By Yang Li

I. Introduction

China’s economic success during the past several decades was not mirrored in its healthcare system that now badly needs further reform. Despite impressive achievements in healthcare reform and rapid progress toward universal health coverage, China need further reform its economic with a number of critical steps to meet the growing demand for good health care and further control spending increases. For example, People line up early in the morning at large and well-equipped hospitals in order to make an appointment with senior experienced doctors. Even among those who can get treatment, complaints about overpriced, low-quality services of health care are common. Sometimes patients just blame doctors. There have been cases of medical personnel physically attacked by disappointed patients or their family members.

II. Background Information

Chinese citizens had become increasingly dissatisfied with the healthcare system that suffered from chronic government under-funding and urban-rural inequalities. The lack of an effective primary health care system and increasing aging population also contribute to the problem. The three main cornerstones of health care have always been access, cost and quality.

A) Public health Expenditure

In 2016, China had a population of more than 1.38 billion people with an approximately 0.47% annual growth rate. In 2014, even with the rural-urban migration there are almost half of the population still lives in rural areas with 749 million people lived in urban and 619 million in rural regions of China. China’s total health expenditure in 2014 was $57.75 billion that accounted for 5.5% of GDP, lower than the average for all middle-income countries. Per capita health expenditure in China is $419.7, compared with $9402.5 in the United States. Public health expenditure consists of 10.4% of government expenditures while it was 21.3% in the United States[1].

B) Primary Healthcare System

The country lacks an effective primary care system. Between 1949 and the late 1970s, health care in China was organized on a three-tier system. Paramedics or ‘barefoot doctors’ provided basic primary care in neighborhood clinics. They would refer patients with problems beyond their skill levels to district hospitals, and only the most complex problems would be managed at large municipal or regional centers (Wang & Wilkinson, 2012). Since the late 1970s, market reform resulted in the development of large and well-equipped hospitals in the health sector. The freedom to choose leads to the gradual demise of primary care. Nowadays, hospitals in China are overcrowded and short of consultations. As a result, patients often find it difficult to get access to health care resources. Perverse financial incentives encourage over-investigation, over-medication, and inappropriate hospitalization which increase the financial burden on patients.

C) Urban-rural Healthcare Disparity

Unequal distribution of health care resources across the country—larger cities tend to have more hospitals while small cities and most rural areas lack of them. As a result, the rural-urban disparities in health insurance coverage, health care facilities and other resources became prominent. At the end of 2011, China had a total of 877,727 medical institutions and 3.5 medical institution beds per thousand residents[2]. However, there is a marked difference between urban and rural areas, with 6.24 hospitals and health center beds per thousand people in urban areas, and only 2.80 in rural areas. In 2008 there were 5.58 health technical personnel per thousand in urban areas, more than twice the number for rural areas.

D) Aging Population

China is experiencing the trend of aging population, and there is a surge in non-communicable diseases (NCDs) such as cardiovascular diseases, cancer, diabetes mellitus and chronic lung diseases. In 2010, people aged 60 and over accounted for 13% of the total. It is expected that the number of people over 65 years old in China is now at 140 million and is expected to increase to 230 million by 2030. It is said that more than 85% of mortality in China is attributed to NCDs[3].

As mentions above, with Chinese citizens’ increasing demand for more accessible, effective and low-cost health care services, the government is challenged with growing social pressure. It is imperative for Chinese government to establish and improve the basic health care system covering urban and rural residents, and provide the people with secure, efficient, convenient and affordable health care services. In order to achieve the expected results, China’s National Health and Family Planning Commission who oversee the health services reform need to improve in the following ways.

III. Policy Options

A) Increase Public Healthcare Expenditure

Health services in China are currently provided mainly by the public system, which covers 90% of emergency and inpatient services. For these public hospitals, drug sales account for about 40% of their revenue, and medical income such as examinations, laboratory tests, and operations brings in about 49% (Guan, Qi, & Liu, 2016). The government has lowered medical costs in response to public demand by carrying out a zero-markup for the sale of essential medicines policy in 2011. However, the subsidy remains the same which accounts for only about 8% of public hospitals’ revenue, putting these institutions under great pressure, even leaving some hospitals at a financial loss. To solve these problem hospitals are now facing, China’s National Health and Family Planning Commission should increase the subsidy to a level that is enough to cover operational costs without damaging the medical staff’s initiative. It also should increase its investment to support county hospitals and grassroots level of medical and health institutions.

B) Provide Training Programs

China’s National Health and Family Planning Commission should provide training programs for public officials and employees on applicable law standards, legal frameworks reforms, such as adopting constitutional amendments to improve healthcare services. Restructure institutions to promote integrity and legitimacy, by providing accountability, building independence, ensuring representation, and increasing responsiveness. Additionally, the National Health and Family Planning Commission should train employees to redesign the mechanism of adjustment for the prices of medical services and establish a national essential drug control system to ensure medical products containing controlled drugs are available for patients. The core part of the reform is to ban the price increase of drugs and materials, reduce the cost of medical examinations, and appropriately raise the price of medical services provided by physicians, such as surgery. Besides, the commission also should train health professionals working in grassroot-level health institutions.

C) Reform Human Resources System

An adequate and well-functioning health workforce is critical for the implementation of health care reform. The headcount quota system that is widely used in China to manage public employees, including health workers in public institutions hindered the process of healthcare reform. Flexibility and efficiencies in the recruitment and management of health workers should be introduced and increase the mobility of health professionals.

4) Improve Communications

In order to implement China’s 13th Five-Year Plan on health reform, the National Health and Family Planning Commission needs closely collaborate with the Ministry of Finance and the Ministry of Human Resources and Social Security of China as well as other agencies that are involved in the reform. The commission needs set communication mechanisms to keep all these players informed with progress and development of the healthcare reform. Coordination and concerted efforts will be needed among them to solve problems and propel reform.

5) Enhance Public Participation

Public option should be a major priority for progressives during the health reform. The basic medical and health services system include county hospitals, community health organizations, township health centers and village clinics. The public have a strong interest in the outcomes of healthcare reform, and of the design and implementation of policy changes and of the institutions that have to deliver them. The public should be informed about what is being discussed and decided. The commission needs engage the public in the process of healthcare reform, identify their needs and find solutions to meet them.

IV. Recommendations

China needs further reform its health system with a number of critical steps to meet the growing health needs of the population and further control spending increases, despite impressive achievements in healthcare reform and rapid progress toward universal health coverage. These include systemic and institutional reform and innovation, adoption of a tiered service-delivery system, a return to greater reliance on community health care and less on more expensive hospital care (World Bank, 2016).

  1. Prioritizing public investments priority areas for reform and established a committee across ministries to coordinate the policy formulation and implementation.
  2. Increase public investments on health care system with primary care as the core and universal health coverage as the objective.
  3. Enhance the pay level of health workforce, so they are better supported to ensure a competent health workforce and improve care quality.
  4. Reform public hospitals to focus on complicated cases and delegate routine care to primary-care providers.
  5. Allow qualified private health providers to enter health care market and compete with the public sector under the right regulatory oversight.



Wang, Y., & Wilkinson, M. (2012). Primary care reform in China. 62(603): 546–547. Retrieved from

Guan, X., Qi, L., & Liu, L. (2016). Controversy in public hospital reforms in China. The Lancet Global Health, 4(4). doi:10.1016/s2214-109x(16)00041-3

World Bank. (2016). Deepening Health Reform in China. Retrieved from:

[1] World Bank: World Development Indicators Database.

[2] World Health Organization:

[3] World Health Organization: