Transcript Total health expenses - Department of Social Work

A presentation at the Center for Social Development,
Washington University at St. Louis
on 27th April 2005
Urban Health Care Reform in China–
Personal Responsibility and the Role of the
State
Chack-Kie Wong
Professor
Social Work Department
The Chinese University of Hong Kong
1
Introduction

Big spending in health care does not
produce better health care protection


USA 14% of GDP whilst 40-45 million
uninsured
Economic development or wealth does not
necessary bring about development and
equity in health care protection
2
China – another case of more spending but
inequitable health care protection


In the past few decades, a shift of the state, across
societies, to endorse market-oriented policies in health
care reforms emphasizing personal responsibility
The presentation argues against the prevalent pro-market
orthodoxy that economic development is not a sufficient
condition for health care development


An indispensable role of the state in health care, esp. in the
finance of health care
China’s case –


health care is not affordable for the majority when it is much
wealthier today
But was once lauded when it was much poorer
3

How serious is the problem?

Health insurance coverage




Only 6.5% of the rural population in the late 1990s
20% of urban population or 30% of urban employees at
present
‘Back to poverty’ due to lack of health care
protection
Indicators of adverse effects of under-development in
health care

Life expectancy



China- 1981-2000, 3.5% increase in life expectancy
Middle-income countries – 1980-1998 (5%)
High-income countries –1980-1998 (4%)
4

Infant mortality –



China - 6.3% decrease 1981-2000
World average - 23% decrease 1980-1998
Regional disparity

Life expectancy



Infant mortality


Shanghai – 77 (2000)
Guizhou - 63.5 (2000)
Rural rate 3.14 times > urban one (2000)
A World Health Organization report (2000) rates China


144/191 in overall health care system performance
188/191 in fairness in financial contribution
5
China’s health care system and its reform
initiatives

China’s traditional health care system



Urban – Government Insurance & Labor Insurance,
both publicly funded system, exclusive for employees
in the cities
Rural – Cooperative health care, barefoot doctors
The rationale underlying urban health care reform



Too costly – moral hazard issue (nominal cost to
patients
Inhibit labor mobility – too good fringe benefits
Unfavorable to state-owned enterprises – newly
created private enterprises do not bear such cost
6
The Developments
 Early 1980s
 The central government capped the subsidies to




public hospitals
Hospitals have begun to rely upon profits from
charges and high-end medical equipment and sale of
medicine
Uncontrollable rise in expenses
Unaffordable for the enterprises to pay
The beginning of the era of cost-sharing – rise in
personal responsibility in health care protection

Co-payment by employees for medical treatment
cost, say 10-20%
7

1993 – the new model formed its
shape
 2 parts – socially pooled fund +
personal medical accounts

Contribution side –
Employment units 6% (average monthly wage)
 Employees 2% (average monthly wage)
 Managed by a state organ
 State contribution through tax relief

8

Benefit side – (primarily a phasesystem)
Employees uses the personal account for treatment
first
 If personal account depleted, not yet reached the
threshold of using the socially pooled fund - selfpayment
 The threshold of socially pooled fund –10% of the
last year’s average local wage (city as an unit)
 The ceiling of entitlement to the socially pooled
fund – 4 times of the average annual local wages
 Beyond the ceiling – serious illness insurance up
to 300,000 yuan (8.3 yuan=1US$)

9



1994 pilot in two medium-sized cities
1996 extended to cover nearly 60 cities
1998 the Decree to establish Basic Health Insurance
System



2003 rural health care reform



Unifying Labor insurance and Government insurance
into the new Basic Health Insurance System
Extended to cover all cities and employees of all
ownership types (enhance labor mobility and equalize
labor cost)
A tripartite-payment new rural cooperative system
Pilot stage – but with 80 million participants in 2004
This presentation focuses on urban health care
reform - national full implementation since the 1998
Decree
10
Assessing the initial impact of the
reformed urban health care system

