Overview of China’s Healthcare System

Total Health Expenditures of Countries (% of GDP) http://www.nejm.org/doi/full/10.1056/NEJMp1413937

Possessing a viable healthcare system is essential for the social and financial wellbeing of a country. The Chinese healthcare system has changed dramatically since 1949 and the rise of the Communist Party of China. Since 1949, healthcare coverage has gone from universal to almost none in 1982, to now, reportedly, 95% (Wordbook 2012). The Health and Family Planning Commission aims to have universal health care by 2020. While coverage is broad, its depth has been questioned recently. In 2014, China spent 5.5% of its GDP on healthcare, compared to the U.S. who spent 17.1% of its GDP n healthcare for a population a fraction of China’s (World Bank).

Part of China’s most recent healthcare reform in 2008 is to provide a vast network of primary care, especially for those in rural areas which contain the majority of the Chinese population. The Chinese healthcare system is organized into three tiers of increasing intensity of care. With primary care facilities in villages or towns as the first tier, county hospitals as the second tier, and tertiary hospitals, usually located in major cities. As a patients visit facilities on higher tiers, their copayments often increase by orders
of magnitude for each tier (Bumenthal et al.). This can lead patients to fail to seek out necessary treatment.

The Chinese healthcare system is overseen by the Health and Family Planning Commission to ensure fair healthcare across all of china, however with 45% of hospitals privately owned and mainly for-profit, quality of care and professionalism can vary (The Commonwealth Fund). The majority of Chinese hospital profits come from prescriptions, which are often not covered by the general government provided health insurance. Hospitals are allowed a 15% markup in distribution of prescription drugs, givi
ng providers financial incentive to generate demand for more expensive drugs (The Commonwealth Fund). Pilot programs, including 3,077 public county hospitals and 446 public city hospitals, were put in place in 2015 to try to eliminate markups of prescription drugs (The Commonwealth Fund). For perspective, as of 2013 there were 24,706 total hospitals and 915,368 primary care facilities in China. Thus, eliminating the profit maximizing behaviors  of drug companies and healthcare providers, potentially harming patient quality of care, still has a long way to go.


Recently, quality of care in China has been under fire following an HIV outbreak in Hangzhou hospital on January 26th, 2017. The Wall Street Journal reports the outbreak was caused by a technical violating protocol and reusing a needle that had come into contact with a patient positive for HIV. Interestingly, this story was scrubbed from Chinese news stations, suggesting a lack of transparency in the Chinese public health system. This is alarming, especially considering the consequences of the delayed public announcement resulting in the SARs outbreak in 2003.

In conclusion, China continues to develop its healthcare and public health system to meet the needs of its massive population. Comprehensive coverage and quality care still remain issues, but China has come a long way in the past 20 years and continues to implement new policies and programs to provide the best healthcare for its citizens.










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18 Responses to Overview of China’s Healthcare System

  1. Charlie says:

    The case of a country, especially one as large as China, transitioning from universal healthcare to near zero healthcare coverage, and now back to approaching universal coverage again, is a fascinating one.
    It is no surprise to see China covering up potential scandals such as the aforementioned HIV outbreak, nor is it surprising to see that the government has a heavy hand in pricing of medication and profit models for private hospitals. It appears as though China is pursuing somewhat of a public-private hybrid model similar to what we have in the US, only with a stronger emphasis on universal coverage.
    Providing healthcare for a population in the billions is no small task; there could be a lot of good policy lessons to draw from China’s experience attempting to reach the 100% insured watermark.

    • the prof says:

      Stronger rhetoric about universal coverage, but the reality is otherwise. You saw in Hessler what that meant in practice. While a decade ago, my sense is it’s not unrepresentative of today.

  2. feldsteinp18 says:

    It is interesting to read about the Chinese healthcare system and simultaneously compare it to that of the US. One story line in the class so far is that in many developmental areas, China is where the US was many many years ago. It seems like healthcare is the same way. It will be interesting to see what kind of healthcare reform is in store for China and if they will implement some version of the ACA, that is if it still exists in the US 5+ years from now.

    • Alden Schade says:

      I think that you are on the right track in assuming that they will implement something similar to the ACA. Given the government’s high level of control over state affairs, it would not be surprising to see the government exert more control over the healthcare system in order to enforce better standards and provide more wide-reaching coverage.

      • the prof says:

        In the developed world, every country EXCEPT the US has a single provider (or more accurately, single price setter). China so far has not moved in that direction. So … if you don’t have the money, please keep out of the lobby, dying in the street is OK, we don’t have to take care of the body. Even if you have an urban hukou, medicines (as per the post) may make healthcare inaccessible. And the incentive to overprescribe medicines can make healthcare positively unhealthy. As in the US, where patients are wont to see multiple doctors and end up with lots of prescriptions that individually may be OK, but taken altogether are not.

  3. bonesc18 says:

    As we went over in class, the Chinese population is starting to age. While not nearly as extreme example as the Japanese population, millions of Chinese will soon reach an age where they will be taxing the healthcare system to new limits. In the United States we are beginning to see this with the baby boomer generation. While our health care doesn’t exactly work perfectly, it is certainly passable in comparison to the Chinese system. It will be interesting to see what serious modifications will have to be made to keep the system going and serve these aging individuals. Will China also be an innovator in the field of healthcare, pioneering new knee replacements, cancer treatments, and drugs that promote a better quality of life, or will the system be unable to meet the needs of the population and crumble under pressure reducing the overall quality of life in China.

