health care reforms examined
Editor's Note: United Nations Health Partners Group in China,
led by the World Health Organization (WHO), working closely with
the Ministry of Health, recently released their China country
health assessment report in July 2005. International experts at
the said group agree China has made huge progress in its health
situation during the past half century, but they also call for
major efforts from the government and the society to co-operate
to take China's healthcare reform to the next level.
At the 14th CEO roundtable on August 26, 2005, themed "Healthcare
Reforms in China" and organized by China Daily, about 50
CEO and senior executives from multinational companies, hospitals,
NGOs, drugs and insurance companies got together for a strategic
dialogue chaired by Professor Liu Yuanli, director, China Initiative,
Harvard School of Public Health and Dr Henk Bekedam, China representative,
What have we done right
Prof Liu said in his opening remarks:
You can easily tell a company's performance by looking at its
balance sheet. But you cannot as easily say that a country's health
sector has done extremely well or has totally failed, because
one can use different performance criteria such as equity, efficiency,
and quality, which can be defined and measured in different ways.
There is no doubt that the general population health status has
continuously improved in China over the past 20 years or so. Life
expectancy at birth increased from 67.9 years in 1981 to 71.4
years in 2000. From 1992 to 2002, infant mortality rate (IMR)
decreased from 47 per 1,000 live births to 29 per 1,000, and maternal
mortality ratio declined from 77 per 100,000 to 43 per 100,000.
(full speech on next page).
Dr Henk Bekedam of the WHO said:
Healthcare reform has been firmly on the government's agenda
for some time nowto defining more clearly the role of the government
when it comes to reinvesting in health.
The question remains as to how to do this. Where should government
funding be focused? What should the levels of expenditure be?
What are the mechanisms that need to be created and strengthened?
How can these best be implemented? (Please see full speech next
Premium for Health
Ron Kuang of insurance giant CIGNA: The commercial insurance
sector does have a role to play in this reform process.
Liu: If you look around the world, the social security system
usually consists of four layers:
The first layer is the minimum social welfare often provided
by the government for the most vulnerable group of people.
Second, you should find a social insurance system which is compulsory
system. Then on top of that you can find commercial insurance
usually providing supplementary insurances for all surgeries which
are not covered by social insurance system. Then on top of that
we have other community mutual aids.
So what I am suggesting in expanding insurance coverage definitely
including social insurance, government sponsored, commercial insurance
because medical surgeries are very diverse and there is a diverse
in need and demand for different levels of partners and makes
no sense for government to cover all.
But it also includes other social community aids arrangement
Bekedam: I am looking for the need to improve medical framework.
There should be stronger control in quality, cost control and
safety. These things have to be ensured for private companies.
There are few things which are important for private insurance
companies to work out.
Universal Package for All?
Stanley Tam, an MD from the Harvard Medical School, asked why
a universal package may not work in China.
Liu: Two things I think, one need to take into account is what's
your value judgment and second what is the reality.
I think ultimately the decision on whether the government should
finance and provide universal package of the essential health
services is a judgment call. There is no scientific answer to
that question. Some countries decided it's a way to go, some countries
decided is not.
I cannot emphasize enough that China is not a simple country.
China is a world of at least three worlds. You know we have the
most developed coastal region, where I don't think many people
really need or demand for government finance essential package
of services. They can easily pay for themselves.
But on the other hand we have also the poorest region, mostly
in the western frontier. I have been to many rural villages myself
for the past 20 years or so and there, definitely not only essential
services but also comprehensive package including coverage of
catastrophic spending should be financed by the government.
So what I am aiming at is we should think about different policies
by looking at the differential need of different regions and different
Bekedam: It's essential to know who is paying for it? Not necessarily
the government but insurance should be part of it. I don't fully
agree with Mr Liu that in China you cannot reform in one way,
but it has to ensure it's the whole population that would have
access to services.
For example, TB If I have TB, I will be treated but it's important
for you to know that I am treated and it's not going to infect
you anymore. Can we leave those things to the market? I don't
think so. It's not easy for the government to pay everything,
but the insurance can come in, the employer can come in. But (the
government) has to ensure people get access to it.
Voices from the Private Sector
Roberta Lipson, who runs the Beijing United Family Hospital:
We serve the needs of a very special niche of the population where
government shouldn't be. I think it's important not just to focus
on the fact of different needs in Beijing and Shanghai but the
fact that different segments of the population.
Our experience in the private hospital is an excellent example
that private healthcare can supplement where the government shouldn't
be and needn't be. I encourage the government to continue to focus
on public sectors that are not efficient from different perspective,
immunization, public health, issues like TB, HIV/ AIDS and leave
that kind of luxury services where I see many public hospitals
wasting their time perhaps that could be covered by the market.
