Deepening the Reform of Health Care

From: English Edition of Qiushi Journal Updated: 2012-03-31 10:39
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 Health care reform is a challenging global issue. A number of countries around the world have carried out health care reform over recent years. All of these countries have encountered a range of difficulties during the course of reform, and some have even struggled. The deepening of health care reform represents a key aspect of our efforts to apply the Scientific Outlook on Development. It is a major welfare initiative aimed at safeguarding the health and happiness of more than one billion people, and a crucial development campaign that will underpin the promotion of economic and social development and the growth of domestic demand. During more than two years of efforts, we have worked out effective approaches, gained new experiences, and made clear progress, and we are now starting to see the positive effects of our reforms. Our progress so far has helped us to put solid foundations in place for our future reform efforts. However, we must be aware that there are still pressing issues to be resolved, and that achieving our overall objectives in health care reform by the year 2020 will involve a gradual process. We must think and act in line with the decisions and arrangements made by the central leadership in an effort to further deepen health care reform in China. Focusing on our goal of providing basic medical and health services to all urban and rural residents in China, we must continue to work out our own distinctive way of tackling the issue of health care reform. 

  Wu Dequan,a rural doctor in Donglake Village,Lanlongkou Town,Huangzhou County,Qinghai Province,checks up on hypertension patients around the village./Photo by Xinhua reporter Wang Bo

  I. The importance and urgency of health care reform

 The CPC Central Committee and the State Council have attached great importance to health care reform. In the first half of 2009, the CPC Central Committee and the State Council promulgated the Opinions on Deepening the Reform of the Health Care System, which outlined the guiding thoughts, overall objectives, basic framework, and policy measures for China’s health care reform. The State Council subsequently issued the Implementation Plan for Short-Term Priorities in Health Care Reform (2009-2011), identifying five key tasks in reform. As important guidelines geared towards specific issues, these two documents were formulated through a process of in-depth investigation, careful discussion, and repeated coordination. Since then, all localities, departments, and institutions concerned have engaged in a conscientious effort to implement the scheme for health care reform. They have stepped up their efforts, increased their collaboration, and managed to overcome the various challenges that were encountered during the early stages of reform. This has allowed us to make sound progress in the various aspects of our health care reform and secure widespread public support for these initiatives. 

 We have produced the following results in the initial stage of our reforms: First, the coverage of basic medical insurance has been expanded by a large margin. We have made constant improvements to the new cooperative medical care system in rural areas and to medical insurance for working and non-working residents in urban areas. This has allowed us to bring 6 million retired workers from closed or bankrupt state-owned enterprises under the coverage of medical insurance. At present, 1.28 billion rural and urban residents are covered by basic medical insurance, accounting for about 95% of the total population. Second, medical and health care services at the grassroots level have been improved. More than 2,000 county-level hospitals and over 30,000 grassroots medical and health institutions have been constructed or reconstructed. A campaign to train grassroots medical workers, especially general practitioners, has been launched. Through this campaign, around 10,000 medical students have been trained for grassroots medical and health institutions in central and western regions free of charge; over 20,000 medical practitioners have been recruited for town and township medical centers; and millions of practicing medical workers have been provided with training. Third, new progress has been made in our effort to provide equitable access to basic public health services for all people. As a part of our initiatives, we have launched a portfolio of basic public health service programs spanning 10 different categories and initiated 7 major public health service campaigns across the country. With the gradual increase of expenditure per capita, more and more people are now benefiting from public health services. Fourth, steady progress has been made in the establishment of a national system for basic drugs and in the trial reform of public hospitals. With the implementation of a system for basic drugs in all government-run medical and health institutions at the grassroots level, drug prices have decreased by an average of 30%, while outpatient drug fees and hospitalization fees have also decreased. Trial reforms in public hospitals and trials for the comprehensive reform of county-level hospitals have been carried out. Fifth, investment in health programs has progressively increased. From 2009 to 2011, an additional 331.8 billion yuan in central government funds was allocated to health care reform. At the same time, all localities have also increased their expenditure in health care reform. With the significant increase of government expenditure, the proportion of health care fees borne by individuals has dropped on a constant basis. This has allowed us to ease the financial burden of the public in medical care. 

 Speaking in overall terms, our health care reform has gained good momentum after making a solid start, which has promoted our efforts to ensure and improve the public well-being, enhanced our social programs, and created favorable conditions for the growth of domestic demand and the stimulation of economic development. Our experiences in reform so far have proven that the concepts, the orientation, and the approaches of our medical reforms are correct. Making sound use of international experiences, our reforms not only conform to the hopes and demands of the general public, but also to the conditions of our country and the laws governing the development of health programs. Despite this, however, we need to be aware of the fact that we are still facing a number of difficulties and challenges in reform, such as the long-term lack of basic medical security, the shortage and irrational allocation of medical resources, the unbalanced development of health programs in urban and rural areas and among different regions, insufficient development of medical workers, and the practice of compensating doctors with proceeds from the over-prescription of high-priced drugs. In addition, the problem of high medical fees and difficulty in securing access to medical services is still serious. Meanwhile, the progression of reforms has varied in different regions. Some localities are yet to fully implement policies and guarantee funding for reforms, and are lagging behind in the development of mechanisms and systems. We must attach a high level of priority to the effective resolution of these problems.

