Healthcare reform in China

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Main article: Health in China

The healthcare system reform in China refers to the healthcare system transition in modern China. China's government, specifically the Ministry of Health of the State Council oversees the health services system, which includes a substantial rural collective sector but little private sector. Nearly all the major medical facilities are run by the government. China's healthcare reform history has seen an increase in quality after 1949 with the establishing of the Cooperative Medical System, and a collapse in healthcare with economic reforms post-1980. Recent reforms include the New Rural Cooperative Medical System, health insurance reforms, the World Bank Health VIII project, and the Healthy China 2020 project, but challenges still exist in providing universal healthcare access to all of China, most notably the rural sectors.

History of reform[edit]


A barefoot doctor examines a child.

After 1949, the Chinese Communist Party took control of China, and the Ministry of Health effectively controlled China’s health care system and policies.[1] Under the Chinese government, the country’s officials, rather than local governments largely determined access to health care. Rural areas saw the biggest need for healthcare reform, and the Rural Cooperative Medical System (RCMS) was established as a three-tier system for rural healthcare access. The RCMS functioned on a pre-payment plan that consisted of individual income contribution, a village Collective Welfare Fund, and subsidies from higher government.[2]

The first tier consisted of barefoot doctors that were trained in basic hygiene and traditional Chinese medicine.[3] This system of barefoot doctors was the easiest form of healthcare access, especially in rural areas. Township health centers were the second tier of the RCMS, consisting of small, outpatient clinics that primarily hired medical professionals that were subsidized by the Chinese government. Together with barefoot doctors, township health centers were utilized for most common illnesses. The third tier of the CMS, county hospitals, was for the most seriously ill patients. These hospitals were primarily funded by the government, but also collaborated with local systems for resources (equipment, physicians, etc.)[2]

Public health campaigns to improve environmental and hygienic conditions were also implemented, especially in urban areas.[3] The RCMS has significantly improved life expectancy and simultaneously decreased the prevalence of certain diseases. For example, life expectancy has almost doubled (from 35 to 69 years), infant mortality has been slashed from 250 deaths to 40 deaths for every 1000 live births. In addition to this, the malaria rate has dropped from 5.55% of the entire Chinese population to 0.3% of the population. This increase in health has been from the efforts of both the Chinese government as a whole and also local, community efforts to increase good health. Campaigns sought to prevent diseases and halt the spread of agents of disease – for example, mosquitoes causing malaria. Attempts to raise public awareness of health were especially emphasized.


The CMS saw great improvements to public health. Infant mortality decreased from 200 to 34 per 1000 live births, and life expectancy almost doubled, increasing from 35 to 68 years.[1] However, the agricultural sector reform slowly ended the original CMS during the 1980s, which had an adverse effect on the poor.[2] The impoverished, especially in rural areas, had no way of paying for medical care. A decentralization of the Chinese government meant a decrease in government involvement in public health services, which in turn made quality healthcare access much more difficult for poorer individuals. In fact, government spending on public health decreased from 32% to 15% as a result of the agricultural sector reform.[1] Recent changes have been implemented in an effort to ensure healthcare for all of China.

Recent changes[edit]

New Rural Cooperative Medical Care System[edit]

As a result of the agricultural sector reform and the end of the old CMS in the 1980s, many rural areas experienced struggles in affording healthcare fees. The New Rural Cooperative Medical Care System (NRCMCS[4]) is a new initiative that was established in 2003 to overhaul the healthcare system, particularly intended to make it more affordable for the rural poor.[5] The main difference between the NRCMS and original RCMS is that it is a voluntary system. Much of the NRCMS aims to reform both private and public sectors of health.[2] This contrasts with the old RCMS that was almost completely funded by the Chinese government and extended universally across all parts of China. The specifics of the program vary by county, but are funded by individual contributions and government subsidies for the poor.[6] Preliminary studies saw favorable participation of greater than 80%, which was believed to be partially from a push from both the local and national governments to participate.

There are some difficulties that persist in the NRCMCS. The program lacks adequate funding, medical staff, and sufficient equipment that is paid for by the government.[6] One particular issue is that while inpatient costs are covered, the majority of outpatient visits are not, which leaves many people still unable to pay for hospital visits. Additionally, the new CMS, like the old system, is tiered, but this also depends on the specific location. The details of the NRCMCS show that patients benefit most from the NRCMCS at a local level. If patients go to a small hospital or clinic in their local town, the scheme will cover from 70-80% of their bill, while if they go to a county one, the percentage of the cost being covered falls to about 60%, and if they need specialist help in a large modern city hospital, they have to bear most of the cost themselves, where the scheme would cover only about 30% of the bill.[7]

Healthy China 2020[edit]

