Health costs have grown at a rate higher than gross domestic product (GDP) growth since 2008, the report flagged. The situation was further magnified by a rapidly aging society and the burden of non-communicable diseases (NCDs), which were already China's number one health threat, the report stated.
"Business as usual, without reform, would result in growth of total health expenditure from 5.6 percent of GDP in 2015 to 9.1 percent in 2035, an average increase of 8.4 percent per year in real terms."
Health care is a vital component of China's 'new economy,' a hot-topic term that tends to dominates foreign investor interest in the mainland. Consisting of consumer-led sectors that also include internet and renewable energy, the 'new economy' has been a key beneficiary of government spending as President Xi Jinping seeks to make it the country's key growth engine, replacing 'old' sectors such as heavy industry.
If Beijing can moderate the main drivers behind soaring health expenses, which include prices per treatment and unit cost increases, the government could achieve savings equivalent to 3 percent of GDP, the report said.
To realize these savings, the World Bank suggested eight policy options aimed at making the system more efficient, compared to the current "hospital-centric, fragmented and volume driven" framework.
China's current model is focused on dishing out more treatments instead of actually improving population health outcomes, the report observed. Moreover, "there is a shortage of qualified medical and health workers at the primary care level, which further compromises the system's ability to carry out the core functions of prevention, case detection, early treatment and care integration."