 We are now entering the “deep end” of our health care reform. As we touch upon more and more deep-rooted issues, the difficulty of reform is set to increase. The only way we can go now is forwards. We must forge ahead if we are to build on what we have achieved in the earlier stages of reform and make greater progress. In order to accomplish our five key tasks for the near-term and pave the way for the realization of our overall objectives in health care reform by 2020, it is crucial that we focus on the task ahead and make new breakthroughs in key areas. The central leadership has outlined new requirements for health care reform in the Fifth Plenary Session of the Seventeenth CPC Central Committee and the Twelfth Five-Year Plan. The direction has been set, and now it is time to act. Under the current situation, we must be more aware of the importance and urgency of deepening health care reform. 

 First, health care reform is an urgent measure that must be taken in order to ensure and improve the public well-being. At present, China’s GDP per capita has exceeded US$4,000, making China a middle-income country. At this stage of development, the general public is paying greater attention to issues such as medical care and health, and the demand for higher standards of living is increasing. Universal access to basic medical services is a fundamental requirement of a modern state. Of the three major indices of the UN Human Development Index (HDI), namely life expectancy, adult literacy rate, and GDP per capita, the index reflecting the level of health is the most important. We have made marked achievements in public health since the founding of the People’s Republic of China, raising the life expectancy from 35 years to 73.5 years. However, our medical and health services are still lacking in terms of equity and accessibility, with people having to pay high expenses for medical services. The general public has many complaints about this, and there is wide social concern over these issues. China still has tens of millions of impoverished people in its rural areas. Other than the harsh natural conditions in the areas where these people live, disease is a major factor contributing to their poverty. Many poor people in urban areas are also stricken by disease. There can be no moderate prosperity without good health. Meeting the people’s demand for health is one of the most important responsibilities of the government. Health care is a major issue which will have an effect on everybody. Therefore, in the effort to put people first, govern for the people, and ensure and improve the public well-being, it is essential that we reduce the difficulty of securing access to medical care by effectively carrying out our program of health reform.  

 Second, health care reform constitutes an important part of our efforts to transform our pattern of economic development at a faster pace. The effort to transform our pattern of economic growth should be manifested throughout all aspects of economic and social development. A major objective of health care reform is to provide a safety net for the general public to obtain medical care. In addition to improving our national health, the reassuring effect of this safety net will also help to boost consumer confidence and stimulate immediate consumer spending, thereby allowing us to increase domestic demand, transform our pattern of economic development, and promote development. In the past, our deficient medical insurance system meant that some people could not afford to seek medical care or opted not to do so. With the constant improvement of our medical insurance system today, more and more people are seeking medical attention, leading to a significant rise in the demand for medical care. Life is the most valuable thing that anyone can own, while health is the most important form of wealth. Public health also represents the foundation of a country and a nation. Over the long term, many hospitals have become accustomed to compensating doctors using proceeds from the over-prescription and overuse of drugs, including antibiotics. If this continues, the health of the people is bound to suffer. We must put an end to this situation. China is a populous country with a rapidly aging population. In addition, health conditions are being impacted by an increasing number of factors, such as changes to ecological environments, means of production and lifestyles. These are issues that we must address appropriately. Through the reform of health care, we will be able to provide people with better medical services and improve the overall level of public health. This will allow us to take advantage of our country’s abundant human resources, providing an important foundation on which to accelerate the transformation of the pattern of economic development.

 Third, health care is a significant area of China’s economic and social reform. Medical and health services are closely linked to the economy and society. The deepening of health care reform not only involves economic reform and development, but also social reform and development. On one hand, medical and health services represent an important social program. They are tied to public services and social management, and have an impact on the lives and health of the public. On the other hand, medical services are also an important component of the service sector, with medical services for the elderly population being an important part of the senior-care industry. According to statistics from the World Bank, health care spending can account for more than 10% of the GDP in some developed countries. In the United States, this figure is 16%; in some developing countries, it can reach 6% to 8%; but in China, it is less than 5%. This means that there are major prospects for the development of health programs and the medical industry in China. As we work to guarantee the provision of basic medical services, we should also see the great potential to be tapped in non-basic medical services. The additional funding that the government is providing for health care reform is mainly directed towards low and medium-income earners. What we are actually doing is adjusting our income allocation structure in an effort to promote social fairness, justice, and harmony. We are currently in the process of implementing a national system for basic drugs. In addition to addressing basic needs for the treatment and prevention of diseases and ensuring that the public has equal access to drugs, this is also driving forward the reform and innovation of mechanisms and systems in connection to internal management, human resources, and income allocation in our grassroots medical and health institutions. We are setting up a standardized system for the procurement of basic drugs. This will promote the optimization, reorganization and restructuring of the pharmaceutical industry, and exert a far-reaching impact on the production and circulation of drugs. We are also working out an effective means to separate government administration from the operation of public hospitals and separate the functions of supervision and operation. This will help to transform the role of the government in health care and encourage non-government participation in the provision of medical services. To summarize, as an important part of our overall reforms, the reform of health care will play an important underpinning role in the promotion of economic and social development and reform.

