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Lecture Prof. Yu Baorong, MD, MPH, Ph.D: Healthcare Pricing System and Provider Payment in China
July 5, 2017, 6:00 PM - 8:00 PM
The presentation will review the financial and pricing system in the health sector since the establishment of New China in 1949, and analyze the current situation.
A National Health Service system was adopted by the Socialist China from the previous Soviet Union, with the characteristics of public ownership, highly centralized economy, and healthcare at low prices and low quality.,
After its opening to the world and reforming its economy, China government put almost all resources into economic development, whereas government subsidies into the health sector – and especially into hospitals – declined dramatically. In this context, hospitals were in severe financial embarrassment: they are public institutions staffed with government employees, yet low service prices cannot cover cost, and declined government subsidies cannot maintain operations……
To flatter the public, the government kept health service prices low, but made quite profitable prices for new coming services such as new drugs, new medical materials, high-tech equipment examinations, andother new technologies. Therefore, on one side lower prices for common healthcare create deficits for hospitals, and in the other side high profits made through high-tech equipment examinations, prescription of drugs, surgeries with new materials, etc. allow for cross-subsidizing.
In 1998, 2003 and 2007, China has established social health insurance schemes for urban employees, rural population, and urban residents, respectively. The health insurance premiums (per year per insured) for the rural population’s and urban residents’ schemes have increased from 20 RMB and 70 RMB to currently 600 RMB, and keep increasing. In 2011, the Chinese government announced its achievement of universal coverage of social health insurance. The health insurance fund plays an important role in reimbursing health providers, generally nearly 50% of medical cost is paid by health insurance (another 50% is by out of pocket payment).
The current direction of health sector reform is adjusting healthcare pricing system and simultaneously exploring appropriate provider payment methods.
Yu Baorong is Professor of Health Economics and Policy, School of Insurance and Economics, University of International Business and Economics.