China Makes Bold Move on Volatile Health Care Issue

China announced Monday the outlines of a thorough reform of the health care system that pledges to provide improved services to all citizens by 2020, tackling a critical issue that has become a major source of public dissatisfaction.

While many details of the plan remain unclear, the announcement underscored the communist government's need to at least appear to be making progress on the issue. Public health care has been underfunded for years, and the high cost and poor availability of services are among the biggest complaints of the Chinese public.

A serious illness can wipe out a family's life savings and the need to set aside earnings for potential medial costs is considered a major drag on the domestic consumption that the government so badly needs to boost to raise the flagging economy.

Credited with making huge inroads against infectious diseases and providing basic free care to most citizens, China's soviet-style centralized public health system was largely dismantled in the 1980s amid economic reforms and a growing taste for privatization. Seeing a doctor became far more expensive and the gap between rural and urban health care began to grow, undercutting attempts to boost rural incomes.

Health care spending by both the private and public sector in China amounts to just 5 percent of GDP, significantly less than the 17 percent spent in the United States.

According to a text of the roadmap for reform released Monday by the official Xinhua News Agency, the first stage of the plan calls for extending some form of basic health insurance to 90 percent of the population by the end of 2011. Currently, only 30 percent of the population is covered.

Further improvements in funding and oversight will then provide "safe, effective, convenient and affordable" health services for all 1.3 billion citizens by the end of the next decade, according to the plan approved by the State Council, China's Cabinet.

Hospitals and clinics in the poor countryside and less developed cities would be improved and the price of essential medicines would be capped. Disease prevention and control, maternal health, mental health and first aid services would also receive greater attention, it said.

China has long struggled to extend some type of universal coverage, but funding such a vast system has been a persistent problem. At present, insurance is mainly provided to working-age urban residents, often through their employers or government agencies.

Xinhua said the reforms envisioned "diversified medical insurance systems" to give coverage to employees in the private sector, non-working urbanites and residents of the poor countryside.

Financial details of the reforms were not given, although the government announced in January plans to spend 850 billion yuan ($124 billion) on the first three years of the program.

Funding may not be as crucial an issue as the problem of coordinating policy among the more than 20 government agencies that have a stake in the health care system, said Drew Thompson, director of China studies at the Nixon Center in Washington who has written extensively on the system.

Beijing is acutely aware of the sensitivity surrounding health care, but has faced public criticism over past proposals and is being cautious about the details, he said. "The health care system ties together so many areas from development to consumer spending so it is absolutely critical that they get it right," Thompson said.

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