 We must be aware that the constantly increasing public demand for health will call for the constant reform and improvement of our health system. As a matter of great public interest, the people have high hopes for the substantive reform of health care in China. We must be aware not only of the importance and urgency of reform, but also of its arduous, complex, and long-term nature. We must have the courage to take on responsibility, to tackle difficulties head on, and to persevere to the end regardless of the setbacks we may encounter. At the same time, we should also be aware that we are in a good position to pursue reform. This is related to the experiences that we have built up over the long term, our increasing national strength, and the fact we have the understanding and support of the general public. For this reason, we are confident that we will make constant progress and achieve all of our objectives in reform. Since we have started, there can be no turning back. We must come together in a pioneering effort to see our health care reform through and develop our own unique means of tackling what is a challenging global issue.  

 II. Main approaches to health care reform

 Health care reform is a process in which we must solve complex issues and deepen our understanding of developmental patterns. Over the past two years, we have committed to a direction of reform, defined our approaches, and gained new experiences. In short, we need to continue to make efforts in the following three aspects.

 First, we must regard basic medical and health services as a universal public good. This is essential if we are to maintain the welfare nature of public medical and health services, and if we are to ensure that everyone can benefit from reform and development. This also points to the laws of development and the basic requirements of public health programs. The nature of public health and basic medical services oriented towards the entire population is clearly that of a public welfare initiative. As we deepen our health care reform, we must focus on meeting the basic health-related demands of both urban and rural populations. We need to preserve the nature of public medical and health services as a form of public welfare; place the emphasis on the prevention of illness; prioritize efforts in rural areas; and lay equal emphasis on traditional Chinese medicine and Western medicine. We need to step up government accountability and investment; improve our institutions and systems; strengthen supervision and regulation; be innovative in our design of mechanisms and systems; encourage non-government participation in medical services; and strive to develop a basic health care system with universal coverage. 

 Our health care reform is built around the core concept of providing basic medical and health services as a universal public good. Basic health care refers to a government-organized health assurance system under which all individuals can secure equal access to basic medical and health services at a reasonable personal cost. 

 The establishment of the basic health care system represents a major institutional innovation in terms of both the concept and the arrangement of China’s health care system. Basic medical and health care includes basic medical security programs for rural and urban residents; basic medical services such as the treatment of common and frequently-occurring ailments; the control and prevention of major diseases; and response to public health emergencies. There are still disparities in public services between urban and rural areas and among different regions, while government investment in basic medical care and public health is still insufficient. In our reforms, we have adopted a range of measures in an attempt to bring basic medical and health services under a set of prescribed mechanisms and institutions. These include developing a medical security system that benefits over one billion people, implementing a system for basic drugs in grassroots medical and health institutions, speeding up the development of medical and health services at the grassroots level, and launching national and major campaigns related to basic public services. All of these embody the concept that basic medical and health services are a form of public good. They have laid down an institutional base for the realization of universal access to basic medical and health services.

 Second, we must guarantee that basic needs are met, develop grassroots institutions, and establish new mechanisms for medical and health care. This is the primary means by which we will provide basic medical and health care as a universal public good. The most distinguishing feature of this round of health care reform is that we have drawn a boundary between basic medical services and non-basic medical services. The government is responsible for providing basic medical services or purchasing certain services for the people. Non-basic medical services will be provided by the market, with the government assuming responsibility for the necessary supervision and regulation.

 We must guarantee that basic needs are met. To do this, we need to ensure that all people have access to basic medical and health services, and focus on improving people’s health. We must do the best that we can within the scope of our capacity. This means that we should establish an appropriate level of benefits for effective assurance, and gradually raise the standard of the benefits we provide. For instance, by developing a new cooperative medical care system in rural areas and medical insurance for working and non-working residents in urban areas, we have managed to gradually bring more and more people under the coverage of basic medical insurance. At the same time, we have gradually raised the level of government subsidies provided to individuals and increased the proportion of fees that are reimbursed to hospitalized patients. These initiatives are in line with our principles of guaranteeing basic needs, providing broad coverage, and ensuring the sustainable development of basic medical insurance. Meanwhile, we also need to improve non-basic medical services. We have given full play to the role of the market and encouraged non-government participation in the provision of selected and personalized medical services, so as to meet diverse needs for medical care. This has not only helped to channel capital from all sectors of society into health care, but has also allowed the government to concentrate its efforts on basic public needs.

