Published by Oxford University Press in association with The London School of Hygiene and Tropical Medicine
ß The Author 2012; all rights reserved. Advance Access publication 4 December 2012
Health Policy and Planning 2013;28:809–824
doi:10.1093/heapol/czs120
Engaging sub-national governments in
addressing health equities: challenges
and opportunities in China’s health
system reform
Hana Brixi,1* Yan Mu,2 Beatrice Targa3 and David Hipgrave2
1
The World Bank, 1818 H Street NW, Washington, DC 20433, USA; 2UNICEF China, 12 Sanlitun Lu, Beijing 100600, People’s Republic of
China and 3UNICEF Timor-Leste, UN House, PO. Box. 212, Caicoli Street, Dili, Timor-Leste
*Corresponding author. The World Bank, 1818 H Street NW, Washington, DC 20433, USA. Tel: þ1 202 458 5131. Fax: þ1 202 473 1385.
E-mail: [email protected]
Accepted
22 October 2012
China’s current health system reform (HSR) is striving to resolve deep inequities
in health outcomes. Achieving this goal is difficult not only because of
continuously increasing income disparities in China but also because of
weaknesses in healthcare financing and delivery at the local level. We explore
to what extent sub-national governments, which are largely responsible for
health financing in China, are addressing health inequities. We describe the
recent trend in health inequalities in China, and analyse government expenditure on health in the context of China’s decentralization and intergovernmental
model to assess whether national, provincial and sub-provincial public resource
allocations and local government accountability relationships are aligned with
this goal. Our analysis reveals that government expenditure on health at
sub-national levels, which accounts for 90% of total government expenditure
on health, is increasingly regressive across provinces, and across prefectures
within provinces. Increasing inequity in public expenditure at sub-national levels
indicates that resources and responsibilities at sub-national levels in China are
not well aligned with national priorities. China’s HSR would benefit from
complementary measures to improve the governance and financing of public
service delivery. We discuss the existing weaknesses in local governance and
suggest possible approaches to better align the responsibilities and capacity of
sub-national governments with national policies, standards, laws and regulations, therefore ensuring local-level implementation and enforcement. Drawing
on China’s institutional framework and ongoing reform pilots, we present
possible approaches to: (1) consolidate key health financing responsibilities at
the provincial level and strengthen the accountability of provincial governments,
(2) define targets for expenditure on primary health care, outputs and outcomes
for each province and (3) use independent sources to monitor and evaluate
policy implementation and service delivery and to strengthen sub-national
government performance management.
Keywords
Equity, governance, health sector reform in China, financing, health expenditure, maternal and child health
809
810
HEALTH POLICY AND PLANNING
KEY MESSAGES
Since 2000 disparity in health outcomes, such as maternal and child health, in China has remained significant.
Although improving equity is a priority in China’s health reforms, public resource allocation for health is increasingly
regressive (negatively correlated with population basic health needs and financial barriers in accessing health care) across
and within provinces.
In China’s decentralized health financing system, sub-national governments seem insufficiently engaged in promoting
equity in public resource allocation for health.
China’s health sector reform may require complementary governance reforms to align the behaviour of sub-national
governments with the national priorities.
Introduction
In early 2009, the government of China announced comprehensive health system reform (HSR) to address the widely
acknowledged inequity characterizing China’s health sector
(Blumenthal and Hsiao 2005). China’s HSR commenced in
2006, after President Hu Jintao demanded universal access to
quality basic health care and better health outcomes for the
Chinese people, followed by an open apology for problems in
healthcare affordability and accessibility by then Vice Premier
Wu Yi. The State Council established a 16-ministry leading
group for HSR, and opened an unprecedented public debate on
HSR issues and proposals, with wide participation of citizens as
well as domestic and international agencies and experts. The
reforms aim to provide ‘safe, effective, convenient and affordable’ health care to all citizens through five main pillars:
strengthening public health functions and services, enhancing
primary care delivery, establishing universal basic health
security (insurance), ensuring the safety and supply of and
access to essential medicines and optimizing the management
of public hospitals (The Central Committee of the Communist
Party of China 2009).
China’s healthcare affordability problems were driven formerly by the low level of government funding, averaging only
0.7–0.9% of gross domestic product (GDP) between 2001 and
2007 (Ministry of Health Figures published annually; Yip et al.
2012) compared with 2% in middle-income countries at a
comparable stage of development (WHO 2008b). Out of pocket
(OOP) spending peaked at around 60% of total health expenditure in 2001, making essential care unaffordable for many. The
introduction of the rural co-operative medical scheme (RCMS),
revitalization of urban health insurance and certain vertically
targeted subsidies for some rural health-service users gradually
decreased this figure to around 36% in 2010 (World Health
Organization 2009; Yip et al. 2012). However, the lower share of
OOP expenditure has not substantively decreased the burden of
health care on households due to rapidly rising costs (Meng
et al. 2012). Recognizing the need for an increased financing
commitment, China has poured a total of 1517 billion renminbi
(RMB) (around $225bn) into the health sector from 2009 to
2011 (China Development Gateway 2011; Xinhua News Agency
2012). Government expenditure on health thus nearly doubled
during the span of 2 years from 2007 to 2009, to reach 1.4%
of GDP in 2010 (Ministry of Health 2011a; Yip et al. 2012).
This is still low compared with government expenditure on
education (3.7% of GDP in 2010) (Ministry of Education,
National Bureau of Statistics, Ministry of Finance 2010) but
brings China closer to a World Health Organization (WHO)
estimate that government spending on health of 1.5–2.0%
of GDP could guarantee primary health care (public health
and a modest package of essential clinical care) for all
in China (World Health Organization China Country Office
2007).
The announcement of the priorities for and content of China’s
HSR, along with the expectation of their implementation at all
administrative levels, imposed a substantive burden on provincial and sub-provincial health authorities. As outlined,
sub-national governments are expected to fund about two
thirds of the overall government investment in HSR (China
Development Gateway 2011; Yip et al. 2012).
Moreover, ensuring that the injection of new fiscal resources
contributes effectively to the accomplishment of HSR objectives
is a challenge. About 90% of public resources for health care in
China, whether derived from national transfers or local
budgets, are administered by provincial and sub-provincial
authorities (National Bureau of Statistics 2011). Promoting
equity and efficiency in public resource allocation at
sub-national levels is a particular challenge that has yet to
receive appropriate attention in China.
In this article, we use data from various published and
unpublished sources to analyse the disparities in certain key
health outcomes in China; the available data on national,
provincial and sub-provincial public resource allocations for
health; per capita allocations among China’s various health
insurance schemes and survey data on OOP and catastrophic
household health expenditure, to explore whether sub-national
governments allocate resources in accordance with the equity
objectives of China’s HSR.
Data sources and methods
We analyse the most recently available national and
sub-national data on health outcomes, public resource allocation and household-level health spending to assess the contribution of sub-national governments to addressing health
inequities.
First, at the level of health outcomes, we used several sources
of data to conduct our investigation, and focus primarily on
maternal and child health (MCH) and nutrition indicators as
ENGAGING SUB-NATIONAL GOVERNMENTS IN CHINA’S HEALTH REFORM
examples of progress in health status. Regional differences in
MCH status are more sensitive measures of health inequality in
China than other health indicators (Fang et al. 2010). For
progress in maternal, child and infant mortality in China, we
used the data collected from the national maternal and child
mortality surveillance network (Wang et al. 2011), which is the
official and accepted most accurate source of information on
these indicators. Sub-provincial data on the same indicators
were sought from social progress reports from various provinces’ statistical bureaus, and also the same national surveillance network. Nutrition data are not regularly updated in
China, so we used a mix of government sources and more
recently released and unpublished survey data to examine
continued inequity in nutrition outcomes in different geographic areas and across social strata.
Second, to assess equity in public resource allocation, we
derived government expenditure on health, and education (as a
comparator), GDP per capita and household income per capita
from national and sub-national statistical yearbooks. In addition, we calculated per capita allocations for the various social
insurance schemes on the basis of the total capitalization of
each scheme and number of beneficiaries.
