4
Reforming China’s Rural Health System
steady decline in government revenues as a share of GDP. As a result, the government received fewer revenues with which to finance social sector programs, including health. This led to a policy of “financial autonomy” for health facilities, which were allowed to supplement their budget allocations by charging patients for the medicines and the services that they provided. While the government imposed a price schedule, it was structured so that providers incurred losses for “basic” health care while they made profits on drugs and high-tech care. The result was, first, a shift away from core public health activities and, second, a seemingly inexorable rise in the cost of personal health services. Newly uninsured households were left with a choice between forgoing care they needed or treatment that could push them into poverty. By 2003, 30 percent of pinkun (poor) households in the government’s National Health Survey (NHS) were reporting health care costs as the main cause of their poverty. Increasingly, health care costs have topped the list of public concerns in government surveys. The increasing burden of health care costs expressed itself in other ways. Even as China was catching up with OECD living standards, it was not closing the health gap on one important measure—mortality rates (Figure 1.2). It is not that mortality increased in China. Rather it is that although China was catching up to OECD countries in terms of per capita income, its mortality rates were not falling faster than those in the OECD countries. In fact, between 1980 and 2000, infant mortality fell faster in the OECD countries than in China, despite the fact that the OECD countries had achieved low rates of mortality by this stage, which ought to have made it harder for them to achieve the reductions they recorded. Parallel concerns began to surface in other sectors, too—the rising cost of education, inequalities between the richer eastern and poorer western provinces, growing rural-urban disparities, damage to the environment, and so on. During the period 2003–2005, as they formulated China’s 11th fiveyear plan for the period 2006–2010, China’s policy makers signaled their growing awareness of these concerns through a significant shift in emphasis in national development strategy. The quest for rapid economic growth would continue; however, a series of policy initiatives would be launched in tandem, promoting “balanced development” and a more “harmonious society.” The health sector—in particular the rural sector—was singled out for reform; and true to its word, the government launched a series of ambitious health sector reforms starting in 2003. It is those reforms—and some ideas on how to build upon them—that are the subject of this book.