Health Care Financing in China

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1 Health Care Financing in China Social vs. private insurance Jin MA, Professor, MSc, MA, PhD Shanghai Jiao Tong University School of Public Health April 11, 2011, Atlanta, USA Outline Health Financing bet 1949 and 1978 Health Financing bet 1978 and 2004 Key Issues New Health Reform Preliminary Result

University School of Public Health April 11, 2011, Atlanta, USA Outline

2 Health Financing bet and 1978 Demand Side Universal coverage Urban Government Health Insurance established in 1952 Labor Health Insurance established in 1951 No Private Health Insurance Rural Cooperative Medical Scheme (CMS) No Private Health Insurance Health Financing bet 1949 and 1978 Supply Side Public Hospitals Owned and Operated by Government and State-owned enterprises Objective of hospitals is to serve all Budget from central government Government control the prices of medical services and medicines No private

established in 1951 No Private Health Insurance Rural Cooperative Medical Scheme (CMS) No Private Health Insurance Health Financing

3 Health Financing bet 1978 to 2004 Strengthen Financing Capacity from Market Decentralize governments power Reform public hospitals payments Allow hospital self-budget Economic incentives to hospitals and health professionals Government sets high prices for high tech equipment Private hospital Health Financing bet 1978 to 2004 Demand Side Urban Urban Employee Health Insurance Scheme Merger GHI and LHI Expand the coverage to all enterprises Without covering relatives Out-of-pocket payments Private Health Insurance Rural Cooperative Medical Scheme Private Health Insurance Out-of-pocket payments

Health Financing bet 1978 to 2004 Demand Side Urban Urban Employee Health Insurance Scheme Merger GHI and LHI Expand the coverage to all enterprises

4 Key Issues for New Reform Health service is unaffordable Low coverage of health insurance The coverage of urban social medical insurance went down due to the policy change Urban Employee s Medical Insurance without covering their family members The rural cooperative medical scheme went bankrupt because of no government and collective economy support Low coverage of commercial medical insurance High cost of health services Profit oriented financing mechanism Government set high prices for high tech equipment Allowing 15% markup for drug selling in hospital Physician s income directly relating to service revenue Fee-for-service payment Key Issues for New Reform Health service is difficult to access Unbalanced health resource allocation The rich owns more resources than the poor Developed areas own more resources than developing areas Ignore rural health services

High cost of health services Profit oriented financing mechanism Government set high prices for high tech equipment Allowing 15% markup for drug selling in hospital Physician s income directly

5 National health expenditure goes up dramatically Unit: 100 Million RMB Yuan 1$=RMB7.75 (14 Mar 2007) individual society country Patients out-of-pocket goes up Individual expenditure Governments expenditure Social expenditure

1 1980 1990 1995 2002 individual society country Patients

6 Health services utilization goes down The growth of life expectancy slow down From 1980 to 1998, the average life expectancy for Chinese people has risen by 2 years During the corresponding period, the average life expectancy in Australia, Japan and New Zealand has risen by 4 to 6 years. The number for Sri Lanka is 5 years

years During the corresponding period, the average life expectancy in Australia,

7 New Health Reform Social Security remove financial barriers and improve financial protection Medicines increase access to safe, quality essential medicines Service Delivery perfect public health community system and improve access Public Health improve equity and strengthen core public health services Pilot Hospital Reform Improve organization, financing and management of public hospitals on a pilot basis Government Taking Core Responsibilities in Financing Gov t responsibilities not only in financing and also changing financing policy Governmental investment of RMB850 billion (about US$124 billion) will be injected into the health care system; Central government verses local government investment will be 4:6 2/3 will go to demand side, 1/3 will go to supply side

hospitals on a pilot basis Government Taking Core Responsibilities in Financing Gov t responsibilities not only in financing and also changing financing policy Governmental investment of RMB850

