Health care reform in China to make life easier for patients, not hospitals

Government plan to reduce bills is lauded by industry, but lacks details on how to rectify shortfall in hospital finances, analysts say

PUBLISHED : Monday, 29 July, 2013, 12:00am
UPDATED : Monday, 29 July, 2013, 8:28am

The central government has made cutting the cost of medical bills a key element of this year's health care reforms, but the plan says little new about how to alleviate the financial woes of urban public hospitals.

Beijing's main goals in health care reform this year show its resolve to reduce patients' medical bills, but the most daunting task - to sort out the finances of public hospitals in the cities - seems as remote as ever, analysts say.

Cost controls and increased health insurance subsidies were among 26 tasks in the new State Council's guidelines on "making new breakthroughs" in health care. The document represents the latest instalment in Beijing's four-year-old effort to overhaul of the country's expensive and inaccessible health care system. The massive reform stands as a major test for Premier Li Keqiang , who oversaw its launch before his installation as premier in March. The State Council - Li's cabinet - has ordered local governments to play a greater role in the overhaul.

The plan calls for maintaining high rates of public health insurance coverage and increasing reimbursements for medical bills. It would raise public health insurance subsidies for rural residents and non-employee urban residents by more than 16 per cent to 280 yuan (HK$350) per year.

The State Council spent more than 1 trillion yuan in the first three years of the reform, which was originally projected to cost 850 billion yuan. Nearly half of that has been spent on expanding public insurance.

"The fiscal income [from taxes and fees] is limited, but spending is increasing," said Wang Hongzhi , a health care specialist at management consultancy Allpku. "So, now you see a series of measures to bring down the medical costs via payments from health insurance."

Overall, the State Council's reform guidelines, which include recommendations for streamlining bureaucracy and lowering prescription drug costs, were well-received by health experts.

But they offered no new proposals for reforming the financial support system for big public hospitals in the cities, which many agree is the biggest problem facing public health.

Such hospitals, which serve most of the population, will see their revenue suffer if they comply with the central government's plans to scrap a 15 per cent prescription drug surcharge, which was originally intended to help cover a shortfall in funding.

"This part of the reform is not progress and the document sends no sign of radical reform in the near future," a report by China Merchants Securities said.

But Professor Zhu Junsheng , of Capital University of Economics and Business, said "much would be achieved" if authorities answered the document's call to wean hospitals off drug sales.

The new guidelines were an improvement on previous plans by focusing on preventing abuse.

"Health insurance programmes forbid doctors from over-prescribing drugs, but doctors can bypass the rule by breaking down the medical service to different areas," Zhu said. "The new document takes that into consideration and forbids it."

The document also avoids any detailed requirements for reforming the central purchasing of drugs, recommending instead that authorities "reasonably lower the cost of drugs".

"Top officials have realised that the high proportion of health bills spent on drugs is not caused by the high price of drugs, but over-prescription by doctors," Wang said. "Emphasising a low price has caused some accidents because manufacturers are unwilling to produce cheap but effective drugs."

The guidelines suggest that the management of public health insurance funds be rolled into one government agency by year's end, while cautioning that the insurance funds need to operate smoothly during the transition.

The Ministry of Human Resources and Social Security is expected to take over all insurance funds to increase efficiency and standardise reimbursement

The ministry already runs the basic health insurance funds for urban employees and urban non-employees, which had collected 482 billion yuan and 70 billion yuan, respectively, by 2011.

The National Commission for Health and Family Planning, set up in March, runs medical insurance for rural residents, and has collected 267 billion yuan, the National Audit Office said.