China's health spending reform an encouraging sign

PUBLISHED : Monday, 10 September, 2012, 12:00am
UPDATED : Monday, 10 September, 2012, 2:04am


Important policy announcements tend to dry up as the mainland prepares for a once-in-a-decade leadership change. It is good to see that health care for the nation's 1.3 billion people is an exception. The Ministry of Health has announced a 30 to 40 per cent increase in health spending as a proportion of GDP by 2020, raising it from the current 4.9 per cent to 6.5 to 7 per cent. The goal is to match the standard of developed countries in several key health indicators, for example by raising average life expectancy from just under 75 to 77 by 2020, and reducing the mortality rate of children under five from more than 18 per 100,000 births to 13.

The targeted budget by 2020 still falls well short of the world average of 9.7 per cent of GDP. Every bit of it will have to be spent wisely and accounted for transparently if the targets are to be met. One of them is to raise government funding and insurance coverage to reduce personal spending on health.

China's market reforms placed a heavy health-care cost burden on local government and consumers. Nonetheless personal spending now accounts for less than 35 per cent of total outlays compared with 40 per cent four years ago. By the end of last year, 95 per cent of people had some sort of health insurance, up from less than a third 10 years ago.

However, insufficient government funding still results in hospitals and doctors imposing surcharges on examinations and drugs, excessive medication and fee-gouging to make ends meet. This explains why patients tend to expect a lot and blame doctors if treatment fails. Indeed, it is not uncommon for them to resort to violence.

Given China's economic rise, patients deserve better. The reform blueprint is encouraging. But unless the central government ensures that hospitals get the funds they need without having to exploit patients it could be empty words. One way of realising it, apart from investing more public funds, would be to encourage the setting up of private and joint public-private hospitals to improve management and equipment.