Strengthen the Government Mechanism

Since the “New Healthcare Reform”, the government has played an increasing significant role in the healthcare system. It can be said that one of the successes of this reform seems to be the establishment of universal healthcare insurance system with the government as one of the participants, providing subsidies for each insured citizens, thus also a purchaser in the healthcare market. In addition to the basic healthcare insurance system, the building of community- level medical system and the achieving of equal access to basic public health services, also appear to be dependent on strong guidance and regulation of government mechanism to some extent, because in the context of the market as the leading factor of resource allocation of resources, healthcare resources will supposedly neither automatically flow to the community- level healthcare institutions nor the rural areas, which was commonly referred as “market failure”.

First of all, regulating the gap between urban and rural of healthcare services.

One of the major defects of China’s public services seems to be the large urban-rural gap, which could be proved by many indicators, and among them, “per capita government budget expenditure” could be employed to the examine the responsibility of government for this gap. Table 3-9 shows that prior to 2005, the ration of urban and rural government per capita health expenditure was nearly eight times as much, but since 2005, this ratio has been considerably decreased year by year and has been

① Opinions of the State Council on Deepen Reform of Medical and Healthcare Services, Article 16-20, 6th, April, 2009.

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reduced to 2.9 times in 2008. Nevertheless, given the weak healthcare infrastructure in rural areas, it for some time still seems essential for the government to continue the support for rural healthcare, not only budget increasing but also other policy tools, such as resources directing and talent personnel attracting.

Table 3-9 Urban-Rural Difference of Per Capita Government Health Expenditure from 2001 to 2008

Year Government Health Expenditure Per Capita in

Urban (yuan)

Government Health Expenditure Per Capita in

Rural (yuan)

Urban / Rural

2001 137.8 17.4 7.9

2002 150.8 19.3 7.8

2003 179.6 22.9 7.8

2004 200.7 27.0 7.4

2005 229.9 34.9 6.6

2006 232.9 59.0 3.9

2007 322.9 91.3 3.5

2008 420.3 144.8 2.9

Data sources: GU Xin, Universal Coverage of Health Care Insurance in China: New Frontiers, Social Sciences Academic Press (China), 2010, p. 25.

Second, level regulation of healthcare service. Another focus of “New Healthcare Reform” was “community-level healthcare system” which was constituted by three levels institutions of county- level hospitals, township health center, and village clinic in rural areas, and refers to community health center (station) in urban areas. By analyzing the income of urban community health center (station) as well that of township health center, the ro le of government mechanism in community- level healthcare services institutions tends to be relatively clearly realized. Table 3-10 shows that before 2008, this ratio of business income and government input in the

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total income of urban community health institution always remains high, even up to more than 10 times in 2005, which has obviously declined year by year s ince 2008, and has dropped to 3.0 times in 2010. Equally, in Table 3-11, with the case of township health center, in rural areas, the ratio has dropped to 2.7:1 in 2010, indicating more financial support for community- level rural healthcare institution than that for urban ones.

Table 3-10 Income of Urban Community Health Center (Station) from 2004 to 2010

Year Total Income (billion yuan)

Government Input

Business Income

Business Income / Government

Input billion

yuan

% billion yuan

%

2004 64.30 6.84 10.6 56.65 88.1 8.3：1

2005 72.56 6.27 8.6 65.41 90.1 10.5：1

2006 113.35 13.80 12.2 96.29 84.9 7.0：1

2007 401.25 44.56 11.1 356.69 88.9 8.0：1

2008 268.97 55.77 20.7 213.20 79.3 3.8：1

2009 419.39 91.22 21.7 328.17 78.3 3.6：1

2010 545.37 134.69 24.7 410.69 75.3 3.0：1

Data sources: China Health Statistical Yearbook 2005-2011.

Table 3-11 Income of Township Health Center from 2004 to 2010 Year Total Income

(billion yuan)

Government Input

Business Income

Business Income / Government

Input billion

yuan

% billion yuan

%

2004 479.19 76.56 16.0 382.82 79.9 5.0：1

2005 481.73 74.27 15.4 393.91 81.8 5.3：1

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2006 525.34 91.14 17.4 423.83 80.7 4.6：1

2007 1414.78 356.70 25.2 1058.08 74.8 3.0:1

2008 804.04 148.35 18.5 655.69 81.5 4.4：1

2009 985.20 196.73 20.0 788.45 80.0 4.0：1

2010 1126.50 303.35 26.9 823.11 73.1 2.7：1

Data sources: China Health Statistical Yearbook 2005-2011.

GU Xin has pointed out that China’s community- level health services can be compared to the “gatekeeper” system widely existing in the healthcare system in developed countries, which generally means that community-oriented primary healthcare institutions are supposed to act as the “gatekeeper” of healthcare services, providing citizens with general out-patient services as well as referral services by the general practitioners, so that the limited resources of healthcare institutions could expect some kind of rational allocation, and the patient’s “search costs” are likely to be saved.^① Learning from foreign experience, the Chinese government in recent years was seen as having engaged into the exploration of the ways of developing community- level healthcare system. In 2012, the State Council issued “Circular of Implementation Plan of Deepening the Reform of Medical and Healthcare System in the 12th-Five Period”, placing the community- level development in a pretty pivotal position. A series of policy measures like promoting “trails reform of community- level primary diagnosis responsibility system”, directing the “policy of healthcare insurance payment to support community- level healthcare institutions”, encouraging “patients of minor illness to visit community- level healthcare institutions”, and improving the “development general practitioners system”, seem to obviously pass the policy intention of “strengthen community- level”, and the effects of these policies probably come to be waited .^② In particular, GU has also argued that in recent years, the government has increased the financial input to community- level

① GU Xin, Building a New M echanism: Public Purchasing and the Development of Community -oriented Primary Health Care in China, Hebei Academic Journal, 2012 (3), p. 99.

② State Council, “Circular of Implementation Plan of Deepening the Reform of Medical and Healthcare System in the 12th-Five Period”, 14th, M arch, 2012.

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healthcare institutions, their average services volume, however, seems to be on the decline.^①