing on treating diseases to preventing them.
Preventive care is where the strength of traditional Chinese medicine lies. The State Administration of Traditional Chinese Medicine launched a three-year program on promoting preventive care in 2008， which successfully raised the awareness of disease prevention among the public and medical personnel. Preventive care with traditional Chinese medicine has been listed as a basic health care service in Gansu. The government in Qingdao， east China’s Shandong Province， has earmarked 10 yuan （$1.6） per person for medical facilities to give a basic health evaluation of senior citizens over 55 years old based on traditional Chinese medicine.
Many medical experts suggest that the philosophy of traditional Chinese medicine for preventing major diseases is in line with the cost-effective guidelines for China’s health care reform.
According to a nationwide survey on medical services conducted by the Ministry of Health （MOH） in 2003， 45.8 percent of Chinese farmers refused to seek treatment and 30.3 percent refused hospitalization when necessary simply due to financial difficulty. The Chinese Government announced a plan to install the New Rural Cooperative Medical Scheme in October 2002.
The word “new” in this title of the reform indicates five characteristics that distinguish it from previous schemes： mainly financed by government subsidies； family-based voluntary participation； county-based fund pooling and management； mainly supporting treatment of critical illnesses； and supplemented by a medical aid system.
So far， 80 percent of the funds for the New Rural Cooperative Medical Scheme come from government investment. Last year， the annual premium paid by farmers was 60 yuan （$9.64） per person， which was subsi- dized by the government at 240 yuan （$38.54） per person. For the last three years， pilot programs on the coverage of critical illnesses， such as congenital heart diseases， childhood leukemia， end-stage renal diseases， severe mental illnesses， breast cancer and cervical cancer， have been carried out in many places and are still expanding. More than 70 percent of hospitalization expenses for the treatment of these diseases are refundable， compared with 48 percent in 2008.
More than 805 million people participated in the scheme in 2012， covering more than 98 percent of the total rural population and making it the largest basic medical insurance program in the world in terms of the number of participants.
“The Chinese Government has pooled a huge amount of money to ensure that more people， especially those in the countryside， have access to medical services. This is a remarkable achievement，” World Health Organization Director General Margaret Chan told China Radio International in May 2012.
China’s urbanization rate reached 51.27 percent in 2011， when China’s urban population surpassed its rural population for the first time. The accelerating urbanization process entails innovative research and new policies so that social changes won’t affect health care provisions and the whole population can benefit from coordinated disease prevention and control efforts. “The New Rural Cooperative Medical Scheme has become the original model for China’s medical programs for people without stable employment， which has accumulated precious experience in promoting social reforms，” said Jiang Zhongyi， a senior research fellow at the Research Center for Rural Economy under the Ministry of Agriculture. He said that this scheme inspired designers of other social security systems， such as urban resident medical scheme and rural pension plans， and laid a solid foundation for the building of an all-inclusive basic medical insurance system in China.
The Chinese Government in April 2009 unveiled an 850-billion-yuan （$136 billion） threeyear program for health care reform. With the funds， the government promised universal access to basic health insurance， the introduction of an essential medicines system， improved community-level health care facilities， equitable access to basic public health services and pilot reforms of public hospitals.
According to a white paper on medical and health services in China issued by the Information Office of the State Council last December， the Chinese population’s general health conditions have been ranked the best among developing countries. The report said that from 2002 to 2011 the country’s maternal mortality rate went down from 51.3 to 26.1 per 100，000， the infant mortality rate dropped from 29.2 to 12.1 per 1，000， and the mortality rate of children under the age of 5 dropped from 34.9 to 15.6 per 1，000.
A pioneering reform
“At the beginning， I was driven more by determination and courage than confidence in pushing forward the health care reform，” said Vice Premier Li Keqiang at a conference last April. At the beginning of his speech， he recalled his anxiety when presiding over the conference to kickstart the reform three years ago.
Li was entrusted with the daunting task of designing and promoting a health care reform program with the largest number of beneficiaries ever in 2008. On October 14 of the same year， a draft reform plan was publicized to solicit public opinions， which drew around 36，000 suggestions and comments from across the country within just one month.
“Health care reform is no easy task for any country， especially one with 1.3 billion people，”said Minister of Health Chen Zhu.