The Chinese government recently declared the pursuit of “Healthy China 2020,” a program to provide universal healthcare access and treatment for all of China by the year 2020, mostly through revised policies in nutrition, agriculture, food, and social marketing.[8] Much of the program centers on chronic disease prevention, and promoting better lifestyle choices and eating habits. The program especially targets public awareness for obesity, physical inactivity, and poor dietary choices. Healthy China 2020 focuses most on urban, populous areas that are heavily influenced by globalization and modernity.[8] Additionally, much of the program is media run and localized, concentrating on change through the community rather than local laws. Many of the aims of Healthy China 2020 are concentrated to more urban areas that are under Western influences. Diet is causing obesity issues, and an influx of modern transportation is negatively affecting urban environments and as a consequence, health.

World Bank Health VIII project[edit]

An example of a reform model based on an international partnership approach was the Basic Health Services Project. The project was the 8th World Bank project in China, and was implemented between 1998 and 2007 by the Government of China in 97 poor rural counties in which 45 million people live.[9] The project aimed to encourage local officials to test innovative strategies for strengthening their health service to improve access to competent care and reduce the impact of major illness. Instead of focusing on eradicating a specific disease, as previous World Bank projects had done, the Health Services Project was a general attempt to reform healthcare.[10] Both the supply (medical facilities, pharmaceutical companies, professionals) and demand (patients, rural citizens) side of medicine were targeted.[10] In particular, the project supported county implementers to translate national health policy into strategies and actions meaningful at a local level. The project saw mixed results – While there was an increase in subsidies from the government, which was able to reduce out-of-pocket spending for residents, there was no statistically significant improvement in health indicators (reduced illness, etc.)[10]

Policy implications[edit]

In view of China managing major health system reform against a background of rapid economic and institutional change, the Institute of Development Studies, an international research institute, outlines policy implications based on collaborative research around the Chinese approach to health system development.[11] A comparison of China's healthcare to other nations shows that the organization of healthcare is crucial to its implementation. There exists some degree of disorganization and inequity in access to healthcare in urban and rural areas, but the overall quality of healthcare has not been drastically affected.[12] Certain incentives, such as adjusting prices of medical equipment and medicine have helped improve health care to an extent. The largest barrier to improvement in healthcare is a lack of unity in policies affecting each county. The Institute of Development Studies suggests testing innovations at local level, encouraging learning from success, and gradually building institutions that support new ways of doing things. It suggests that analysts from other countries and officials in organizations that support international health need to understand this approach if they are to strengthen mutual learning with their Chinese counterparts.[13]

Health insurance laws[edit]

Historically, there were two main health insurance systems: the labor insurance schemes (LIS) and government employee insurance schemes (GIS).[14] Under the establishment of these two health insurance systems, about 700 million rural Chinese citizens were health uninsured, even with the availability of hospitals and medical professionals. The LIS was a self-insurance system for all aspects of healthcare (clinic visit, access to medicine, etc.) while the GIS provided insurance to state employees. After the 1980s reform, the Chinese government began the transition to a new social insurance system for the entire country to completely replace LIS and GIS.[14] The need for this new insurance system stemmed from much of the rural Chinese population lacking medical insurance, exacerbated with rising medical costs. In fact, in 1998, a mere 9.5% of the entire rural Chinese population had medical insurance.[15]

Besides only improving health insurance for the rural and insured, the new health insurance system also improves health insurance standards for those in the lower-middle income bracket, who now receive subsidies. By the new health insurance laws, citizens in the middle class can now receive health subsidies of around 20 yuan, which is a contrast from the past, where neither the central nor local governments provided any subsidies for health insurance at all. An examination of the health insurance policies saw a need for more sources funding, since funding from the Chinese government alone was not enough.[14] A new health financing policy that matches funds on a local and central government level may prove to be an improved success.[15]

Public opinion[edit]

Though life expectancy in China has increased and infant mortality decreased since initial healthcare reform efforts, there is dissonance in quality of healthcare.[2] Studies on public reception of the quality of China’s healthcare in more rural Chinese provinces shows continued gaps in understanding between what is available in terms of medical care and affordability of healthcare.[16] There continues to be a disparity between the quality of healthcare in rural and urban areas. Quality of care between private and publicly funded facilities differs, and private clinics are more frequented in some rural areas due to better service and treatment. In fact, a study by Lim, et al. showed that in the rural Chinese provinces of Guangdong, Shanxi, and Sichuan, 33% of rural citizens in these provinces utilize private clinics as opposed to governmentally funded hospitals. The study showed that it was not so much the availability and access to health care for citizens, as it was the quality of the public health care people were receiving that drove them to opt for private clinics instead. The continued lack of health insurance, especially in the majority of rural provinces (where 90% of people in these rural provinces lack health insurance) demonstrates a continued gap in health equality. [16]