8 Demand side Health Financing To establish urban resident medical insurance Premium 50% from the gov t and 50% from individual Subsidies about 50.9 billion RMB by central government in 2010 To expand rural new cooperative medical scheme The premium of NCMS subsidies from 10 RMB per person in 2002 to 120 RMB in 2010, and 200 RMB in 2011 ($1 US=6.5 RMB) To invest in public health Subsidies 15 RMB per capita on public health in 2010 To encourage commercial medical insurance to meet the special need Health Financing Supply Side Most of government investment goes to grassroots health facilities strengthen access and equity Not allow grassroots health facilities directly financing from users Zero markup to the essential medicines

9 Payment Hospitals Try to abolish fee for service Pay for Performance (Shenzhen, Yunnan, Shanghai, etc) Payment by outcomes (Shanxi, Henan) Case payment (Henan, Shandong, Chonqing) Global Budget Promote prepaid system Setting prices for drugs and reducing provider profit margin Result Insurance Coverage In the end of October, 2011 The population covered by urban employee and resident medical insurance are 424 million, around 70% of total urban population ( million, 23.65% in 2004). The population covered by New Rural Cooperative Medical Scheme are 835 million, 92% of total rural population (11.6% in 2004).

the end of October, 2011 The population covered by urban employee and resident medical insurance are 424 million, around 70% of total urban population

10 China National Health Expenditures Billion 47.5% Billion Billion 64.43% 35.57% 61.23% 38.77% 52.5% Medical Insurance Expenditures % 60.59% % 64.56% 30.63% 21.13%

11 Commercial health insurance Commercial Insurance Program Increasing dramatically in China From 1 commercial insurance Co. in the early 70 s to 112 Insurance Co. in Chinese Co. 48 Foreign Co. 51 life insurance Co. among 112 Co. 80% offering health insurance program Three of them only offering health insurance program Result Affordable The reimbursement rate of NCMS was more than 40% of total medical expenditures in 2009, only 23% in 2008 *. In Yunan Province in 2010 Policy reimbursement rates of urban employees, residents medical insurance and rural NCMS are 77.89%, 60.43% and 60.22%, respectively. * Zheng Gongcheng. The Reform and Development Strategies of China Medical Security System, Dongyue Tribune, 31(10):11-17

80% offering health insurance program Three of them only offering health insurance program Result Affordable The reimbursement rate of NCMS was more than 40% of total medical

12 Result Access Community health centers have seen an increase in its outpatient utilization: 26.4% of total in 2010 Utilization of rural health services has increased: 2010 verses 2005 Outpatient: 42.9% Inpatient: 115% Average service expenditure of primary care institutions decreased Result Satisfaction Surveyed in Shanghai in March, 2011 Sample 3184 persons from 9 CHS in 3 districts (Luwan, Changning and Qingpu) and web online survey(912) Content Score Rate(%) Result General Reform Result Health Security Grass-root Service Delievery Essential Medicine Public Health : Very satisfaction 3: satisfaction 1: very dissatisfaction

9% Inpatient: 115% Average service expenditure of primary care institutions decreased Result Satisfaction Surveyed in Shanghai in March, 2011 Sample 3184 persons from 9

13 β Variable SE(β) P value OR Gender age Table Logistic analysis on the impact factors of residents satisfaction Resident Occupation Education * Annual income* Insurance category Reimbursement rate* Reimbursement in time Physical access degree* Waiting time Environment of health facility Medical equipment Capacity for services Attitude of providers Communication Medical charges* Curative effect* Health education Dissemination of preventive knowledge Health exam for the senior Health exam for the growth of children Maternal health Note: * indicate P< Chronic diseases advice Even though, the health care financing reform has partially achieved the goal. The further impact of the reform is still to be seen, because payment and organization also are very important parts to improve the performance of health care system as whole.

802 Reimbursement in time 0.283 0.212 0.182 1.154 Physical access degree* 0.478 0.232 0.036 1.081 Waiting time 1.587 0.457 0.641 4.891 Environment of health facility 1.015 0.221 0.947 4.

14 Thank you very much for your attention!

Development of Health Insurance Scheme for the Rural Population in China

Development of Health Insurance Scheme for the Rural Population in China Meng Qingyue China Center for Health Development Studies Peking University DPO Conference, NayPyiTaw, Feb 15, 2012 China has experienced