 We must develop grassroots medical and health institutions. To do this, we need to enhance the service capacity of grassroots health care institutions and develop a sound network of basic medical and health services. At present, grassroots medical and health institutions are unable to play the role that is required of them and the practice of over-prescription for minor illnesses is still prevalent. The underdeveloped state of grassroots medical institutions is a major cause of high medical fees and difficulty in securing access to medical services. The experiences of other countries have shown us that the emphasis of health care should be placed on the grassroots. On the one hand, this approach highlights prevention and makes it easy for people to see a doctor. On the other hand, it can also help to effectively control medical expenses. In order to improve grassroots medical and health institutions, our efforts must be focused on the local level. We need to provide grassroots medical and health institutions with increased funding and material support, and work to channel more personnel and technology to the grassroots. In addition, we need to clearly define the functions and service modes of these clinics, and support local clinics in establishing stable relationships with their local communities, thereby allowing them to play a principal role in health management and the diagnosis and treatment of common and frequently-occurring ailments. By further developing grassroots medical and health institutions, raising the level of reimbursement for medical fees, and making greater efforts in publicity, we will make it possible for more people to consult medical attention within their villages or communities, thereby allowing grassroots medical and health institutions to eventually become the first choice of the general public. 

 We must establish new mechanisms for medical and health care. To do this, we must develop institutions and mechanisms that not only embody the nature of medical and health care as a form of welfare, but also allow medical institutions to improve their service capacity and raise their level of efficiency. Mechanisms are the foundation of development in medical and health care, having a bearing on the overall and sustainable development of medical and health care programs. Therefore, we need to be innovative in our design of institutions and mechanisms, regardless of whether we are seeking to guarantee basic needs or improve grassroots medical and health institutions. Through reform, we need to establish institutions for basic medical and health services and balance the relationships between the government and the market, between equity and efficiency, and between motivation and control. Doing so will allow us to bring positive factors into play, safeguard the nature of public medical and health care as a form of welfare, and promote the standardized and efficient operation of the medical and health care system. We need to improve our basic medical insurance, our national system for basic drugs, and other newly-established framework systems. We also need to set up new operating mechanisms for grassroots medical and health institutions and public hospitals, and improve medical service systems at the grassroots level and for the basic health care system. We need to enhance legislation in regard to health care, and thereby guarantee the sustainable and sound development of our health programs. As our reforms in health care deepen, we need to better link our increased expenditure to the development of mechanisms. By making a bigger effort to develop mechanisms, we will gradually put in place a basic medical and health care system that covers all of China’s urban and rural areas.

 Third, we must adopt a step-by-step approach to reform, making overall plans and giving priority to key efforts. The reform of health care is a massive and highly complicated initiative. The fact that China will remain in the primary stage of socialism on a long-term basis dictates that we must take a pragmatic and progressive approach to our health care reform. First, we need to guarantee that people’s basic needs are met before encouraging non-government sectors to provide medical and health services. In the initial stages of health care reform, the focus should be placed on satisfying basic needs and strengthening foundations. This involves the adoption of key reform measures to improve weak links such as basic medical insurance, basic drugs, basic medical services, and basic public health. We must first guarantee that the basic needs of the public in urban and rural areas have been met before we can give better play to the role of the market in meeting people’s non-basic needs and better address people’s diverse needs through diversity in the medical sector. Second, we need to develop grassroots medical and health institutions before launching the reform of large hospitals. Grassroots medical and health institutions are geared towards the general public. Starting our reforms at the grassroots level will allow us to address the reality that medical and health services in villages and communities are unable to meet the basic needs of the public. By strengthening weak links and making it easy for people to see a doctor, we will address the problem of inadequate access to medical care and relieve the pressure on large hospitals in cities. This will create favorable conditions for the reform of public hospitals. Meanwhile, we need to carry out trial reforms in county-level hospitals and large urban hospitals in order to build up experience for nationwide reforms. Starting with the satisfaction of basic needs and the improvement of grassroots medical and health institutions, our reforms will eventually encourage grassroots medical and health institutions, public hospitals, and diverse medical and health service providers to spur each other forward and develop side-by-side. This approach will help us to advance health care reform in an active yet prudent fashion.