Vic Lazzaro of Capitis China: In the United States also, 25 per
cent of the population is not covered, so even though we got a
very prominent and settled country, we got significant problems
in our healthcare too. One of the things we want to stress is
the government's role is oversight, control, ministration but
Comments from Fortune 500
Jeffery Li, country president of Novartis: We have a serious
interest to see a long-term sustainable healthcare system. It
is surely a very critical environment now for the industry to
work towards long-term development. I think even if we do not
yet have a well-developed world health system, it is an opportunity
for China to develop a very good healthcare system? We can learn
from other systems.
I feel it is very critical for the government to hear views from
all the stakeholders, that would include from pharmaceutical industry,
healthcare companies, insurance companies, etc. I think taking
into consideration of all the critical issues that are relevant
for decision making is important.
David Jin, Greater China president of Philips Medical: As a corperate
citizen, we are always interested in sustainable growth.
Prof Liu's suggestion of the programme (is aimed) to improve
the efficiency of the progress. As a responsible citizen, we would
like to support the programme. I think the priority number one
is on how we can solve the problem of insufficiency.
We should increase the investment in healthcare both from government
sector and also the private sector. I was joking, for example,
people in Shanghai who are willing to pay 20- 30 times of their
annual income to buy a house but have a very low percentage of
their income for their spending on healthcare. They go to the
hospital and don't really want to have a check-up because they
want to save money for an apartment.
It is important for the mentality through education that people
more willing and more interested in their well being. I welcome
those people from Harvard and Tsinghua to discuss about how to
improve the investment in healthcare industry and create a sustainable
Ideas from the NGOs
Christina Ho of the Clinton Foundation: One thing that had emerge
in our work which is certainly not unique in China is that when
you work at single disease effort, you run into comprehensive
health system issues.
I remember in the US when I was working for Senator Clinton on
viral terrorism issues It seems what's exciting about this conversation
at this point is there's an opportunity for China as it's making
a deliberation about what the next step to take. And an exciting
opportunity for private sector, insurance products as they develop
their market here.
Peter Liu of the non-public medical instition association of
I represent over 300 private healthcare organization in Chaoyang
District of Beijing. I think that most of our guests are professionals
in healthcare matter.
Perhaps you've observed in the past few years that this healthcare
market in China has all kinds of shivers and gains. So one thing
that I think we have to consider in the healthcare reform plan
is how to make this industry a more professional industry.
And we have a lot of new players who are previously not healthcare
professional. So it is the major reason I'm glad to hear that
Prof Liu is talking about the training of both policy makers and
also executives, managers and this is one part of the thing that
play a big role, especially in the city. And so this is something
that I think to our interest.
From around the globe
Robert A. Go, global managing director of Deloitte's healthcare
practice, who has worked with now over 500 different organizations,
globally both private and public, on issues that cover healthcare
Two things come up. One is on one hand all problems are unique,
and these problems are unique in China.
On the other hand no problems are new. The only point that really
disturbs me is that some of the issues that we are talking about
today are really quite impartial, unfortunately of a move for
a transition to a more market based system.
We should learn from what we've learned from many other countries,
and all the mistakes that we've made, the sort of things that
work well. Whether it is in the systems in Europe, including certain
aspect of social insurance, as well as the systems in the United
States, including certain aspect of manage care.
So I think it is important that as we look for the uniquely Chinese
solution to these issues, we do not forget all the learning that
in fact we can benefit from. And these are all my points.
Zhongyuan Li, chairman of the Hong Kong listed China Healthcare
Group: My feeling seems to be, in order for a sustainable growth,
you also need to establish a viable benchmark. How do we benchmark
in this market? And what is the proper approach? Is it cost versus
delivery? And what sort of benchmark we could establish in order
for the whole thing to be viable?
From what I've seen there seems to be a lot of complaints and
all that regarding the market oriented reform. But nevertheless,
I haven't seen much regarding what is the viable solution, especially
quantitatively to establish those benchmarks. That's what I'd
like to post. And I think that anyone and the stakeholders in
the healthcare industry have to look at that very seriously. Otherwise
we are just running at a dead spot.
We have to see China is special. China is special because it
is big. China is special because it is very diverse. But China
has gone very far, far much greater than any country.
Just give an example for why it is important to have a sense
of where to go. I've worked in many countries, but they only have
one ministry responsible for health. And they get the whole responsibility
But in China it's all 11. Eleven ministry's responsibility. These
ministries all need to have a sense of where to go. And I think
these are some of the challenges of the China health reforms.
A critical question for health system reforms regards the proper
role of the government and market in health sector.
It is a balancing act given the known market and government failures.
The framework, which I like to offer for conducting more constructive
policy discussions, would divide the health system into several
functional sub-systems (resource supply, healthcare delivery,
healthcare financing and payment, and regulation) and then analyze
the different roles that the government and the market can and
Development of sound health policies in China would certainly
benefit from a more open and transparent process.
One of the hallmarks of China's development path is "gradualism"
and conducting pilots before going to scale nationally. To find
feasible and effective solutions to China's priority health and
healthcare problems, different operational models should be encouraged
through pilot projects in different regions.
The experiences from these pilots should be vigorously evaluated,
and results from the evaluations should guide the process of further
policy development and implementation nation-wide.
(August 31, 2005)