Many minority groups are still facing challenges in gaining equality in healthcare access. Due to the 1980s health reform, there has been a general increase in government health subsidies, but even still, individual spending on health has also increased. A disparity in inequality between urban and rural areas persists, since much of recent government reform is focused on urban areas.[17] Despite efforts by the NCRMS to combat this inequality, it is still difficult to provide universal healthcare to rural areas. To add to this rural inequality, much of the elderly population lives in rural areas and face even more difficulties in accessing healthcare, and remains uninsured.[17]

Like minority groups, health policy makers are also faced with challenges. First, a system that keeps basic wages low, but allows doctors to make money from prescriptions and investigations, leads to perverse incentives and inefficiency at all levels.[2] Second, as in many other countries, to develop systems of health insurance and community financing which will allow coverage for most people is a huge challenge when the population is aging and treatments are becoming more sophisticated and expensive. This is true especially in China, with the demographic transition model encouraging a larger aging population with the one-child policy.[17] Several different models have been developed across the country to attempt to address the problems, such as more recent, local, community-based programs.

See also[edit]


  1. ^ a b c Blumenthal, David, and Hsiao, William. (2005). Privatization and Its Discontents — The Evolving Chinese Health Care System. The New England Journal of Medicine. 1165-1170.
  2. ^ a b c d e f Liu, Yuanli, Hsiao, William C., and Eggleston, Karen. (1999). Equity in health and health care: the Chinese experience. Social Science & Medicine, 10, 1349-1356. Cite error: Invalid <ref> tag; name "Liu" defined multiple times with different content (see the help page).
  3. ^ a b Cook, Ian G., and Dummer, Trevor J.B. (2004). Changing health in China: re-evaluating the epidemiological transition model. Health Policy, 3, 329-343.
  4. ^ Bernardi, Andrea; Greenwood, Anna (2014-07-03). "Old and new Rural Co-operative Medical Scheme in China: the usefulness of a historical comparative perspective". Asia Pacific Business Review. 20 (3): 356–378. doi:10.1080/13602381.2014.922820. ISSN 1360-2381. 
  5. ^ Dib, Hassan H., Pan, Xilong, and Zhang, Han. (2008). Evaluation of the new rural cooperative medical system in China: is it working or not? International Journal for Equity of Health, 7-17.
  6. ^ a b Wagstaff, Adam, Magnus, Jun, Gao, Ling, Xu, and Juncheng, Qian. (2009). Extending health insurance to the rural population: An impact evaluation of China's new cooperative medical scheme. Journal of Health Economics, 1, 1-19
  7. ^ Liu, Yuanli, Hu, Shanlian, Fu, Wei, and Hsiao, William. (1996). Is community financing necessary and feasible for rural China? Health Policy, 3, 155-171.
  8. ^ a b Hu, F. B., Liu, Y., and Willett, W.C. (2011). Preventing chronic diseases by promoting healthy diet and lifestyle: public policy implications for China. Obesity Reviews, 7, 552-559.
  9. ^ China: Basic Health Services 8 Project. 20, 2013.
  10. ^ a b c Wagstaff, Adam, and Yu, Shengchao. (2007). Do health sector reforms have their intended impacts?: The World Bank's Health VIII project in Gansu province, China. Journal of Health Economics, 3, 505-535.
  11. ^ Lesson from the Chinese Approach to Health Systems Development Institute of Development Studies (IDS) In Focus Policy Brief Issue 8, June 2009.
  12. ^ Hsiao, William. (1995). The Chinese health care system: Lessons for other nations|journal=Social Science and Medicine, 8, 1047-1055.
  13. ^ Lesson from the Chinese Approach to Health Systems Development Institute of Development Studies (IDS) In Focus Policy Brief Issue 8, June 2009.
  14. ^ a b c Liu, Yuanli, and Rao, Keqin. (2006). Providing Health Insurance in Rural China: From Research to Policy. Journal of Health Politics, Policy and Law, 1, 71-92.
  15. ^ a b Liu, Yuanli. (2004). Development of the rural health insurance system in China. Health Policy and Planning, 3, 159-165.
  16. ^ a b Lim, Meng-Kim, Yang, Hui, Zhang, Tuohong, Feng, Wen, and Zhou, Zijun. (2004). Public Perceptions Of Private Health Care In Socialist China|journal=Health Affairs, 6, 222-234.
  17. ^ a b c Chen, Lanyan, and Standing, Hilary. (2007). Gender equity in transitional China's healthcare policy reforms. Feminist Economics, 189-212.

Further reading[edit]