Health in the Land of the Dragon: Policies, Challenges, and the Future of China
MEDICI ANDRE
International Senior Consultant in Health Economics and Health Development Strategy - Author @ Monitor de Saude Blog | PhD in Economic History
André Medici
The Nature of the Chinese Healthcare System
Throughout my life, I have not had the pleasure of working with health policies in China, a country I have, in fact, never visited. My closest encounter was during breaks from World Bank missions when I visited the city of Sapa, Vietnam. I ascended via cable car and then trekked a small trail to reach the summit of Fansipan—the highest mountain in Vietnam at 3,143 meters above sea level. Located at the border with China, one could theoretically view the vast country from there, but the region is prone to dense fog. Even from that vantage point, my view could not cross the border due to the mist.
Although I have not worked in China, colleagues from the World Bank, like Jerry La Forgia[i], have worked there and written about the realities and challenges of its health policies until the past decade, offering some insights and sparking my curiosity to learn more about the topic.
In the last ten years, Chinese health policy has undergone substantial transformations aimed at providing broader coverage, greater equity, adequate financing, and social protection to its population. Despite being, in theory, a communist country, China's health system operates as a mixed public-private model under the strong supervision of the central government. For decades, the country has been implementing universal health coverage policies through three major insurance programs that were recently merged:
These systems were financed through a mix of employer contributions, individual and family contributions, and government subsidies—distinct from Brazil's Unified Health System (SUS), which is funded through general taxes.
Performance Over the Past Decade (2013–2023)
The performance of China's health policy over the past decade can be divided into three periods:
2013–2015: The Basic Medical Insurance (BMI) expanded to cover 95% of China's population by 2015 (more than 1.35 billion people). This achievement was enabled by integrating urban and rural schemes and increasing government subsidies for low-income populations. However, regional disparities persisted. Urban areas boasted high-quality hospitals, while rural regions struggled with physician shortages and inadequate infrastructure. In 2013, health expenditure accounted for 5.5% of GDP. The central government increased rural subsidies and implemented a program to reduce the cost of essential medications, but catastrophic medical expenses remained unaddressed.
2016–2018: Distinct insurance schemes were integrated, and public subsidies increased. The unification of NRCMS and URBMI led to the creation of a unified Basic Medical Insurance system for urban and rural residents (BMI). While universal coverage seemed closer, equitable access to quality services remained a significant challenge. Redistribution policies were necessary to address resource disparities, increasing doctors, facilities, and equipment in underdeveloped regions. Public health spending rose to 6.4% of GDP by 2018, spurred by hospital system reforms and rural infrastructure investments. In 2016, the Catastrophic Medical Expense Insurance Fund was established to cover significant medical costs that exceeded individuals' financial capacities. This fund has played a central role in reducing extreme poverty by mitigating financial vulnerabilities caused by severe illnesses.
2019–2022: The COVID-19 pandemic severely impacted China, with the government covering treatment costs for much of the population, regardless of financial capacity. However, an explosion of new cases in 2022 led to the government ceasing to count new cases, exposing the population to severe outcomes. The pandemic highlighted gaps in rural healthcare infrastructure, prompting immediate efforts to build new hospitals and expand testing capacity in underdeveloped regions. Health spending increased substantially due to the need for pandemic control and treatment. Emergency subsidies and temporary hospital funding were implemented. The pandemic emphasized the importance of a universal health system for protecting populations during health crises while raising awareness of the need for greater equity.
2023: Post-COVID reforms and investments in health technologies intensified. China's health system achieved coverage for 1.4 billion people. The focus shifted to quality, especially in preventive health. New plans aimed to reduce urban-rural gaps using digital technologies like telemedicine to deliver healthcare to remote areas. Health expenditure reached about 7% of GDP, with investments in hospitals, medical research, and advanced technologies. The catastrophic illness insurance system continued to expand its coverage, easing the burden of catastrophic expenses.
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Main Challenges of Health Policies
Despite notable advancements, Chinese health policies face considerable criticism, highlighting structural flaws and challenges. These include:
Regional Inequality: There are significant disparities in healthcare access between urban and rural areas. Cities like Beijing and Shanghai offer advanced hospitals, while rural areas lack infrastructure, medical staff, and essential drugs. Despite government efforts to redistribute resources, the shortage of qualified professionals in rural areas remains a persistent issue.
Rising Costs: The aging population, increasing prevalence of chronic diseases, and growing use of advanced medical technology are driving up healthcare costs. Families often struggle with out-of-pocket expenses for expensive medications or prolonged hospitalizations, even with partial system coverage.
Aging Population and Long-Term Care: The rapidly aging population places enormous pressure on the healthcare and long-term care systems. Geriatric services and rehabilitation remain insufficient, and the system lacks robust policies for managing the health of the elderly.
Dependence on Private Resources: Although China has a robust public system, there is growing reliance on private hospitals and clinics, which offer faster and more advanced services but at high costs, creating a barrier for low-income populations.
Corruption and Inefficiency: Corruption, particularly in public hospitals, is an ongoing issue, with reports of bribes for better services and unnecessary prescriptions.
Access to Medications: Essential medications remain inaccessible to vulnerable populations due to high costs or bureaucratic hurdles.
Quality of Care: Long wait times, impersonal service, and inconsistent quality of care are common issues.
?Future Expectations (2025 and beyond)
China's health policy will likely focus on expanding coverage, improving service quality, increasing equity, and ensuring financial sustainability. Key areas include:
By 2025, China aims to establish a resilient and inclusive health system while addressing persistent regional inequalities and rising healthcare costs.
Sources of Information
Insights are consistent with China's 14th Five-Year Plan (2021–2025), focusing on health system modernization. Reliable sources include The Lancet, New England Journal of Medicine, the WHO, and the World Bank, among others.
[i] La Forgia, G. M., & Nagpal, S. (2012). Governance in Health Care Delivery: Raising Performance. World Bank Publications.