 In addition to considering the overall situation, it is also important that we prioritize key efforts. There are five key aspects of our health care reform which, if we can succeed in making breakthroughs, will drive on the progress of our overall reform program. The establishment of a system for basic drugs, for instance, is a key task in our health care reform, and also a key link in the reform of grassroots medical and health institutions. This will promote the development of grassroots medical and health institutions and help to develop a new drug supply system. In addition, each of our tasks has different priorities in different stages of reform. Taking the effort to develop basic medical insurance as an example, our goal in the initial stages was to expand our coverage; our focus at the present has shifted toward increasing the level of insurance benefits; and our task in the future will be to concentrate on making innovations in management systems and improving our capacity to operate and provide services. Therefore, we need to lay stress on key tasks and identify points of breakthrough. If we are able to do this, our efforts will be twice as effective, and the overall effects of our health care reform will be multiplied. 

 There are a multitude of things we need to address in health care reform. This calls for overall planning and systematic arrangement. At the start of the reforms, the central government not only set out a general blueprint for health care reform leading up to the year 2020, but also formulated an implementation scheme for key short-term tasks in reform. This approach was important for two reasons. Firstly, it defined the overall direction and route of reform, thereby ensuring the continued progression of our initiatives. Secondly, it allowed us to provide the people with solid benefits, motivate medical workers, help regulators and administrators to perform their duties, and provide the government with tasks to work towards, thereby allowing us to produce substantive results in reform within a short period of time. In our efforts to accomplish the five key tasks of reform, we have made overall plans for the development of urban and rural areas and all regions; given due consideration to the interests of both supply and demand parties; integrated efforts in prevention, treatment, and rehabilitation; and sought to balance the relationships between the government, medical and health institutions, drug manufacturers, medical workers, and patients. These efforts have reflected our reform strategy, which is to advance reform by comprehensive means while giving consideration to both short-term and long-term tasks.

 We have also integrated our efforts to develop both hardware and software in the reform of health care. Hardware is the basis for reform, while software is the substantial element. Our reform measures include increasing government expenditure to develop infrastructure, improve our medical and health system at the grassroots level, and ultimately improve basic services. They also include efforts to improve administration, operating mechanisms, and hospital environments. Confucius said that a workman must first sharpen his tools if he is to do his work well. Therefore, it is essential that we develop our infrastructure in order to improve our medical and health services. If we fail to upgrade our infrastructure and improve conditions in medical institutions, we will be unable to meet public demands for medical attention in local clinics and hospitals. On the other hand, if we overemphasize the construction of buildings and the purchasing of facilities, and ignore the training of medical workers, we will be unable to improve the quality of our medical services, regardless of how sophisticated our equipment is. Therefore, we have attached emphasis to both the development of infrastructure and the fostering of personnel, with the priority being the latter. Our efforts in this regard include stepped-up efforts to train general practitioners. By emphasizing both hardware and software, we have promoted the balanced development of health care in China, which has been of great benefit to the general public. 

 III. Priorities of health care reform

 We have now entered a key period for the deepening of health care reform. This is a crucial stage for the accomplishment of our five key tasks in reform, and also an important period in which we have started to implement the Twelfth Five-Year Plan. Therefore, this is a crucial stage in our efforts to tackle the issue of health care reform, which is a global challenge faced by many countries. We must fully implement the arrangements of the CPC Central Committee and the State Council on health care reform. In line with the principles of guaranteeing basic needs, improving grassroots medical and health institutions, and developing mechanisms, we should not only improve health care at the grassroots level and promote equitable access to basic public health services, but also accelerate the development of basic medical insurance, the system for basic drugs, and the trial reform of public hospitals. We must concentrate all our efforts on solving these key and difficult issues, as they have a bearing on the overall progression of health care reform.

 First, we need to advance our effort to develop basic medical insurance with universal coverage in order to truly benefit the people. Basic medical insurance has a bearing on the fortune of the country. It will benefit all individuals now and for generations to come. It is a bridge linking the supply side at one end and the demand side at the other. As a key link in health care reform, it is connected to medical services, the public health system, and the drug supply system. More than 130 countries in the world have adopted medical insurance as a means of addressing their people’s demand for medical and health care. Most developed countries have established universal medical insurance. Some developing countries have also launched insurance programs. For instance, Mexico has carried out health care reform and implemented a program called Seguro Popular (Popular Health Insurance). Through the deepening of health care reform, we have been working to develop a basic medical and health system which is based around the universal coverage of medical insurance and the provision of a social safety net. By improving medical insurance for working and non-working residents in urban areas, developing a new cooperative medical care system for rural areas, establishing medical assistance systems in rural and urban areas, and probing into the development of commercial medical insurance, we have put in place a framework for the universal coverage of basic medical insurance. This demonstrates that China has made initial success in its task of bringing the entire population under the coverage of basic medical insurance. We will continue to make innovations in systems and mechanisms and make greater efforts to increase the benefits and effectiveness of our system, so as to constantly improve our universal system of basic medical insurance.