Third, at the household level, we extracted changes in
household OOP expenditure on health and the risk of
catastrophic health expenditure from China’s National Health
Service Surveys, which have been conducted every 5 years since
1993, and from recently published data (Meng et al. 2012).
In addition to normative study and qualitative analyses of
this evidence and information, we compare health outcomes
and general socio-economic progress, and examine to what
extent local GDP per capita at province and sub-province level
has remained correlated with local public resource allocations
for health and local health outcomes over several different time
periods. In analysing the equity of public resource allocation,
we also use proxy indicators to investigate whether the public
resources on health are allocated according to needs. We use
household OOP health expenditure data and prevalence of
catastrophic health expenditures among low-income households as examples of inequity in access to health care.
We also include information on governance issues pertaining
to health sector funding allocations and programme administration, mainly derived from a citizen scorecard survey conducted in five Chinese cities to gauge citizens’ experience with
public services (Brixi 2009) and from interviews with government officials.
811
Population Fund (UNFPA) 2006) showed large inequalities in
mortality rates between the poorest rural counties and urban
areas in 2004, and more recent data indicates that the maternal
mortality ratio (MMR) in 2006 and newborn mortality rate in
2007–8 in the poorest rural type IV counties both remained
around five times higher than in urban areas (Feng et al. 2010,
2011). The highest provincial MMR in China is 49 times the
lowest, and the highest under-five mortality rate (U5MR) is 8
times the lowest (Rudan et al. 2010; Ministry of Health 2011b).
In addition, although the declines in maternal and child
mortality are substantive, published data indicate no improvement in the distribution of new-born mortality between 1996
and 2008 and MMR by urban–rural ‘socio-economic’ typology
in China between 1996 and 2006 (Feng et al. 2010, 2011). Data
from the national maternal and child mortality surveillance
network imply significant volatility in the ratio of all rural to
urban maternal mortality over the past 20 years, but indicate a
dramatic decline from 3.0 in 1999 to 1.0 in 2010 (Figure 1).
This convergence has been largely driven by the decline in rural
mortality, with the persistent urban mortality reflecting the
markedly higher mortality among rural women who have
recently migrated to urban areas, masking mortality reductions
among long-term urban resident women. Figure 1 also shows
that for U5MR the decline in the rural:urban ratio over the
same period has been far more modest (from 3.3 in 1999 to 2.8
in 2010) (Ministry of Health 2011a).
Comparisons in maternal and child mortality across provinces
Figures 2 and 3 demonstrate persisting close correlation between
maternal and under-five child mortality and provincial GDP per
capita (see Supplementary Figure A1), despite national initiatives [such as the RCMS, medical financial assistance (MFA)
for the very poor, MCH initiatives and hospital delivery
subsidies] to reduce disparities in MCH in the 2000s.
Interestingly, the disparity in MMR and U5MR in relation to
provincial GDP per capita in China is of a similar magnitude to
that observed across countries, revealing the unfulfilled potential for an equalizing role of China’s national government. The
MMR and U5MR, for example, while on average lower in
China’s provinces than in countries with a comparable GDP per
capita, are as closely related to the provincial GDP per capita in
China as the levels across countries are to the national GDP per
Results and discussion
China’s challenge of disparities in health outcomes
The pattern of recent changes in maternal and child mortality
in China
Disparities in maternal and child mortality rates remain
significant across China, influenced by factors such as poverty;
maternal education; local sanitation and hygiene; access to,
quality of and uptake of services, migration and fertility rates.
Using the government’s classification of urban districts and
rural counties, a 2006 review by the China Ministry of Health
(MoH) and several United Nations agencies (MoH, WHO,
United Nations Children’s Fund (UNICEF) United Nations
Figure 1 Rural:urban ratio in maternal and child mortality, compared
with urban:rural income ratio, 1991–2010. Sources: Ministry of Health
(2011b) and National Bureau of Statistics (Published annually a).
812
HEALTH POLICY AND PLANNING
Figure 2 Maternal mortality and GDP per capita across provinces,
1995, 2000 and 2008. Sources: (National Bureau of Statistics 2011) and
DevInfo (http://www.devinfo.org), a database system endorsed by the
United Nations Development Group for monitoring human
development.
Figure 3 Under-five mortality and GDP per capita across provinces,
2000 and 2008. Sources: (National Bureau of Statistics 2011) and DevInfo
(http://www.devinfo.org), a database system endorsed by the United
Nations Development Group for monitoring human development. Data
on U5MR for 1995 were not available.
capita worldwide (Figure 4; Supplementary Figure A2 for infant
mortality).
Maternal and child mortality within provinces
The scant evidence available on mortality ratios across prefectures within provinces provides mixed messages. For example,
Inner Mongolia (among the few provinces for which prefecture
mortality data are available) has achieved equitable improvements in infant mortality over the past decade (Figure 5). In
other provinces, however, intra-province disparity in child mortality rates remains high (Figure 6; Supplementary Figures A3
and A4 and Tables A1 and A2). The U5MR differed 12-fold
across prefectures in Gansu (Gansu Provincial Bureau of
Statistics 2010). Similarly, although maternal deaths are
much less common, in 2009 the MMR in the best and worst
among Sichuan’s 21 prefectures (total population 80.4 million)
differed 12-fold (Chengdu Bureau of Statistics 2010).
Child nutrition
The nutritional status of children both in urban and rural China
has improved steadily, with both underweight and stunting (a
better measure of long-term infant and young child nutrition)
declining substantively since 1990 (Table 1). Interestingly, the
ratios of rural:urban underweight and stunting have both
improved since peaking in 2000, again suggesting a trend
towards improvement in rural areas as observed particularly for
the MMR. The improvement in poor rural counties observed in
2005, however, has not been sustained in 2010, possibly
indicating the influence of rising food prices (Prof. Chen
Chunming, personal communication). Data not yet published
but emanating from China’s 2010 to 2011 national nutrition
survey indicate persistent disparity in deficiency of various
micronutrients (particularly iron, zinc and vitamin A, all of
which are important for child survival and health) between
rural and urban areas in China (Dr Chang Suying, personal
communication) and the phenomenon of stunting with obesity
is also emerging amongst China’s rural poor (Wang et al. 2009).
Disparities among other health outcomes across China
In addition to the disparity in mortality and nutrition outcomes
described earlier, other indicators also underscore the divide in
health status and needs between China’s urban and eastern
populations and the rest. Measles outbreaks predominantly
affect rural communities and migrants in urban areas; polio
recently reappeared in a poor area of far western China; certain
nutrition-related problems, such as iodine deficiency disorders
and neural tube defects occur mainly in poor rural areas; and
diagnosis of schistosomiasis and tuberculosis is more common
amongst certain poorer and rural groups (Lou Xiao Dong, China
Ministry of Health 2009, public presentation on tuberculosis
control; Hipgrave 2011). The risk factors and preventive
approaches for each of these conditions are well known, but
implementation of prevention, treatment and public health risk
management approaches is generally poorer in the most
affected areas (Tang and Squire 2005; Wang et al. 2008;
Hipgrave 2011).
Explaining the disparities in health outcomes
The persistent inequities in health outcomes have multiple
roots, such as social determinants, underfunding of primary
care, widespread incentive distortions among the providers of
care, and financing and design weaknesses in the RCMS and
MFA (Ma and Zhao 2007; Hu 2008; World Bank 2009; Ying
2009; Fang et al. 2010; Yip et al. 2012). In this context,
inefficiency and inequity in the distribution of financial, human
(Anand et al. 2008) and physical resources are areas of focus for
China’s HSR (Yip et al. 2012). In the following sections, we
investigate to what extent public finance and governance in
China support improvement in health equity.
The autonomy and accountability of China’s
sub-national governments in relation to health
In recent years and particularly since the beginning of the new
millennium, China’s government has complemented a drive for
economic development with a focus on equity, social harmony
and development based on scientific principles (C Wong,
unpublished data1; Zhou 2010). Equity is articulated in most
ENGAGING SUB-NATIONAL GOVERNMENTS IN CHINA’S HEALTH REFORM
813
Figures 4 (a) Maternal and (b) Under-five mortality and GDP per capita. Relationship by province in China and by country internationally.
