While China’s insurers now collectively have US$101 billion available to infuse into new investment streams – real estate and private equity – the central government has itself been investing in a nationwide health care insurance program.
In the spring of 2009, Beijing announced a three-year health care reform plan that would see US$124 billion injected into providing basic health insurance, as well as primary health care facilities and an essential drug system. China aims to have 90% of its citizens under some form of insurance coverage by 2011, marking a turning point in the evolution of the country’s substandard health care system.
"The dates for achieving universal coverage jump around a little bit and the timeline is being pushed back as the leadership realize they can’t do this as quickly as they want," said John Langenbrunner, coordinator for human development at the World Bank in Beijing. "Nevertheless, they are moving at breakneck speed. I can’t recall any country in the world that has moved so quickly in terms of insurance coverage."
Since Chen Zhu succeeded Gao Qiang as minister of health in 2007, China has been fundamentally overhauling its health care system, and universal health coverage will act as one of the central pillars of this reform.
The push for change has been helped by the State Council’s recognition of the dire state of the current system. "Some people are not covered by medical insurance, the public health sector has been weak for a long period of time, and state-run hospitals are too profit-obsessed," it said when announcing its 2009-2011 health care spending package. Nevertheless, it’s not clear that planned spending increases will fix these problems.
Some regional hospitals have witnessed a doubling of admissions since the government started increasing health insurance coverage. The World Bank’s Langenbrunner questions the driving forces behind this jump in numbers.
"Is the jump in admissions due to unmet demand? Or is it because [health care] providers are finding new tests and new procedures as a way to increase revenue?" he asked. "It could be half-and-half."
Chinese public health care providers are paid on a fee-for-service basis, which leaves open loopholes in the system for exploitation by profit-driven hospitals. Because of increased insurance coverage, some hospitals have found it tempting to run up patients’ bills even further.
"If a doctor does one test, they get paid for one test. If they do 15 tests, they get paid for 15 tests. So there is an incentive to do more, whether they’re necessary or not," said a former medical equipment sales manager, who asked not to be named. Some local studies have shown that up to 50% of hospital admissions may have been unnecessary.
Current evidence points to the government putting good money into a bad system.
"The big picture is, people are getting insurance, the government is pumping a lot of money into the system, but people are not necessarily better off," said Langenbrunner. "They may have the same level of financial protection that they had at the beginning of this decade."