Between 2009 and 2012， the Central Government issued 14 documents on health care reform and more than 50 supplementary documents were issued by various government departments， which have formed a policy framework. China’s achievement of universal coverage of basic medical insurance has been spoken highly of by the international community. “China’s health reform process， solutions and lessons will provide evidence to inform debate and， ultimately， enhance global health care outcomes，” wrote an editorial on China’s health system published by renowned medical journal Lancet in March 2012.
“Reform is China’s biggest dividend and we must make sure that ordinary people benefit the most from the reform. This goal has guided health care reform for the last three years，” said Li at a meeting of the Leading Group for Health Care Reform of the State Council， China’s cabinet， on January 5.
Before the initiation of the latest reform， the public’s complaints about the medical sector were mainly directed at difficulties seeking and paying for health care and the enormous gaps in quality of services between different regions as well as between urban and rural areas. While designing the reform， policymakers decided to strengthen the government’s role in providing basic health care and enhance the fairness in its provision. The birth of this guiding principle was significant as it symbolized a reversion for the market-based resources distribution that dominated the medical sector for more than 20 years.
Between 2009 and 2011， the government invested about 1.52 trillion yuan （$244 billion） into health care， an increase of 1.24 trillion yuan （$199 billion） over the figure before the reform started. In 2011， private medical spending accounted for 34.77 percent of total health care expenses， the lowest proportion in nearly 20 years. Last August， six ministries jointly issued a policy to promote critical illness insurance among urban and rural residents so that the sick won’t lose everything because of an illness.
The Central Government also set goals for local health care reforms， which are mainly evaluated by local governments’ investment into these initiatives.
“China is a big country with a large population and unbalanced development in different regions. The poor conditions in China’s community-level facilities particularly affected ordinary people’s access to quality basic health services. These conditions required us to choose a reform path that was tailored for the country，” said Sun Zhigang， Vice Minister of the National Development and Reform Commission.
Zeng Yixin， President of Peking Union Medical College， who participated in the drafting and revision of the health care reform program， said that ensuring the provision of basic health services， improving community-level medical facilities and instituting stronger regulatory systems are the critical success factors for China’s health care reform. China has more than 50，000 publicly funded community-level medical facilities across the country. Zeng said that ensuring basic health services was to make them affordable and build a cost-sharing mechanism. He explained that when people complained about the difficulties of receiving treatment， they mainly referred to seeing renowned doctors in top-rate facilities. “What motivates patients to queue up all night to make an appointment with prestigious doctors is their lack of faith in the quality of community-level medical services，” he said， adding that for the last three years， the government has put improving community-level facilities high on its reform agenda by investing generously in upgrading their equipment and training their doctors.
In 2010 the Chinese Government released a plan to train up to 300，000 general practitioners within 10 years to satisfy the needs of community-level medical facilities. Under the plan， community-level general practitioners will provide primary care， treating acute and chronic illnesses. They will also provide preventive care for local residents.
“Once community-level medical institutions are equipped with qualified general practitioners， people would not all flood into large hospitals to treat even a mild condition，”Zeng said. He suggested the government come up with more incentives to encourage qualified medical personnel with five years of training in a medical school and three years of clinical general practitioner training to work at communitylevel facilities.
Zeng said that an important measure for instituting stronger regulatory systems is the increased supervision on large hospitals to make sure their services are adequate and efficient. Health authorities in recent years have launched campaigns against rampant breaches of ethics codes， such as accepting bribes from patients or kickbacks from pharmaceutical companies， which contributed to the establishment of stronger regulatory systems. “The two initiatives of strengthening primary care and regulatory systems are mutually complementary， which are both indispensable to the success of China’s health care reform，” he said.
Cutting off interest chain
Hospitals making money through drug sales has long been regarded as a root cause of expensive medical bills and poor quality of medical services in China. Due to insufficient government funding， pubic hospitals have been allowed to supplement their expenditure by selling medicines with profit margins of less than 25 percent. However， in practice the markup often surpasses 40 percent or even 60 percent. Sometimes， physicians even prescribe unnecessary drugs for patients simply to meet a prescription quota set by their employers. Pharmaceutical representatives have also become infamous for lubricating the channels so that certain drugs are sold in hospitals and maneuvering profits that are distributed among doctors， hospitals and themselves. To solve this problem， on August 18， 2009， the MOH and other government departments concerned jointly launched policies on essential medicines.
The state essential medicine list contains 307 varieties， including chemicals and finished products of traditional Chinese medicine. More importantly， they are all covered by the country’s basic medical insurance program and enjoy a reimbursement rate remarkably higher than that of non-essential medicines.