Source: Gapminder at http://www.gapminder.org.
high-level government pronouncements, including in the recent
National People’s Congress and Chinese People’s Political
Consultative Committee meetings in March 2012, and underpins many national initiatives. The available evidence, however,
suggests that public resource allocation in China’s health sector
is not becoming more equitable.
China’s decentralization and intergovernmental model
Although government revenues in China are centralized, government expenditure is highly decentralized across five levels of
government, namely the central, provincial, prefecture, county
and township levels. Aligning incentives, responsibilities and
resources across government levels has been a long-standing
challenge (Jin et al. 2005). In social sectors, including health,
sub-national governments account for 90% of total budgetary
expenditures and bear responsibility for the provision of
essential services including health and education (National
Bureau of Statistics 2011). Government expenditure on health
is largely determined by local fiscal capacity (Feltenstein and
Iwata 2005; Yip et al. 2012; C Wong, unpublished data1).
County and township governments, the lowest two of the five
tiers, bear the main responsibility for financing essential public
services including health. Their fiscal capacity differs widely
across China even after adjusting for equalization transfers,
which are formula-based grants by central government calculated according to local expenditure needs and fiscal capacity (C
Wong, unpublished data1; Bloom 2011). On average, revenues
through the tax revenue-sharing mechanism and intergovernmental fiscal transfers from the centre finance up to 50% of
sub-national government expenditure (World Bank 2012).
China’s decentralization and intergovernmental system gives
unusually high discretionary power to provincial governments
814
HEALTH POLICY AND PLANNING
and imposes a significant fiscal stress at the lowest government
levels. County and township governments receive public
resources through a cascading arrangement, in which each
level of government has considerable discretion in transferring
resources to the lower-level government. In particular,
Figure 5 Inner Mongolia infant mortality rate (IMR) by prefecture vs
GDP, 2000 and 2009. Source: Social Progress Reports for Inner Mongolia
Autonomous Region (2010) (unpublished data).
Figure 6 Infant mortality by prefecture vs GDP within three provinces
of China, 2007. Source: Social Progress Reports for Hebei Province and
Xinjiang and Inner Mongolia Autonomous Regions (2008) (unpublished
data).
provincial governments, the main recipients of the central
government equalization and tax sharing grants, have significant autonomy in transferring resources to prefecture governments, which in turn determine the transfers to county
governments which decide on the transfers to the townships.
In this system, poorer jurisdictions at the township and county
levels tend to face an imbalance between their available
resources and responsibility for public service delivery (C
Wong, unpublished data1; Zhou 2010).
Surveys [e.g. by one of the authors (Brixi 2009)] and insights
offered by government officials interviewed for this analysis
suggest that governments at each level may partly withhold
public resources originally envisaged to cover expenditure
responsibilities of counties, townships and villages in need. In
particular, some commentators confirmed that beyond the
earmarked transfers and selected nationwide priorities, provincial and lower levels of governments favour spending ‘close to
home’; that is, mainly in the provincial capital city and at the
prefecture and municipal level. This kind of bias at sub-national
levels could undermine progress towards national development
goals set by the central government (Uchimura and Jütting
2007; Yang 2011). Transfers—even if earmarked for specific
counties—are transmitted through provincial and prefecture
governments and are disproportionately spent on urban development—particularly urban infrastructure—leaving a shortage
of resources at the county level and below to spend on essential
social services.
To supplement resources received from the higher levels,
sub-national governments raise resources from various fees, the
sale of land-use rights and taxes on real estate transactions
(World Bank 2012). Such locally generated revenues, however,
may further exacerbate inequalities as poor localities tend to
have a more limited scope for revenue-generating transactions.
The remaining imbalance between resources and expenditure
responsibilities at county and township levels, particularly in
poor jurisdictions, has negatively affected the quality of health
care (Yang 2011) and the burden of household health expenditure (Meng et al. 2012) in poor rural localities (Blumenthal and
Hsiao 2005; World Bank 2012).
Furthermore, partly exacerbated by decentralization, income
disparities have widened across localities and population
groups, often within local jurisdictions (UNDP China and
Table 1 Underweight and stunting prevalence (%) and relative progress among children in urban and rural areas in China, 1990–2010
Year
Underweight
Stunting
National
Urban
Rural
Rural:urban
1990
13.7
5.3
16.5
1995
11.4
3.4
14.1
1998
7.8
1.8
9.8
5.44
14.5
22.3
5.3
27.9
5.26
36.4
2000
8.2
2.0
10.3
5.15
15.8
20.0
4.1
25.3
6.17
36.9
2005
4.9
1.4
6.1
4.36
9.4
13.0
3.1
16.3
5.26
20.9
2008
–
–
5.1
7.3
–
–
13.7
–
–
12.6
8.0
9.9
3.4
12.1
2009
–
–
4.6
2010
3.6
1.3
4.3
National
Urban
Rural
Rural:urban
3.11
33.1
11.4
40.3
3.54
4.15
33.2
10.4
40.8
3.92
3.31
Poor rural
Source: National Food and Nutrition Surveillance System, 1990–2010 (unpublished data).
Note: ‘Poor rural’ areas are the rural counties that are officially designated national poverty counties.
Poor rural
18.9
3.56
20.3
ENGAGING SUB-NATIONAL GOVERNMENTS IN CHINA’S HEALTH REFORM
China Institute for Reform and Development 2008; Xing et al.
2008; Zheng et al. 2008). Nationally, the urban:rural per capita
income ratio has increased from 2.4 in 1991 to 3.2 (and ranges
up to 4 within provinces) in 2010 (Figure 1) (National Bureau
of Statistics Published 2011). Since 2000, all but four western
provinces (Sichuan, Tibet, Xinjiang and Yunnan) registered a
continuously rising urban: rural ratio in per capita annual
disposable income (Supplementary Table A3). These four
provinces only bucked this trend due to large-scale central
subsidies to foster their economic development and poverty
reduction.
Difficulties in using the budget for policy implementation
Budget and expenditure management in China’s decentralized
environment has been fragmented. China lacks a comprehensive
budget that would facilitate aligning government expenditures
with policy priorities across sectors and programmes. Instead, the
general budget covers the bulk of government expenditures,
including central–provincial revenue sharing and resource
transfers. The state capital budget uses dividend payments
from state enterprises to promote public investment. A separate
fund covers social security. At the sub-national levels,
the government-funded budget utilizes off-budget revenues for
off-budget programmes. In addition, at the sectoral level,
ministries decide on and allocate earmarked transfers to the
provinces (C Wong, unpublished data1; Zhou 2010).
Monitoring is limited. Few budget details are available, and
there is little oversight by higher authorities or effort to align
the sub-national budgets with specific intra- or cross-sectoral
priorities. Moreover, little information is available on whether
governments spend money according to budgetary allocations
(except at the broadest levels), whether government expenditures and programmes lead to the desired outputs (except for
earmarked transfers with separate monitoring) and whether the
outputs lead to the expected outcomes. This is exemplified for
the HSR in recent analyses where achievement of high-profile
input and output targets masked the absence of substantive
analysis of outcome-level impact (Meng et al. 2012; Yip et al.
2012). Internal and external audits focus on detecting malfeasance, not programme performance.
In addition, the budget cycle and the expenditure cycle are
not synchronized. Thus, even though the fiscal year starts at the
beginning of the calendar year, the budget is not endorsed by
the National People’s Congress until the end of the first quarter.
This delay often implies that programme implementation starts
before budgetary authorization, reducing the budget’s operational significance for sub-national governments and central
ministries (World Bank 2012). Fragmentation, information
limitations and delays in budget execution across government
levels complicate policy implementation. In particular, they
limit the ability of the central government to transform policy
priorities into resource allocation and results at the local levels
(World Bank 2012).
Accountability of sub-national governments with a focus
on the health sector
In China’s intergovernmental system, sub-national governments have insufficient downward accountability. Local elections are limited and citizens’ feedback does not directly
determine their outcomes (Zhou 2010). The central government
815
evaluates performance of sub-national governments according
to specific criteria (which emphasize public order and economic
growth and selected policy priorities, such as universal 9-year
compulsory education). Such evaluation tends to determine
promotion decisions for government officials across government
levels (Zhou 2010; Yang 2011).
