ANALYSIS: China has long way to go on health reforms

By Elise Potaka Apr 12, 2009, 2:08 GMT

   Beijing - Chinese authorities released a long-awaited health reform action plan last week, but it is only the first step in a long march towards curing endemic problems marring the country's medical system, analysts say.

   Over the next three years, 850 billion yuan (124 billion dollars) will be spent on lowering the costs of medicines, building and renovating hospitals and clinics, training medical staff, and improving and expanding the current medical insurance scheme.

   Acknowledging the size of the task ahead, the government has appointed vice-premier Li Keqiang to head a taskforce comprising 16 government departments to coordinate the implementation of the proposed reforms.

   This shows not only the government's commitment, but also an understanding that only a top leader can motivate and unite all departments.

   Health care topped the list of Chinese citizens' concerns in a recent survey by the National Bureau of Statistics.

   Until the 1980's, health care costs in China were largely covered by the state. When this system was dismantled, medical fees sky-rocketed as under-funded hospitals struggled to keep up with demand.

   Between 1985 and 2005, the annual disposable income of Chinese residents increased 20 times, but the amount they spent on health care increased by 133 times, according to Ministry of Health figures.

   But reactions to the government's new action plan have seen hope mixed with concern, as analysts question just how certain goals will be met.

   'The release of the policy is only the first step in the march towards reform,' Peking University economics professor Liu Guo'an told the German Press Agency dpa in Beijing.

   Liu, who was an advisor to the reform group, said that plans to expand insurance cover and more closely integrate the existing three insurance schemes will significantly benefit patients by reducing costs and streamlining the claims process.

   He also praised the elimination of barriers to private investment in public hospitals, and the removal of current policies which limit the career options of doctors who choose to work in private institutes.

   But Liu also questioned how the government will put together the essential medicines list which is aimed at reducing costs of commonly-used medications.

   'We are not clear about the selecting principles. Who will select ... What data will they base their selections on?' he asked.

   Professor Zhong Nanshan, head of the Chinese Medical Association and a well-known physician, questioned how hospitals will make up the shortfall when medicine costs are lowered.

   In China, income from the sale of medicines makes up around 50 pr cent of a hospital's revenue, and doctors routinely over-prescribe.

   While medical treatment fees are to be increased and hospitals will receive more government funding under the reforms, Zhong told dpa that he doesn't think the link between doctors and pharmaceutical companies will be solved in a short time.

   This echoes the sentiment of an opinion piece in the state-run China Daily back in January, which said 'it is an open secret that doctors get kickbacks from drug manufacturers for prescribing their drugs.'

   Underpinning the above concerns is the larger question of whether the 510 billion yuan, which local governments are supposed to contribute to the total 850 billion, will ever see the light of day.

   'It's a big challenge for county level governments to collect resources to put into medical insurance, because their finances are very strained,' Liu said.

   Finance Vice-Minister Wang Jun has confirmed that the 850 billion is not a final amount.

   'The 850-billion-yuan investment is a calculated figure. As for the actual investment each year, it will be budgeted by local governments and should go through legal procedures,' he told a press conference on Wednesday, according to Xinhua.