    • the prof says:

      Because fertility fell faster in China, aging will occur faster in China than in Japan. Later, yes, but the transition to an aged society will be very quick.

  4. choia18 says:

    I went to the Emergency Room in Beijing for an anxiety attack. Needless to say, it was a “get in get out” type of deal. I went in at 1am in the morning with my Chinese teacher (since I could not communicate in Chinese well enough) to see the doctor and came out at around 6am. Patients with severe problems were in beds crammed into the room. Extra beds were made ready outside, several of which were occupied. Only one doctor was there to take care of the situation. No one would see me unless I went to the cashier and told her what I needed (in this case a blood test and heart mapping). Once the samples were given, we had to go to different windows to find and pick up the results, deliver the results to another lab and then wait longer for the results to appear. We also needed an xray so, again, I paid for the xray, we had to find the xray room, someone took my xray and then we printed the xrays out on machines. All this was strangely efficient and only costed about $60.

    After this experience, I have become extremely concerned about the healthcare system. If you do not have the money, the doctor simply has too many patients who can pay to actually see you. China has 1.51 physicians per 1000 people and this is actually a slight decline based on past result. The United States does not fare that much better at 2.3 but for a growing and aging Country like China, the healthcare system needs to be improved quickly.


    • the prof says:

      Very useful information, exactly in accord with what Hessler experienced (or more specifically, Wei Jia). Urbanization has swamped all attempts to improved the system.

  5. march zheng says:

    This is a very informative article which the topic I know really little about. It surprises me that China only has around 5% of their GDP spending allocated towards Healthcare. Also based on their tier models for healthcare intensity coverage, does that mean that China has an overall better healthcare system? In all honesty, I think that incentives for markups are a crucial aspect of growth, and if the Chinese healthcare system finds a better way to balance profits/patient care, then I think that will pay better dividends in the long run.

    • the prof says:

      Every country that I know of has a “tier” system. Local clinics don’t need an MRI, small hospitals don’t need a CAT scanner or high-end MRI (or even any MRI), medium-sized hospitals don’t need a pediatric neurosurgery unit, those sorts of health issues are [thankfully!] rare.

  6. sackettm18 says:

    It’s clear that China needs to step up and improve their healthcare quality and reach, but what does it actually mean for them to do so? Does it mean direct government investment in private hospitals? Full public healthcare? ACA? I don’t think the answer is very clear. China is not like the United States (where the mere mention of a single-payer system strikes fear into people) but it’s also not like Europe where universal care is the standard.

    • the prof says:

      China doesn’t have a big private health insurance system, there are no equivalents to Blue Cross/Blue Shield. There’s thus no political need for an ACA, which was crafted at the Heritage Foundation [not the Democrats!] so as to leave no vested interest out of the deal. Pharmaceuticals are also via license, so again a different set of players in China than in the US.

  7. masonw17 says:

    I agree with above comments that the current healthcare situation in China bears some resemblance to early healthcare issues in the US. The healthcare industry is one of the most rapidly growing sectors of each country’s economy, given a rapidly aging population. What remains to be seen, however, is whether the Chinese government will be able to efficiently leverage increasing demand for high quality low cost healthcare into a robust and efficient market, or will fall prey to the many complexities of a public/private healthcare hybrid which continue to drive up costs in the US.

  8. gristt18 says:

    This obviously strikes a cord with our class as the US has constantly grappled with how to handle healthcare. With the ACA under fire from the new administration, the future of health care in the two largest world economies is dubious. On top of quality, which you talk about a lot, Ryan, is the issue of access. There may be several high-quality facilities throughout China, but if they are located in population-dense areas, they will not help families in rural areas. Likewise, the quality of providers in rural areas is likely pretty poor. Establishing more consistent, quality healthcare will likely be a goal moving forward.

  9. tylerc18 says:

    If China truly wants to achieve universal health care, should the government not back the efforts fully? The cost of healthcare in the US is twice as high as everywhere else in the world. Some scholars have gone so far as to criticize the capitalist model of the US healthcare, even in the ACA era: people are being kept alive that should not be. If you have wealth in the US, you will be willing to spend it on yourself and your loved ones. Others are not so fortunate. Although China has distanced itself from its Communist past since Reform and Opening Up, its healthcare system needs to be fully public for it to reach a universal level. It is indeed a difficult task for the government; but as China’s population ages, and the retirement age remains static, the government needs to intervene.

  10. the prof says:

    Lots of interesting questions of political economy and fiscal structure. A national system requires a revenue source and requires choices about who gets what sort of access. Should critically ill 90-year-olds be admitted to intensive care or sent to hospice? Who sets prices for pharmaceuticals?

    Right now provision is local, tied to hukou. But (as we’ll discuss) localities have no fiscal autonomy. How should that gap be bridged?

  11. DrDan says:

    The second paragraph appears to mention that most of the Chinese population live in rural areas.
    This is not the case – the trend has been “rural to urban” migration since 2005. According to latest statistics (WHO, UNHCR), the urban/rural divide is 50/50 and trending towards urban.

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