Efficiency and particularly equity in public resource allocation
have not been included among the core performance indicators
for governments at sub-national levels. Local government
officials are not held accountable for equity in local health
outcomes and for equity and efficiency in public resource
allocation within their jurisdiction (Bloom 2011). There is no
mechanism for independent, province-level evaluation of
output- or outcome-level indicators in the health sector, with
the National Health Service Survey only powered enough to
assess regional progress (Meng et al. 2012). The most comprehensive current evaluation of HSR targets (Yip et al. 2012) relied
almost entirely on administrative data. In this respect, health
differs from education, where the achievement of universal
9-year compulsory education is subject to strict monitoring and
performance evaluation at the sub-national levels. The associated incentive structures in the provincial and sub-provincial
governments reduce the emphasis on equity and efficiency in
public resource allocation for health.
Introducing equity in health outcomes and public resource
allocation at sub-national level has also been a challenge in the
development of the monitoring and evaluation framework for
HSR implementation. As a result, provincial and sub-provincial
governments may not have the incentives or capacity to comply
with China’s HSR objectives (Brixi 2009; Yang 2011; Yip et al.
2012).
It is worth noting that weaknesses in sub-national public
sector governance also complicate the enforcement of
health-related laws, regulations and standards. For instance,
although China passed a strict national food safety law and
introduced a series of food safety standards in 2009, implementation of the law is poorly regulated, and food safety
problems (such as melamine-contaminated dairy products)
have persisted. Chinese media have also reported enforcement
weaknesses in the areas of environmental, road, industry and
drug and vaccine safety. Possible conflicts of interest at local
level (such as local economic growth vs public health safety)
are not systematically monitored and addressed (Human Rights
Watch 2011; Yang 2011).
Sub-national governments are yet to become truly accountable for local performance in the areas of regulatory and law
enforcement, policy implementation and the financing and
delivery of services, such as health care (Zhou 2010; Bloom
2011; Yang 2011). This has been identified, for instance, in the
context of tuberculosis programme management (Tang and
Squire 2005). Similarly, the case of Shenmu County in Shaanxi
province, where the coal-rich local government implemented a
high-profile HSR pilot, has illustrated the difficulty of building
an adequate surveillance and enforcement capacity at local
level; the National Audit Office reported misappropriation of
health resources, including fake invoices (National Audit Office
2010). Ensuring appropriate implementation of HSR may
require improved monitoring and management of government
performance across sub-national levels.
816
HEALTH POLICY AND PLANNING
The contribution of sub-national governments to
addressing inequity in health
Inequity in public expenditures on health
Fiscal decentralization in the context of uneven economic
development across geographic areas has resulted in greatly
varied fiscal capacity to fund social services (Bloom 2011; Meng
et al. 2012; Yip et al. 2012; C Wong, unpublished data1).
Moreover, the extent of inequity in public spending on health
per capita across provinces has risen since 2001 (Figures 7
and 8). This is also true in other areas of public services, such
as education in the period 2000–8 (Supplementary Figure B1).
Within provinces and also within prefectures, evidence also
suggests that inequity in spending on health is rising. Examples
of rising disparity across prefectures in Inner Mongolia and
Shandong and across district levels in Jinan and Zhengzhou
municipalities are shown in Supplementary Figures B2–B5.
(Supplementary data provides descriptive statistics). Graphs
from other locations in Supplementary Figures B6–B8 show
similar inequity in health spending at sub-national level. A
similar situation appears in government expenditure on education at both prefecture and sub-prefecture levels (Supplementary Figure B9).
Disparity also characterizes the financial benefits offered by
China’s various health security schemes. Figure 9 shows that
whilst China has since 2002 introduced several major new
schemes to benefit previously excluded population groups and
make access to health security more equitable, the size of the
allocations per capita varies widely. There was a 22-fold
difference between the government subsidy offered in 2008 to
employees of public administrative units and organs, and rural
and urban residents in the non-state sector in 2010. (In 2008,
this difference was 65-fold, but 2010 figures for the former
group are not available.) Similarly, in other social sectors,
including old-age pensions and education, China has been
introducing programmes to target the poor, trying to overcome
the overall bias in social sector spending towards better-off
population groups (Xiao 2008). A recent summary of
evaluations of the RCMS concluded that there has been ‘no
measurable effect on reduction of financial risk’. In addition, it
provided data demonstrating wide variations in the pooled
premium by location because of varying ability to augment
central and provincial contributions (Yip et al. 2012). Although
China’s
health
insurance
schemes
have
equitably
increased financial access to health services, they have not yet
reduced the share of healthcare spending in total household
expenditure, which continued to rise and is higher in rural
and central/western than urban and eastern areas (Meng
et al. 2012).
Weaknesses in allocative efficiency
Across provinces, government health resources are not matching the needs (Fang et al. 2010). Figure 10 shows that in 2007–9
(the most recent year for which relevant data is available)
provinces with a proportionally larger rural population spent
less on health per capita. This situation is a reflection of both
incentives and fiscal space at the provincial level. It prevailed
despite increasing central government earmarked allocations
notionally targeting the rural poor [hospital delivery subsidies
for rural women; the introduction of fee-free vaccination;
Figure 7 Provincial government operating expenditure on health in
relation to local GDP, 2001–6. Note: A new government budget
classification methodology was introduced in 2007. Operating expenditure on health was a pre-2007 term, primarily including government
subsidies to providers and excluding some health security programmes.
From 2007, the definition of health spending was expanded. Sources:
National Bureau of Statistics (2011, Published annually a).
Figure 8 Provincial government expenditure on health in relation to
local GDP, 2007–8. Source: National Bureau of Statistics (2011, Published
annually a).
increasing and tiered RCMS payments; and basic public health
payments indexed by provincial ability to pay (Yip et al. 2012)],
and despite official data indicating the poorer health status of
the rural population and the lower affordability of health
services for the rural poor (Ministry of Health Centre for Health
Statistics and Information 2004, 2009).
Inequitable access to essential care
China is clearly striving to improve access to a basic package of
clinical and public health services, yet inequalities in access to
care remain significant. China has achieved success in expanding access to care particularly under flagship programmes such
as maternity care and access to inpatient services (Meng et al.
2012; Yip et al. 2012). However, there remains inequality in
physical access to some public health services evidenced by
unequal rates of child vaccination and hospital delivery by
socio-economic region (MOH, WHO, UNICEF, UNFPA 2006;
ENGAGING SUB-NATIONAL GOVERNMENTS IN CHINA’S HEALTH REFORM
3000
Per capita government
funding (RMB) in 2008 or
2010
2500
Programme for Employees of
Public Administrave Units
and Organizaons
(10 million) 2008
2000
2629
1500
Programme for
Employees of Public
Sector Services Units
and Organs (39
million) 2008
1000
817
533
500
RCMS
(832
million)
2010
126
Urban MFA
(16.1 million)
2010
Rural MFA (50.4
million) 2010
(bubble
covered)
279
171
100
0
120
GFYL
Urban Residents' BMI
(195million) 2010
-500
Year of
1950s
launch
2002
1990s
2003
2007
Figure 9 Per capita government funding for and numbers of beneficiaries of social health protection programmes, 2008 and 2010. Note: Bubble size
is equivalent to the number of participants. Number of participants is shown in parentheses. Government spending per participant is shown.
Government funding figures are annual per person, except for the rural and urban MFA, reported per case. RMB ¼ renminbi; GFYL ¼ gong fei yi liao,
the original civil servant health benefit scheme; URBMI ¼ urban residents’ basic medical insurance scheme. Sources: Ministry of Health (2011b,
Figures published annually).
1000
900
800
700
600
govt. health
pending per
capita (RMB)
500
2007
400
2009
300
200
100
0
0
20
40
60
80
100
rural populaon as % of total populaon in provinces
Figure 10 Provincial government health spending per capita by
proportion of rural population, 2007 and 2009. Source: Ministry of
Finance (Published annually) and National Bureau of Statistics
(Published annually b).