 In working towards basic medical insurance for the entire population, we need to take into account the public demand for medical care and increase government expenditure. In addition to increasing expenditure in public health services, we have raised benefits for participants of the new cooperative medical care system in rural areas and participants of medical insurance for non-working residents in urban areas on several occasions over recent years. On this basis, we need to further reduce the burden of medical expenses on the general public. For participants of the new cooperative medical care system in rural areas and medical insurance for non-working residents in urban areas, the proportion of hospitalization expenses that will be reimbursed by the government will be increased to 70 percent, with the maximum amount that can be reimbursed for medical expenses being brought to over 50,000 yuan. We will effectively integrate basic medical insurance with government assistance for major illnesses, with the focus on assistance for certain major illnesses, and widely implement unified planning of outpatient expenses at the grassroots level. This will allow us to provide greater assurance in the event of major illnesses as well as a certain level of assurance for minor illnesses. We need to advance the unified planning of medical insurance funds. Firstly, we need to accelerate unified planning at the prefectural level, and then work to implement unified planning at the provincial level in areas with the conditions to do so, thus leveraging the regulatory role of funds under unified planning. We will introduce measures that will allow rural migrant workers to change the location of their medical insurance and measures that will provide for the settlement of medical bills incurred by retirees in areas outside the jurisdiction of their insurance coverage. We will work out a unified management system for both urban and rural areas and promote the combination of basic medical insurance with commercial medical insurance. We will improve IT systems for medical insurance, change the way insurance payouts are made, improve medical insurance services, and implement the immediate settlement of fees so as to make the reimbursement process much more straight forward. In line with the principle of prioritizing disease prevention, we must seek substantial progress in major public health campaigns. We need to cover more people, provide a larger range of services, and raise service standards. We will carry out health education activities and increase our capacity in disease prevention in order to help people avoid illness.

 Second, we need to establish a new operating mechanism for grassroots medical and health institutions by implementing the system for basic drugs. The problem of hospitals compensating doctors with proceeds from the over-prescription of high-priced drugs is a major problem that is undermining the sound development of our health programs. Our reforms began with the implementation of a system for basic drugs in grassroots medical and health institutions run by the government. In doing so, our aim has been to dispel the negative impact caused by this problem from the bottom up. The establishment of a national system for basic drugs represents a major institutional innovation. In addition to its influence on the production, circulation, and utilization of drugs, this system also has an impact on the operation of grassroots medical and health institutions, and on the incomes of medical workers. Therefore, this is a delicate matter with a bearing on the overall situation. If we make an isolated effort to implement this system, the likelihood is that we will encounter more problems and even trigger new conflicts. If that were to happen, the system would not last long. This is why we need to use the implementation of the system for basic drugs as a starting point for the comprehensive reform of grassroots medical and health institutions. We must develop a new operating system that preserves the nature of these institutions as public service providers, promotes their sustainable development, and encourages medical workers to be diligent.

 The key link in the effort to implement the system for basic drugs in grassroots medical and health institutions is to standardize the purchase of drugs. We need to implement the policy of selling basic drugs without markups and work to ensure the reliable quality, rational price, immediate supply, safety and effectiveness of basic drugs. This will allow us to reduce the burden of the public in the use of basic drugs. At present, we need to prioritize our effort to ensure the quality of drugs. In addition, we need to advance the comprehensive reform of grassroots medical and health institutions and deepen reforms in regard to performance-related pay, human resources and social security. We need to set up new mechanisms for drug purchasing, compensation, employment, and income distribution. All of these things will help to improve services and raise efficiency in grassroots medical and health institutions. In this case, we need to increase government expenditure in the comprehensive reform of grassroots medical and health institutions, fully exert the compensatory function of medical insurance funds, and make adjustments to charged services, so as to ensure the sound operation of grassroots medical and health institutions.

 The implementation of the system for basic drugs is closely linked to medical and health services at the grassroots level. We need to develop grassroots medical and health services in urban and rural areas so as to ensure that all townships have medical centers, all villages have clinics, and all urban sub-districts have community health centers. Village clinics represent the foundation of the triple-tier medical and health service network in rural areas. They ensure that rural residents can secure easy access to a doctor, and play a fundamental role in the prevention and control of major infectious diseases and the promotion of our efforts to achieve universal access to public health services. In implementing the system for basic drugs in grassroots medical and health institutions, we need to promote joint efforts between medical centers in townships and village clinics, and take various measures and approaches to ensure the normal operation of village clinics and the rational pay of village medical staff. This will guarantee the sound operation of medical and health services in rural areas.