Three components of the reform



Basic Health Insurance
Reform of the hospitals
The circulation and production of medicine

This presentation looks at the financial side

Key to personal responsibility and the role of the
state
Table 1 for its coverage and financing sustainability
 In general, the reformed system has begun to cover
all cities and it is cost-efficient and sustainable

11
Table 1 Development of Basic Health Insurance in China, 1998-2003
1998
1999
Employees
(‘000)
4,017
4,698
Retirees (‘000)
1,076
Total (‘000)
(Annual change)
5,093
(Employee:+36%
Retirees:+45.7%)
Cities/ Districts
40+
59
284
19.5
24.5
15.6
9.8
Income (100
million yuan)
Expenditure
(100 million
yuan)
Accumulated
surplus (Deficit)
(100 million
yuan)
2000
2001
2002
2003
54,710
69,260
79,750
18,150
24,740
29,270
94,000
(+29.0%)
109,028
(+16.0%)
339
Nearly all
Nearly all
170
384
607.8
890
16.5
124
244
409.4
654
8
89
253
450.7
379
43,320
1,241
5,939
43,320
72,860
(+16.6%) (+629.4%) (+68.2%)
Source: Annual Statistical Announcement of the Development of Labour and Social Insurance,
Labour and Social Security Ministry, PRC. (1998-2003) (In Chinese) http://www.molss.gov.cn/
Note: All are year-end figures.
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
Table 2 illustrates how far is the success of the
transfer in terms of financial responsibility since
1998

Source of finance for health care


Findings from two national surveys on health care services
Successful

In shifting the sources of finance from traditional health care
system to the new basic health insurance



More state’s commitment in the former
The reformed one basically an employeremployee co-payment insurance system
Self-payment from individual citizens remained unchanged

Personal responsibility still the same
13
Table 2 Source of Finance of China’s Urban Health Care,
1998 & 2003 (%)
1998
4.7
2003
32.2
Government Insurance
Labour Insurance
Cooperative Insurance
16.0
28.7
2.7
4.0
4.6
6.6
Commercial Insurance
Self Payment
Others
Total
-44.1
3.7
99.9
5.6
44.8
2.2
100.0
Social Insurance (Basic insurance,
serious illness insurance)
Source: Ministry of Health, PRC National Survey on Health Service in 1998, 2003, see
2003 & 2004 China Health Statistics Summary. Ministry of Health, PRC.
http://www.moh.gov.cn/statistics/digest03/t28.htm
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
Table 3 illustrates the role of the state in health
care finance, on the basis of a broader and longer
policy context

Over the economic reform period (1978 0nward)
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It reveals the dwindling financing role of the state
Together with substantial reduction on the share of social
health expenses (social insurance)
Individual citizen payment increased at the same time
Total health expenses as % of GDP also increased
Since 1998, the reformed health care system (19982002)

Effect of the reformed system – the shares of health care
expenses among the three major parties not much changed
15
Table 3 China health care expenses and national wealth,
1980-2002 (at current price)
Total health
expenses (100
million yuan)
Government
health expenses
(%)
Social health
expenses (%)
Individual
health expenses
(%)
Per capita
health
expenses (yuan)
Total health
expenses as %
of GDP
GDP (100
million yuan)
1980
1990
14.32
743.0 2,257.8 3,384.9 3,776.5 4,178.6 4,764.0 5,150.3 5,684.6
36.2
25.0
17.0
15.4
15.6
15.3
14.9
15.5
15.2
42.6
38.0
32.7
27.7
26.6
25.5
24.5
24.0
26.5
21.2
37.0
50.3
56.9
57.8
59.2
60.6
60.5
58.3
14.51
65.0
190.6
273.8
302.6
331.9
376.4
403.6
442.6
3.17
4.00
3.86
4.55
4.82
5.10
5.33
5.37+
5.42
451.8
1995
1997
1998
1999
2000
2001
2002
18,548 58,478 74,463 78,345 82,068 89,442 95,933 104,882
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The findings of the two social
surveys in Wuhan