Zhou et al. 2009; Feng et al. 2010), and citizens’ financial access
to health services in China remains inequitable (Meng et al.
2012). The remaining share of OOP in total health expenditure,
and the incidence of catastrophic health expenditures and of
self-discharge from hospital for financial reasons continue to
demonstrate considerable inequality within as well as across
urban and rural localities (Meng et al. 2012). Around 10% of
low-income rural households experienced catastrophic health
spending in 2003 and 2008, the incidence of which increased
from 4 to 6% in urban areas over this period (Figure 11),
possibly reflecting the difficulties faced by rural migrants who
live but often lack coverage in urban areas. For instance, a
survey including both urban and rural migrant residents in five
cities reported a staggering 140% of ‘annual’ per capita income
in the poorest quintile (compared with 10% in the richest
quintile) spent by households for a single average hospitalization episode (Brixi 2009). More recent analysis suggests little
progress in this area (Meng et al. 2012), although an equivalent
survey will not be done until 2013. The average OOP payment
(after insurance reimbursement) for a single inpatient stay in
2008, again the most recent year for which relevant data is
available, was 50–70% of annual income per capita in rural
areas, about twice the levels common in urban areas (Figure
12). Moreover, to some extent, the funding increases for rural
health care through the RCMS and specifically through
subsidies for hospital delivery may have been associated with
cost inflation, limiting the reduction in absolute OOP payments
per intervention (Figure 13) (Wagstaff et al. 2009; Bogg et al.
2010; Long et al. 2011).
Poor rural households still face financial obstacles in accessing cheap effective care. The government-UN review in 2006
found that preventable conditions accounted for 70% of
neonatal deaths in 2004, particularly in poor rural areas
(MOH, WHO, UNICEF, UNFPA 2006); this was subsequently
verified for newborns born in 2007–8 (Feng et al. 2011). A
review of under-five deaths in China (Rudan et al. 2010) also
infers that a majority of these would be preventable with
interventions that are commonly available and cheap.
818
HEALTH POLICY AND PLANNING
and likely to improve only over a period of a few decades
(Anand et al. 2008). Finally, early evaluations of the attempts by
the HSR to reduce the cost of drugs suggest uncertain progress
in its impact on assuring the appropriate use of the cheapest,
reliable quality medications, a major issue in the cost and
quality of China’s health care (Yip et al. 2012).
Figure 11 Catastrophic health expenditure among low-income households, 2003 and 2008. Note: According to China’s NHSS, OOP health
spending is catastrophic when exceeding 40% of annual household
(HH) consumption. Low-income HHs are those with per capita annual
income below 50% of the mean annual HH income in the jurisdiction.
Sources: Ministry of Health Centre for Health Statistics and Information
(2004, 2009).
12000
80
60
cost in RMB
8000
6000
40
4000
20
% of annual income per capita
10000
2000
0
0
large cies medium small ciesrural type I
cies
average total cost
type II
average OOP
type III
type IV
share
Figure 12 Average cost and OOP expenditure on in patient care after
insurance reimbursement and as a proportion of relative annual income
per capita, by urban–rural typology, 2008. Note: The China MoH urban–
rural socio-economic typology system is described in the 2006 joint
government–UN review and in the literature (MOH, WHO, UNICEF,
UNFPA, 2006; Wang et al. 2011). Source: Ministry of Health Centre for
Health Statistics and Information (2009).
Complementing the affordability problem facing China’s poor
rural populations, the quality of care in rural facilities is
relatively low (Bloom 2011). An unpublished UNICEF evaluation of 50 rural counties in 13 western provinces found that
only 10% of non-project comparison counties were providing
appropriate antenatal care and the MoH itself tacitly acknowledges the low proportion of health facilities adequately
equipped to provide safe, quality maternity care through its
prioritization of staff and equipment for MCH services in its
new HSR allocations. This does not touch on the health
qualifications of many rural staff in China, known to be poor
Selected productive inefficiencies in relation to equity
As in many other countries, public resources in China are
biased towards higher-level facilities in urban areas, which
disproportionately benefit higher-income households (Meng
2007) and consume available public funding for health
inequitably.
Advanced care in China’s cities is available at levels comparable with advanced economies (Organisation for Economic
Cooperation and Development 2010) and various life-cycle
indicators match or exceed those of the developed world (Fang
et al. 2010). Beijing and Shanghai, for instance, report prevalence of magnetic resonance imaging machines and other
advanced medical equipment—funded partially by public resources—exceeding levels common in European cities (Chen
et al. 2007). Access to such advanced care, however, depends on
household income and the type of social health protection
programme. Moreover, primary care in urban areas has been
unnecessarily expensive, often delivered by hospitals and
specialized doctors instead of community health centres
(Anand et al. 2008). In contrast, the fraction of public resources
that benefits rural (township) health centres is disproportionately small (Figure 14), while poor quality of care and irrational
use of drugs remain serious problems there (Blumenthal and
Hsiao 2005; Yip et al. 2012).
The bias towards advanced care continues to surface in the
process of HSR implementation at the local level. The detailed
design and implementation of most of the social protection
schemes in health, including the RCMS, MFA and Urban
Residents’ Basic Medical Insurance (URBMI), occurs at county/
district level (Yip et al. 2012). Research in 2008 estimated that
only 15% of counties covered outpatient and inpatient care in
their RCMS schemes (Hu 2008). A more recent appraisal using
administrative data found that as of 2010, the beneficiaries of
both the RCMS and the URBMI had to pay 60–70% of their
outpatient expenditure, and that the prevailing predominantly
fee-for-service payment schemes continued to provide incentives to doctors to admit patients for ailments that could be
treated more cost-effectively at home (Yip et al. 2012). Recently,
the RCMS introduced almost full cost coverage for treating
childhood leukaemia and some congenital heart diseases, and
policy discussions and local pilots explore the possible inclusion
of other costly interventions in the scheme. Given the RCMS’s
resource limitation, the inclusion of costly treatments may
jeopardize adequate coverage of (including reimbursement rates
for) primary care.
OOP payments as a share of medical bills remain significantly
higher for outpatient care compared with inpatient care in both
urban and rural areas (Yip et al. 2012). The most recent
full-scale National Health Services Survey (NHSS) (Ministry of
Health Centre for Health Statistics and Information 2009)
showed that in 2008, 33% of patients received partial reimbursement for outpatient care compared with 85% who received
ENGAGING SUB-NATIONAL GOVERNMENTS IN CHINA’S HEALTH REFORM
120
117
108
105
100
1600
89
80
1200
60
800
40
400
20
2008 Out-of-pocket as % of 2003 Out-of-pocket
Hospital Delivery out-of-pocket payment (RMB)
2000
819
2008 hospital delivery average outof-pocket payment (aer RCMS
reimbursement)
2003 hospital delivery out-ofpocket (without RCMS coverage)
Hospital delivery out-of-pocket
payment in 2008 relave to 2003
0
0
Large
cies
Medium
Cies
Small
Cies
Type I
Type II
Urban
Type III
Type IV
Rural
Figure 13 OOP expenditure for hospital delivery, 2003–8. Sources: Ministry of Health Centre for Health Statistics and Information (2004, 2009).
2200
2000
1800
1600
Revenue of 1400
providers 1200
(in RMB 100 1000
million)
800
600
400
200
0
Government subsidy
Medical service fees
Drug revenues
Other revenues
City hospitals
County hospitals
Township centers Community centers
Figure 14 The distribution of government subsidy across providers, 2008. Source: Ministry of Health (Figures published annually).
partial reimbursement (averaging 35% of medical bills) for
inpatient care. A 2008 citizens’ scorecard survey in five cities
showed that OOP payments as a share of medical bills were
much higher for outpatient care compared with inpatient care,
and reached 84% of ‘monthly’ per capita income among
patients in the poorest quintile (compared with 11% in the
richest quintile) for an average outpatient visit (Brixi 2009).