 Third, we need to carry out trial reforms to work out a course for the development of public hospitals. Public hospitals play a dominant role in China’s medical and health services. At present, beds in public hospitals account for 89% of the total number of beds in all of China’s hospitals. Their outpatient and inpatient amounts each account for 92% of national totals. Many problems that China faces in health care are found in public hospitals. Moreover, the results that we achieve in the reform of grassroots medical and health institutions must be consolidated through the reform of public hospitals. If we fall short in the reform of public hospitals, we will be unable to provide the public with affordable and adequate access to medical services. If this happens, the results of our health care reform, the effects of government investment, the benefits provided to the general public, and the public rating of reform will suffer. Therefore, we may say that the reform of public hospitals is not only the focus of public attention, but also an important indicator of health care reform. The key task of trial reforms in public hospitals is to work out an effective approach to reform. Public hospitals and grassroots medical and health institutions need to work together to increase their inherent vitality, and we also need to provide an external driving force to accelerate the trial reforms of public hospitals. We need to make innovations in systems and mechanisms and improve management and service standards in hospitals. We need to work out an effective means of separating government administration from the operation of public hospitals, separating regulation from operation, separating medical services from pharmaceutical services, and separating for-profit operations from non-profit operations, and improve systems for the management of public hospitals. This will help us to identify a basic approach to the reform of public hospitals, allowing us to expand, deepen, and make new breakthroughs in reform. 

 The establishment of a mechanism to divide and coordinate work between public hospitals and grassroots medical and health institutions is a major measure in the reform of public hospitals. It will ensure interaction between large hospitals and grassroots medical and health institutions. We will make overall plans for dedicated cooperation between large hospitals and county-level hospitals and grassroots health clinics. Measures such as dispatching medical personnel, mobile diagnosis and treatment, the provision of assistance in training, and the two-way referral of patients will help hospitals and clinics in counties, townships, and communities to improve their capacities in the provision of medical services. Moreover, we will develop a level-by-level mechanism for the treatment of illness. County-level hospitals, which cover more than 900 million people, represent a bridge between large hospitals and grassroots medical and health institutions, and a crucial part of our efforts to address the problem of high medical fees and difficulty in securing access to medical attention. Therefore, we will seek to make breakthroughs in the reform of public hospitals through the transformation and improvement of county-level hospitals. We will accelerate trial reforms in county-level hospitals so that these hospitals may assume a leading role in their respective counties. To do so, we need to gradually end the practice of compensating doctors with proceeds from the over-prescription of high-priced drugs, rationally control medical and drug fees, advance comprehensive reforms, and make greater efforts to develop and raise service standards in county-level hospitals. 

 The promotion of measures to benefit the people is essential if public hospitals are to boost their inherent vitality during reform. In essence, this is a specific approach to reform. While encouraging people with common ailments to seek medical attention in their local clinic, we should also work to provide greater convenience to patients in large urban hospitals, improve patient experience, and create better hospital environments. We need to be innovative in the design of operating and management systems in hospitals, and advance scientific and sophisticated management in order to improve service capacity. We need to optimize, redesign and standardize the procedure of diagnosis and treatment. We need to make it easier for people to seek medical treatment by taking a range of measures, such as the application of one-card-passes, same-day outpatient surgery, acceptance of examination results between hospitals at the same level, the reduction of waiting times, and treatment by appointment. Meanwhile, we need to improve internal management in public hospitals and gradually address the problem of low-paid staff in order to motivate medical workers and improve the quality and efficiency of medical services.

 Encouraging the non-government sector to provide medical services will boost the internal motivation of public hospitals to reform. In implementing the policy of encouraging non-government capital to run medical institutions, efforts will be made to streamline and modify related regulations and measures. By removing policy obstacles, we will treat all medical service providers equally and promote the development of non-public medical institutions. In this way, public and non-public hospitals will be able to supplement and stimulate each other, thus creating an external driving force for the reform of public hospitals. In addition, we need to develop a sound mechanism for competition and improve the regulation of the medical market in order to ensure the healthy development of medical and health institutions run by all sectors. 

