Beijing proposes $124 billion health care revamp

Shanghai, January 23: The government of China has proposed to spend around $124 billion over the next three years to revamp the country’s health care structure by spreading out insurance cover, refurbishing public hospitals and improving accessibility to medication.

The proposal, which was put forward on Wednesday by the State Council, a parallel of the Chinese government’s cabinet, aims at enlargement of insurance cover to 90 percent of the inhabitants by 2011, and making “basic health-care services” accessible to every single citizen of China.

To meet this end, the government will strive to establish a network of hospitals, clinics and health-care centers that will encompass both rural as well as urban areas. To achieve its goal of enlargement of insurance cover, the government plans to increase subsidies for premiums.

A major part of China’s population has no health insurance and the government’s pay-as-you-go attitude compels them to go without the required medical therapy. This has invited significant social discontent, and the proposed revamp is an answer to these pressures.

The government of China has an economic motivation as well. High medical costs combined with the country’s overall weak social safety net have dissuaded the population from spending.

Economists feel that increasing the insurance cover could gradually swing the balance in the country away from savings towards more consumption.

As per the State Council estimates, the entire plan’s cost would be 850 billion Yuan ($124 billion) over a period of 3 years, which is the same as around 3 percent of China’s expected 2008 GDP.

William Hsiao, a health economist at the Harvard University, said, “It’s definitely a significant commitment of money.”

It is worth mentioning here that a sharp fall in public services, particularly in the countryside, and essentially privatized medical care was witnessed in the late 1980s when China shifted to a market economy from the traditional central planning.

In its endeavor to contain the costs, the government is taking every step to increase its hold over drug production and distribution.

According to figures from the UN, in 2006, the Chinese government’s health expenditure amounted to under 1 percent of the country’s GDP.

In 2005, 25 percent of public-health resources were allocated to the rural population, even when they comprised 60 percent of the natives. Bridging this urban-rural disparity is the State Council’s objective.