Data from 2010 infer that this situation has improved, as the
number of urban districts covering outpatient care had almost
quintupled to 57.5% from 2008 to 2010, and in rural counties it
had almost tripled to 79%, in both cases with rates even higher
for major and chronic diseases. Modest increases in the
inpatient reimbursement rates (to 47.9 and 43.9%, respectively)
had also occurred (Yip et al. 2012).
Previous attempts to influence sub-national
government health financing
China’s recent HSR framework includes many appropriate
elements to promote equity, cost-effectiveness and overall
operational efficiency in public resource allocation in health.
Efforts to expand universal health insurance and financial
assistance for the poor, to allow cost-recovery in primary care,
implement a new list of essential medicines, reduce dependence
on drug sales and service fees in provider payment mechanisms, strengthen health centres and enhance the management
of public hospitals are all included. Furthermore, Government
has invested in improving health infrastructure and training of
staff.
In addition, China’s State Council recently announced a new
phase of HSR (Ministry of Health 2012). The 2012–15 plan
focuses on many of the areas recommended in recent reviews
(Meng et al. 2012; Yip et al. 2012), including expanding
insurance benefits and unifying China’s several health insurance schemes; encouraging the development of commercial
insurance, the private sector (targeted to manage 20% of health
services by 2015), capitation and other payment reforms to
separate doctors from the financial management of hospitals;
health worker performance-based funding and family general
820
HEALTH POLICY AND PLANNING
practice; expanding community and public health services, and
consolidation and regulation of drug production, prescription
and pricing. The guidance is encouragingly specific on matters
of health strategy, but remains vague on accountability and
local spending responsibilities, stipulating only that government
health spending gradually increases as a proportion of total
recurrent fiscal expenditure.
Achieving the HSR objective of improving equity in the ability
of citizens to utilize essential care and in health outcomes
amidst the large and growing disparities in economic development and incomes across localities and population groups,
however, will require a stronger function of public finance
towards promoting equity and efficiency at sub-national levels.
The evidence provided above implies that regressive public
resource allocation in the health sector, driven by the uneven
fiscal capacity and incentive misalignments at the sub-national
levels, has been contributing to the existing disparities and
inefficiencies in access to care.
Although it is too early to draw lessons, promising new
initiatives in public finance and governance have been piloted
at sub-national level in recent years. For example, in
Chongqing, efforts to integrate management of urban and
rural health insurance schemes at provincial level have the
potential to address intra-province inequity. Chongqing is also
experimenting with capitation payment for outpatient services
in this health insurance scheme, to reduce the burden of OOP
payments on more cost-effective outpatient care. In Henan, the
government is paying for public health services for the rural
population based on performance of providers, incorporating
feedback from citizens on services as part of the evaluation tool.
These initiatives are valuable in promoting sub-national equity
in health sectors, a stepping stone to nationwide equity in
health outcomes.
The role of earmarked transfers to implement national
priorities
To implement national priorities, the central government has
been circumventing the weaknesses in resource allocation at
sub-national government levels by increasingly relying on
vertical programmes and earmarked special-purpose transfers.
For example, from 2003 to 2010, the number of vertical public
health programmes increased from 10 to 44, with the total
budget growing from RMB 1.03 billion to RMB 22.01 billion
(name withheld, China Ministry of Finance 2012, personal
communication). Most increases in health funding at the
central level took the form of earmarked allocations. In 2009,
when the HSR was unveiled, six new public health initiatives
related to hepatitis B, folic acid deficiency, fluorosis, cervical
and breast cancer, cataract treatment and rural water and
sanitation were added to the hundreds of other earmarked
transfers in the health sector (over 100 of them in public health
alone). In 2009, central government transfers for the health
sector (which accounted for RMB 112 billion, constituting 95%
of the central government expenditure on health) were in the
form of earmarked transfers only, with no general-purpose
transfers (Chen and Li 2010).
Across sectors, China’s earmarked transfers from the central
government budget have supported programmes that attempt
to reduce inter-provincial and rural–urban disparity. These
earmarked transfers are of three main types:
(a) Targeted vertical schemes, such as hospital delivery
subsidies for rural women; improvements to China’s
vaccination programme; the six public health initiatives
listed above and a 15 (now 25) RMB per capita public
health payment, variably implemented by county health
authorities (Yip et al. 2012), and support for 9 years of
compulsory education;
(b) social protection payments, such as the various insurance
schemes, dibao cash transfers for the rural poor and
transfer programmes for special population groups in
need; and
(c) infrastructure investments, such as construction of health
facilities and improvement of drinking water sources,
sanitation and rural access roads (Brixi 2009).
In health, around 50% central government earmarked transfers are spent on insurance premiums, 30% on infrastructure
and training (especially for rural and primary healthcare
facilities) and 10–16% on provision of public health services
(Yip et al. 2012). These earmarked transfers may have
contributed to some of the reduction in disparity in selected
outcomes across provinces and across the rural and urban areas
nationally. For example, earmarked transfers for basic compulsory education, complemented by close monitoring of student
enrolments have helped strengthen basic education across
China. Similarly, earmarked transfers and intensive real-time
monitoring have facilitated successful roll-out of the dibao cash
transfer scheme nationwide. Such funds are also the main
reason for the massive and equitable increases in hospital
delivery rates, health insurance enrolments and health service
access and uptake (Meng et al. 2012).
However, the reliance on earmarked transfers for such
programmes generates concerns about the sustainability of
any observed improvements and the predictability of funding at
the local level. Furthermore, the selection of programmes for
earmarked transfers may depend on technical or sectoral
agencies’ or local governments’ lobbying ability rather than
on a rigorous assessment of needs (examples include free
treatment of child leukaemia and congenital heart disease,
funding of multiple antenatal ultrasound scans and folic acid,
but not iron-folate supplementation for pre-pregnant and
pregnant women). Moreover, field investigations have revealed
weaknesses in monitoring and in compliance in the use of
earmarked transfers. For instance, county governments may
offset earmarked transfers by cutting operating budget or
raising staff numbers in the transfer recipient agencies (Circular
of National People’s Congress Standing Committee 2010).
Finally, although vertical programmes and earmarked transfers help deliver results in specific areas they may not
adequately support effective HSR implementation in the
longer term. The large number of vertically funded health
interventions seems to contradict the HSR’s managementstrengthening objectives and principles of sound public finance
management. In particular, China’s proposed universal primary
healthcare system (Government of China 2011) will be difficult
to consolidate when it comprises a large group of narrowly
defined vertical programmes.
ENGAGING SUB-NATIONAL GOVERNMENTS IN CHINA’S HEALTH REFORM
Improvements in China’s intergovernmental and decentralization systems—including measures to strengthen accountability of sub-national governments—appear necessary to
eventually allow for reducing the reliance on earmarked
transfers and for expanding the use of general purpose
transfers, as discussed in the next section.
Options for future public financing and governance
reforms to support HSR implementation
Our analysis indicates that HSR implementation may demand
better alignment between financing, sub-national government
decision making and China’s national priorities. The challenge
is how to ensure that sub-national governments have their
responsibilities clearly defined in line with the national policies,
standards, laws and regulations, how these responsibilities are
implemented (ensuring that sub-national governments have
and allocate resources adequately to fulfil their responsibilities)
and how this is independently, reliably and regularly monitored. International experience suggests that this may require
strengthening accountability relationships across government
levels and agencies, and between government agencies, service
providers and citizens (World Bank 2004; Zhou 2010). Stronger
accountability relationships—contributing to the alignment of
sub-national government incentives with national policy
priorities—would, in turn, allow for an increasing volume of
and reliance on general-purpose equalization grants as opposed
to earmarked transfers in implementing national policies and
reforms, such as HSR.
