As a few other people have noted in their posts, China is currently holding its annual National People’s Congress sessions. It is a time for the Communist Party to air some of the upcoming policy agendas, and one of the overarching themes has been improving quality of life in China. For my purposes, I take interest with the healthcare proposals. While healthcare spending has only been mentioned in passing during these sessions, it is clear that healthcare provision will become a top priority of the government in coming years.
I noted in my last post that China is opening up its healthcare system to private hospitals, foreign investment, and for-profit companies. While this shows one approach to increasing the quality and quantity of healthcare provision, privatizing more of the healthcare system will have a very interesting impact on the development of Chinese healthcare.
One motivation for encouraging the expansion of privatized healthcare is to take pressure off of public healthcare funding. This would allow the central government to focus on investing in healthcare provision for rural China, which is a part of China’s plan to increase quality of life (China.org). There is also the added benefit of providing higher quality healthcare to the middle class and wealthy individuals that will come along with more privatized healthcare.
However, it seems that increasing healthcare provision also means increasing the cost of healthcare for the government. China has already increased spending on healthcare by 27.1 percent from 2011-2012 to 2012-2013 to a total of 260.25 billion yuan (~USD 44.2 billion) (China.org). Although this only represents a fraction of China’s government spending, healthcare spending will certainly continue to increase at double digit rates as the demand for healthcare grows.
It will be interesting to see how the government deals with increasing privatization of the healthcare system. How will price controls on prescription drugs be enforced? Will there be an effective universal healthcare system? Will out-of-pocket costs go down? Will there be a movement away from the fee-for-service model that Chinese healthcare currently uses?
Additionally, greater spending on healthcare means other programs will take a back seat. Can China afford to have a well-functioning healthcare system and control environmental issues? What does this portend for China’s investment model?
These are very general questions, but I hope to fill in parts of answers in coming posts.