Wuhan, a mid-China city


Wuhan – different indicators, average of China



Too large of China as a unit of analysis
Annual disposable income - 8,525 yuan, closed to national
average - 8,472 yuan, in 2003
Unemployment rate -4.6%, closed to national - 4.3% in 2003
Target respondents



Employees and patients (Major stakeholders of the reformed
health care system)
The reformed system serves the few privileged
If these two groups are also unsatisfied with the reformed
system, the rest will be even worse
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Survey Methodology



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Stratified quota random sampling for even representation
of the target populations
Units – patients from 3 different levels of hospitals;
employees from government and government subsidized
public agencies, state-owned enterprises, and other
enterprises.
Samples similar in terms of gender distribution and
ownership type (male -52.6% and Wuhan 51.5%; 63%
from first two groups, whilst Wuhan 2/3)
But older, with higher income and better educated than the
Wuhan population

Reflected the nature of the reformed system – at the service of the
more wealthy and those with health insurance (with good
employment, in traditional sense)
18
The findings of the surveys

The perceptions of responsibility in health
care


To see whether any shift in responsibility for
health care protection
Table 4 reveals the traditional welfarist ethos
of clinging to state protection still strong
despite it is not in line with the prevalent
policy practice
19
Table 4 Respondents’ perceptions of responsibility in health
care in Wuhan, China (2003)
Employees
%
(N)
1.
2.
3.
Those who are not able to pay for
medical fees should be assisted by the
government or the employment unit
Agree/Strongly agree
Half and half
Disagree/Strongly disagree
Total
The government has no responsibility
to provide basic health care to all
Agree/Strongly agree
Half and half
Disagree/Strongly disagree
Total
It is reasonable to treat urban and
rural residents differently in terms of
health care benefits
Agree/Strongly agree
Half and half
Disagree/Strongly disagree
Total
Patients
%
(N)
Overall
%
(N)
²
83.2
8.8
8.1
100.0
(247)
(26)
(24)
(297)
88.2
7.7
4.0
100.0
(262)
(23)
(12)
(297)
85.7
8.2
6.1
100.0
(509)
(49)
(36)
(594)
4.626
5.4
3.1
91.5
100.0
(16)
(9)
(270)
(295)
8.3
2.8
89.0
100.0
(24)
(8)
(258)
(290)
6.8
2.9
90.3
100.0
(40)
(17)
(528)
(585)
1.889
24.3
18.6
57.1
100.0
(68)
(52)
(160)
(280)
28.1
11.3
60.6
100.0
(77)
(31)
(166)
(274)
26.2
15.0
58.8
100.0
(145)
(83)
(326)
(554)
5.918
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Table 4 Respondents’ perceptions of responsibility in health
care in Wuhan, China (2003) (Cont’d)
Employees
%
(N)
4.
5.
6.
One should not be entitled to health
care protection if one does not pay for
medical insurance
Agree/Strongly agree
Half and half
Disagree/Strongly disagree
Total
Medical expenses are the primary
responsibility of individual,
employment units or the government
Individual
Employment units
Government
Total
Which one of the following should be
responsible for medical expenses
above the ceiling if patients do not
have medical insurance for serious
illness
Patients and their families
Patients’ employment units
Government
Total
*p < 0.05; **p < 0.01; ***p < 0.001
Patients
%
(N)
Overall
%
(N)
²
47.0
17.2
35.8
100.0
(134)
(49)
(102)
(285)
39.9
16.7
43.4
100.0
(115)
(48)
(125)
(288)
43.5
16.9
39.6
100.0
(249)
(97)
(227)
(573)
3.775
13.1
34.1
52.8
100.0
(33)
(86)
(133)
(252)
14.6
32.1
53.3
100.0
(36)
(79)
(131)
(246)
13.9
33.1
53.0
100.0
(69)
(165)
(264)
(498)
.370
24.2
22.0
53.8
100.0
(45)
(41)
(100)
(186)
17.0
20.9
62.1
100.0
(31)
(38)
(113)
(182)
20.7
21.5
57.9
100.0
(76)
(79)
(213)
(368)
3.443
21