China is not unique in facing the challenge of aligning central
control and local autonomy, but is unique in the extent to
which national policy is separated from its financing, detailed
design, implementation and monitoring. The resourcing of
national policy is a critical issue in China, not only in the health
sector. International comparison demonstrates that China is an
outlier in the extent to which government expenditure is
decentralized and to which sub-national expenditure outweighs
official sub-national revenue. This underscores the dependence
of poorer sub-national authorities on intergovernmental transfers and the dependence of sectoral authorities at national level
on the co-operation of their counterparts at sub-national level
for policy implementation (C Wong, unpublished data1). For
poorer sub-national units, this may simply be unrealistic, as
even off-budget revenues may be too low to make national
policy affordable, a situation that may worsen for the health
sector as the population ages and health care becomes more
expensive. Promotion of health equity may require further
centralization of health financing, as is being observed in
Europe and the UK (Saltman 2008) and Australia (Bennett
2010). In China’s context, such centralization may imply the
reallocation of responsibilities from the lower government
levels, such as township, county and prefecture, to the level
of provinces and central government.
Given China’s size and decentralization in financing and
delivery of public services, strengthening the role and accountability of provincial governments will be crucial. Provincial
governments may have to become explicitly responsible for
equity and efficiency in public resource allocation, for national
policy implementation, enforcement of laws, standards and
regulations and for adequate health system performance, at
821
output and outcome levels, within the entire province. The
central government could specify viable fiscal targets for
expenditure on primary health care across provinces and
define the outputs and outcomes that each province should
achieve in an equitable and cost-effective manner in the
context of HSR. Making provincial governments explicitly
responsible for results in HSR implementation at all levels
may strengthen their commitment to improving public resource
allocation, compliance and performance monitoring across
levels in each province.
Furthermore, HSR may involve consolidating key financing
responsibilities and schemes at the provincial level. A single
agency at the provincial level, for instance, could manage all
social protection schemes in health (including the RCMS,
Urban Employee Basic Medical Insurance, URBMI and MFA
schemes). Pooling resources for each of these schemes at the
provincial level would help address intra-provincial inequity. In
addition, province-level agencies could develop capacity to
establish a viable contracting and performance evaluation
arrangement with the providers of care. Provinces could be
incentivized to explore alternative service purchasing and
payment mechanisms, based on schemes already piloted locally
and abroad, to improve efficiency of service provision.
Moreover, provincial governments could boost their capacity
to monitor the use of public resources by replacing the existing
cascading system of transfers (which moves resources through
several levels of government before they are actually spent)
with direct payments from the provincial treasury system (via a
treasury single account that is already operational in many
provinces).
Importantly, the central government will have to effectively
monitor and evaluate the use of public resources, policy
implementation and overall service delivery performance
across provinces, holding the provincial governments to account. This may become easier with the comprehensive new
health management information system announced by the
Ministry of Health in 2011. With a budget of RMB 22 billion,
this system will potentially feed real-time information upwards
to decision makers and health resource managers, as well as
enabling top-down monitoring of the health sector.
Complementing this information system, citizen score card
surveys could become a useful innovative tool to gather citizens’
feedback regarding their experience with public services,
including their ability to utilize primary care and other services,
the required fees and OOP payments, their ability to access
relevant information and resolve complaints, and their satisfaction with services and with the performance of service
providers, insurance schemes, local government agencies and
others. Such a direct mechanism for obtaining citizens’ feedback would allow the central government to better assess policy
implementation performance at the local level, particularly with
respect to equity and quality in service delivery (Brixi 2009).
This can draw on China’s recent local pilots of citizens’ engagement in evaluating local government performance (Zhou 2010).
Independent assessment could effectively inform a comprehensive performance management system (another planned
health initiative, also announced in 2011) and help strengthen
accountability at the provincial and sub-provincial levels (across
government agencies and providers) for the delivery of health
822
HEALTH POLICY AND PLANNING
care and other public services and their outcomes. A strong
monitoring, evaluation and performance management system,
internalizing and addressing citizens’ feedback, with respect to
service delivery (outputs) and its outcomes and public resource
allocation at the local level, will boost incentives (and hence
allow for greater autonomy) at the provincial and
sub-provincial levels.
Improvements in public sector governance would most likely
generate equitable improvements in the health of China’s
citizens independent of the HSR. This is because public
governance reforms would also enhance essential public service
delivery in line with national policies across sectors, improving
the social determinants of health such as access to safe water,
sanitation, basic education, housing, rural access roads, social
assistance and others (World Health Organization 2008a).
The health system strengthening agenda across countries has
largely taken decentralization and governance constraints as
given and exogenous (Hanson andet al. 2003; Phyllida et al.
2004). China, however, approached HSR with such a high level
of government commitment that recognizing the broader
institutional constraints of HSR might in fact help motivate
improvements in public sector governance.
Conclusions
Similar to international experience, our analysis suggests that
the behaviour and resource constraints of sub-national governments may inhibit the implementation of China’s HSR.
Measures to: (1) consolidate key health financing resources
and responsibilities at the provincial level and strengthen the
accountability of provincial and sub-provincial governments;
(2) set targets for primary healthcare expenditure, outputs and
outcomes for each province; and (3) use independent sources to
monitor and evaluate policy implementation, service delivery
and the use of public resources towards enhancing the
management of sub-national government performance would
facilitate HSR implementation in China.
Supplementary Data
Supplementary data are available at HEAPOL online.
Authorship
H.B. designed and led the analysis. M.Y. contributed to the
study design and analysis. All authors conducted the systematic
review of the available literature and evidence in their areas of
expertise, extracted the available data and information from the
original sources, conducted the analysis, provided important
intellectual and material input and contributed substantively to
drafting the paper.
Disclaimer
The views expressed herein are those of the authors alone, and
do not necessarily reflect those of the agencies employing them.
Acknowledgements
We thank Prof. Liu Shangxi (Research Council for Fiscal
Science, Ministry of Finance), Dr Yang Hongwei (China Health
Development and Research Center, Ministry of Health), Dr Shi
Guang (Policy and Legislation Department, Ministry of Health),
Prof. Liu Mingda (formerly with the Finance Bureau of
Guangxi Zhuang Autonomous Region), Dr Gong Sen (State
Council’s Development Research Centre), Dr John Langenbrunner (World Bank) and Dr Sarah Barber (World Health
Organization, China Office) for advice and comments, and
Jennifer Fong for assistance in data collection and analysis.
Chen Chunming and Chang Suying permitted their personal
communication to be cited. This research was funded by
UNICEF China.
Conflict of interest statement: None declared.
Endnotes
1
http://www.cairncrossfund.org/download/%E5%8D%81%E4%BA%8C%
E4%BA%94%E9%A1%B9%E7%9B%AE%E6%8A%A5%E5%91%8A/
Background%20Papers/Wong%20-%20January%20version_Public_
Sector_Reforms_toward_HSP%20final2.pdf
References
Anand S, Fan VY, Zhang J et al. 2008. China’s human resources for
health: quantity, quality, and distribution. Lancet 372: 1774–81.
Bennett CC. 2010. Taking the first step toward a healthier future. Medical
Journal of Australia 192: 510.
Bloom G. 2011. Building institutions for an effective health system:
lessons from China’s experience with rural health reform. Social
Science and Medicine 72: 1302–09.
Blumenthal D, Hsiao W. 2005. Privatization and its discontents—the
evolving Chinese health care system. New England Journal of
Medicine 353: 1165–70.
Bogg L, Huang K, Long Q, Shen Y, Hemminki E. 2010. Dramatic
increase of Cesarean deliveries in the midst of health reforms in
rural China. Social Science and Medicine 70: 1544–9.
Brixi H. 2009. China: Urban Services and Governance. Policy Research Working
Paper No. 5030. Washington DC: The World Bank.
Chen BW, Yin DL, Hao MH, Guo JH, Deng XH. 2007. Allocation
planning for big medical equipment in China. China Medical
Equipment 6: 8–11.
Chen C, Li S. 2010. Discussion on the ways of Chinese central finance
health transfer payment. China Health Economics 1: 7–9.
Chengdu Bureau of Statistics. 2010. Chengdu Social Development Report.
Chengdu: Chengdu Development and Reform Commission.
China Development Gateway. 2011. Detailed Financial Report on China’s
Health Care Reform. http://cn.chinagate.cn/indepths/2011lh/2011-03/
09/content_22095171.htm, accessed 10 May 2012 (in Chinese).
Circular of National People’s Congress Standing Committee. 2010. Audit
Working Report on Central Budget Implementation and Other Financial
Revenues and Expenditures in 2009. Beijing: China National People’s
Congress.