Different provinces， autonomous regions and municipalities have added an average of 210 varieties of medicines to their own regional lists.
Provincial-level platforms for the centralized procurement of essential medicines have been established to seek procurement tenders from producers， while all essential medicines are required to be purchased directly from pharmaceutical firms.
Although the prices of essential medicines have been reduced by 30 percent on average after the reform， it has harmed the interests of many pharmaceutical companies， drug wholesalers and some local governments that rely on these companies for taxes.
A State Council Executive Meeting in February 2012 decided to complete the reform of county-level public hospitals and start an overall reform on public hospitals in cities in 2015， with the aim of eventually wiping out hospitals’ reliance on medicine sales while their services are undervalued.
All the essential medicines are sold at zero profit by community-level medical institutions run by the government， and most of these facilities find it hard to make ends meet as government funding remains insufficient. “More reforms must be conducted to ensure the normal operation of township-level clinics without the profits from medication sales. Otherwise， the essential medicines system will not be soundly implemented，” Sun said.
Governance restructuring
A strategy report titled Health China 2020 was released at the China Health Forum 2012 last August. The report， which was initially prepared by the MOH in 2008， suggested the establishment of a health and welfare ministry by merging related departments under the MOH， the National Population and Family Planning Commission， the Ministry of Environmental Protection and the General Administration of Sport.
The report said that issues related to public health fall under the jurisdiction of multiple government departments， which hinders work efficiency. It also called for setting up a cross-department coordinating organization headed by a central government leader and a national health commission based on the Leading Group for Health Care Reform of the State Council. The report predicted that China’s average life expectancy will increase to 77 years by 2020 from 74.83 years in 2010 and national health care input will account for 6.5 to 7 percent of the country’s GDP by 2020.
“With the progress of health care reform， we have to address more and much complicated concerns，” said Minister Chen at the forum. He said that in the future reform， key issues involving health insurance， drug supplies and medical services will require better coordination between concerned government departments， such as further reforms of public hospitals.
Professor Winnie Chi-Man Yip at the Department of Public Health， University of Oxford， expressed a similar opinion in a paper he co-authored， which was published in Lancet. The paper reviewing China’s health care reform stated that governance restructuring for public hospitals is the key to the success of the overall health care reform in China.
Preventive care prioritized
“What makes a good soup for the common cold are the white part of green onions， ginger and dark brown sugar.” This is one of the messages on a public billboard of health tips in Yuanming Village， Weiyuan County in northwest China’s Gansu Province.
Such billboards containing information on how to prevent and treat common illnesses， which are maintained and updated by local health authorities in every community in Gansu， are part of the province’s year-round program of educating the public on staying healthy.
In 2012， the Chinese Government allocated a total of 238 million yuan （$38 million） to support local governments’ similar educational programs， which include public awareness campaigns and lectures.
Chang Cuiqing， Director of the Research Division of Sports Nutrition and Biochemistry of the Peking University No.3 Hospital in Beijing， spends a considerable amount of her time every year touring the country and giving speeches on what to eat to stay healthy.
In 2007， Chang was invited by the China Nutrition Society to participate in the drafting of Chinese People’s Dietary Guidelines. “We tried to spread nutritional knowledge with the simplest language and an honest attitude，” Chang said.
Chen wrote in the preface of this publication， “The next 10 to 20 years are a strategic period for the shaping of Chinese people’s dietary habits. With proper guidance， people will adopt healthy diets and reap the benefits for a long time to come. If not， the health of several generations of people will be put at stake and the increased health care costs will eat up the fruit of economic development.” The Health China 2020 report identified a transformation of development models for China’s medical sector from focusing on treating diseases to preventing them.
Preventive care is where the strength of traditional Chinese medicine lies. The State Administration of Traditional Chinese Medicine launched a three-year program on promoting preventive care in 2008， which successfully raised the awareness of disease prevention among the public and medical personnel. Preventive care with traditional Chinese medicine has been listed as a basic health care service in Gansu. The government in Qingdao， east China’s Shandong Province， has earmarked 10 yuan （$1.6） per person for medical facilities to give a basic health evaluation of senior citizens over 55 years old based on traditional Chinese medicine.
Many medical experts suggest that the philosophy of traditional Chinese medicine for preventing major diseases is in line with the cost-effective guidelines for China’s health care reform.