Table 5 illustrates how respondents regard the
relationship between economic development and
health care protection
 Assuming people should enjoy better health
care protection (better national wealth and
personal wealth since economic reform)
The first question is to examine how welfare
development as compared with economic
development as a government priority
 The second two questions are whether medical
expenses are affordable to the general public and
the country at large

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Table 5 Respondents’ perceptions of economic development
and health care in Wuhan, China (2003)
Employees
%
(N)
1.
2.
3.
The primary role of the government is
economic development and not
welfare improvement
Agree/Strongly agree
Half and half
Disagree/Strongly disagree
Total
Medical expenses are more than what
current economic conditions in our
country can afford
Agree/Strongly agree
Half and half
Disagree/Strongly disagree
Total
The current medical examination and
treatment expenses are more than
what the general public can afford
Agree/Strongly agree
Half and half
Disagree/Strongly disagree
Total
*p < 0.05; **p < 0.01; ***p < 0.001
Patients
%
(N)
Overall
%
(N)
²
11.3
4.1
84.6
100.0
(33)
(12)
(247)
(292)
8.5
4.8
86.7
100.0
(25)
(14)
(254)
(293)
9.9
4.4
85.6
100.0
(58)
(26)
(501)
(585)
1.353
73.5
11.3
15.3
100.0
(202)
(31)
(42)
(275)
75.4
8.8
15.8
100.0
(205)
(24)
(43)
(272)
74.4
10.1
15.5
100.0
(407)
(55)
(85)
(547)
.908
86.1
6.4
7.4
100.0
(255)
(19)
(22)
(296)
84.7
8.7
6.6
100.0
(243)
(25)
(19)
(287)
85.4
7.5
7.0
100.0
(498)
(44)
(41)
(583)
1.188
23
Conclusion

The reformed health care system helped institutionalized
the inequitable health care financial structure

Individual citizens still took up the largest share – not affected
by the reformed system



57.8% in 1998, 58.3% in 2002
The state shied away from its responsibility - 36.2% in 1980,
15.6% in 1998, 15.2% in 2002
The state’s little financial commitment resulted in larger
total health care expenses of the whole society
 Continued rise in national wealth for health care




Total health expenses, 3.17% of GDP (1980) to 5.42% (2002)
Whilst GDP rose 23 times between 1980-2002
Equity in financial contribution not solved
The state spends less resulted in larger share of
national wealth for health care and an unfair health
care system
24


The old ethos of state responsible for health care
protection was still much alive amongst the
respondents despite the reformed system did not
follow this line
China does not strike a balance in economic
development and health care protection



Phenomenal growth in the reform period coupled with
a shift of responsibility from state protection to
individual responsibility in health care
A strong case to argue that a retreat of the state in the
economy should not mean a corresponding retreat in
the society – especially for the vulnerable
Simply market oriented policies do not work in health
care
25

Specific policy recommendations for the Chinese
government

An open-ended health care assistance should be in
place, if not that of a universal health care


Some encouraging note - In 2004, 300 million yuan pledged
by the central government on this purpose, but short of an
open-ended entitlement
WHO standard of the share of GDP for health care



Middle-income countries 3%-7%
China at 5.4% in 2002
Not about share of wealth for health care but its cross-sector
distribution and system designs

E.g., the state capped its subsidies to public hospitals that drove
the escalation of medical expenses
26


A compelling case for increased government
spending in health care to its share at the prereform period (1980 at 36% of total health
expenses)
If too radical, to 1990 level at 25%



Help relieve the pressure on public hospitals and
individual citizens
This case study illustrates the ‘surrender’ of
the state in health care protection to marketoriented policies resulted in greater social and
economic costs to the society
Thank you!
27