 Developing our own approach to health care reform is both a pressing task and an arduous, long-term initiative. Our gradual accomplishment of the five key tasks of reform in the short term is testament to the major progress that we have made in the current stage of reform. At a new starting point, we must review our experiences in reform over the past two years and take rapid action to formulate a scheme for the deepening of health care reform during the period of the Twelfth Five-Year Plan. This is essential if we are to achieve our overall objectives in reform by the year 2020. Basic medical insurance for all must be consolidated as the foundation of our basic medical and health care system. We need to improve our framework of basic medical security, including basic medical insurance for working and non-working residents in urban areas, the new cooperative medical care system in rural areas, and medical assistance systems in urban and rural areas, and provide supplemental medical insurance. We also need to link these systems together and gradually integrate them. We need to bolster the progress that we have made in the implementation of the system for basic drugs in grassroots medical and health institutions run by the government, and deepen the comprehensive reform of these institutions. Other medical and health institutions also need to progressively deploy basic drugs and give priority to the use of basic drugs. We will make improvements to our pricing system and dynamic price adjustment system, and promote reform in the production and circulation of drugs. On the basis of trials, we will accelerate the reform of public hospitals and county-level hospitals. To do this, we need to set up scientific and rational systems for appointment, distribution, and compensation; develop a sound modern hospital management system and corporate governance structure for public hospitals; and improve the management of public hospitals in line with the needs of patients. In addition, we will encourage the investment of non-government capital in the running of medical institutions in order to diversify medical service providers. We will improve medical service systems in urban and rural areas. By optimizing the distribution of medical and health care resources, we will develop a triple-tier network of medical and health services for rural areas in which county hospitals play the leading role and town and township medical centers and village clinics serve as the foundation. We will improve the urban medical and health services system on the basis of community health services, and strengthen our contingent of medical and health workers in community clinics, with the focus being on the training of general practitioners. We will push for more registered doctors to work in more than one medical institution and advance the application of IT in medical and health services. We will strengthen the public health service system. In this regard, we will increase per capita spending on basic public health services, increase the number of basic public services the government delivers, implement major public health service projects, actively prevent major diseases, and deal with major public health emergencies. By deepening reforms and furthering the development of our basic medical and health care system, we will speed up the development of health programs and strive to meet people’s increasing demands for health care.

 The reform of health care will be of benefit to everybody. Its success hinges on the concerted efforts of all sectors of society. Medical workers represent the major force that underpins our reforms. The achievements of our health programs are the result of their hard work and dedication. We need to fully motivate our medical workers and inspire them to participate in, support, and promote reform. We will spur them to improve their professional ethics and style of work as well as their level of attainment and professional skills. We need to ask them to show concern and care for their patients, devote themselves to disease prevention and treatment, and provide people with quality services in keeping with the fine traditions of the Chinese nation and the lofty spirit of healing the wounded and rescuing the dying. In addition, we also need to increase the incomes of medical workers in line with the development of the economy and society and the progression of our health programs. The understanding and the support of the public is essential for our health care reform and the development of our health programs. We need to give full play to public initiative and encourage non-governmental investment in both health care reform and public health programs. We need to guide the public media in publicizing health care reform and the development of public health programs, and create a social environment in which all people show respect for medical sciences and medical workers, so as to build harmonious relationships between hospitals and patients. By doing this, we shall create a favorable situation in which all sectors of society care about and support our health care reform and the development of public health programs.

 We bear the great and glorious responsibilities of carrying out health care reform. In the effort to improve our level of national health and ensure that everyone has access to basic medical and health services, all departments and localities need to enhance their understanding, step up their leadership, and treat health care reform as a major task with a bearing on the overall situation. We must develop sound working mechanisms, identify key tasks, and implement policy measures in order to succeed in this major project of public welfare and development, and work out our own solution to the challenging global issue of health care reform. 


(Originally appeared in Qiushi Journal, Chinese edition, No.22, 2011) 

Author: Member of the Standing Committee of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council

Related readings:1

Opinions of the CPC Central Committee and the State Council on Deepening the Reform of the Health Care System 

The Opinions of the CPC Central Committee and the State Council on Deepening the Reform of the Health Care System was issued on April 6, 2009. The Opinions put forward the short-term objectives of effectively reducing the burden of medical expenses on the general public and solving the problem of high medical fees and difficulty in securing access to medical services. It also outlined reform objectives for the long-term, such as the development of a universal system for basic medical and health care and the provision of safe, effective, convenient and affordable medical and health services to the general public.

The Opinions, over 13,000 characters in length, includes six parts: I. Fully understanding the importance, urgency, and enormous difficulty of deepening the reform of the health care system; II. The guidelines, basic principles and overall objectives for deepening the reform of the health care system; III. Improving four major systems in health care and developing a basic health care system covering urban and rural residents; IV. Improving institutions and mechanisms to ensure the effective and well regulated operation of the health care system; V. Focusing on reforms in five key areas and striving for substantial progress in the short-term; VI. Advancing health care reform in an active yet prudent manner.

Related readings:2

Implementation Plan for Short-Term Priorities in Health Care Reform (2009-2011)

Based on the Opinions of the CPC Central Committee and the State Council on Deepening the Reform of the Health Care System, the State Council formulated the Implementation Plan for Short-Term Priorities in Health Care Reform (2009-2011) as the first supporting document for China’s new round of health care reform. The Plan was issued on April 7, 2009. The Plan sets forth specific arrangements for the implementation of the Opinions in light of current circumstances. It outlines five areas as the focus of reform for the period from 2009 to 2011: I. Speeding up the development of a basic assurance system; II. Preliminarily establishing a national system for basic drugs; III. Improving the grassroots medical and health services system; IV. Promoting equal access to basic public health services; V. Advancing trial reforms of public hospitals.

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