Fang PQ, Dong SP, Xiao JJ et al. 2010. Regional inequality in health and
its determinants: evidence from China. Health Policy 94: 14–25.
Feltenstein A, Iwata S. 2005. Decentralization and macroeconomic
performance in China: regional autonomy has its costs. Journal of
Development Economics 76: 481–501.
ENGAGING SUB-NATIONAL GOVERNMENTS IN CHINA’S HEALTH REFORM
Feng X, Guo S, Hipgrave D et al. 2011. China’s facility-based birth
strategy and neonatal mortality: a population-based epidemiological study. Lancet 378: 1493–500.
Feng XL, Zhu J, Zhang L et al. 2010. Socio-economic disparities in
maternal mortality in China between 1996 and 2006. BJOG: An
International Journal of Obstetrics & Gynaecology 117: 1527–36.
Gansu Provincial Bureau of Statistics. 2010. Social Progress in Gansu.
Lanzhou: Gansu Provincial Bureau of Statistics.
Government of China. 2011. State Council Guidance on Further
Strengthening the Ranks of Rural Doctors. http://www.gov.cn/zwgk/
2011-07/14/content_1906244.htm, accessed 20 August 12 (in
Chinese).
Hanson K, Ranson MK, Oliveira-Cruz V et al. 2003. Expanding access to
priority health interventions: a framework for understanding the
constraints to scaling-up. Journal of International Development 15:
1–14.
823
MOH, WHO, UNICEF, UNFPA. 2006. Joint Review of Maternal and Child
Survival Strategy. Beijing: China Ministry of Health.
National Audit Office. 2010. National Audit Report on Central Budget
Implementation and Uses of Other Financial Resources. Beijing: National
Audit Office.
National Bureau of Statistics. 2011. China Statistical Yearbook 2011. http://
www.stats.gov.cn/tjsj/ndsj/2011/indexch.htm, accessed 10 May
2012 (in Chinese).
Organisation for Economic Cooperation and Development. 2010. OECD
Health Data. Paris: OECD.
Phyllida T, Sara B, Andy H et al. 2004. Public health: overcoming
health-systems constraints to achieve the millennium development
goals. Lancet 364: 900–6.
Rudan I, Chan KY, Zhang JS et al. 2010. Causes of deaths in children
younger than 5 years in China in 2008. Lancet 375: 1083–9.
Hipgrave D. 2011. Communicable disease control in China: from Mao to
now. Journal of Global Health 1: 223–37.
Saltman RB. 2008. Decentralization, re-centralization and future
European health policy. The European Journal of Public Health 18:
104–6.
Hu S. 2008. The implementation and evaluation of the Rural
Cooperative Medical Insurance Scheme. China Health Economics 2:
28–9.
Tang S, Squire SB. 2005. What lessons can be drawn from tuberculosis
(TB) control in China in the 1990s? An analysis from a health
system perspective. Health Policy 72: 93–104.
Human Rights Watch. 2011. ‘‘My Children Have Been Poisoned’’: A Public
Health Crisis in Four Chinese Provinces. New York: Human Rights
Watch.
The Central Committee of the Communist Party of China. 2009. Circular
No.60. The Central Committee of CPC and the State Council’s Joint
Guidelines for Deepening the Medical and Health Sector Reform. Beijing:
CCCPC.
Jin HH, Qian YY, Weingast BR. 2005. Regional decentralization and
fiscal incentives: federalism, Chinese style. Journal of Public
Economics 89: 1719–42.
Long Q, Zhang Y, Raven J et al. 2011. Giving birth at a health-care
facility in rural China: is it affordable for the poor? Bulletin of the
World Health Organization 89: 144–52.
Ma J, Zhao M. 2007. Improve the design of medical financial assistance
programme and build a harmonious society—implementation of
MFA in Shanghai. China Health Economics 10: 14–8.
Meng Q. 2007. Equity, efficiency and sustainability of health financing
in China. Health Economics Study 4: 10–2.
Meng Q, Xu L, Zhang Y et al. 2012. Trends in access to health services
and financial protection in China between 2003 and 2011: a
cross-sectional study. Lancet 379: 805–14.
Ministry of Education, National Bureau of Statistics, Ministry of
Finance. 2010. The 2009 Statistical Notice on National Education
Expenditure. Beijing: Ministry of Education.
Ministry of Finance. Published annually. Public Finance Statistical
Yearbook. Beijing: Ministry of Finance.
Ministry of Health. 2011a. China 2010 Health Statistical Yearbook. Beijing:
China Ministry of Health.
Ministry of Health. 2011b. Health Statistical Yearbook China 2010. http://
www.moh.gov.cn/publicfiles/business/htmlfiles/zwgkzt/ptjnj/
year2010/index2010.html, accessed 10 May 2012 (in Chinese).
Ministry of Health. 2012. China’s State Council Announcement on Deepening
Medical and Health System Planning and Implementation of the Program
during the 12th Five Year Plan. http://www.moh.gov.cn/publicfiles/
business/htmlfiles/mohzcfgs/s9660/201203/54386.htm, accessed 20
August 12 (in Chinese).
Ministry of Health. Figures published annually. National Health Account
Reports. Beijing: China Ministry of Health.
Ministry of Health Centre for Health Statistics and Information. 2004.
An Analysis Report of the Third National Health Services Survey in China
in 2003. Beijing: China Union Medical University Press.
Ministry of Health Centre for Health Statistics and Information. 2009.
An Analysis Report of the Fourth National Health Services Survey in China
in 2008. Beijing: China Union Medical University Press.
Uchimura H, Jütting J. 2007. Fiscal Decentralization, Chinese Style: Good for
Health Outcome? OECD Development Centre Working Paper #264. Paris:
OECD.
UNDP China and China Institute for Reform and Development. 2008.
China National Human Development Report 2007/2008: Access for all:
Basic Public Services to Benefit 1.3 billion People. Beijing: UNDP.
Wagstaff A, Lindelow M, Jun G, Ling X, Juncheng Q. 2009. Extending
health insurance to the rural population: an impact evaluation of
China’s new cooperative medical scheme. Journal of Health
Economics 28: 1–19.
Wang L, Wang Y, Jin S et al. 2008. Emergence and control of infectious
diseases in China. Lancet 372: 1598–605.
Wang X, Höjer B, Guo S et al. 2009. Stunting and ’overweight’ in the
WHO child growth standards—malnutrition among children in a
poor area of China. Public Health Nutrition 12: 1991–8.
Wang YP, Miao L, Dai L et al. 2011. Mortality rate for children under
5 years of age in China from 1996 to 2006. Public Health 125:
301–7.
World Bank. 2004. The World Development Report: Making Services Work for
Poor People. Washington DC: The World Bank.
World Bank. 2009. Reforming China’s Rural Health System. Washington
DC: The World Bank.
World Bank. 2012. China 2030: Building a Modern, Harmonious, and Creative
High-Income Society. Washington DC: The World Bank.
WHO. 2008a. Commission on Social Determinants of Health. Geneva: WHO.
WHO. 2008b. World Health Statistics. Geneva: WHO.
WHO. 2009. Global Health Observatory Data Repository. Geneva: WHO.
World Health Organization China Country Office. 2007. Health in China’s
Harmonious Society: Building Health System to Benefit All. Beijing:
WHO.
Xiao Y. 2008. Equity of pension system in China. Shanghai Economic
Research 8: 18–23.
Xing L, Fen S, Luo X, Zhang X. 2008. Intra rural income disparity in
West China. China Economic Quarterly 1: 329–50.
Xinhua News Agency. 2012. Twelve Five: Financial Sustainability at all
Levels to Increase Investment in Helping Doctors. http://www.chinadaily.
824
HEALTH POLICY AND PLANNING
com.cn/hqgj/jryw/2012-04-28/content_5795279.html, accessed 10
May 2012 (in Chinese).
Yang DL. 2011. The central–local relations dimension. In: Freeman CW,
Lu XQ (eds). Implementing Health Care Reform Policies in China.
Washington DC: Centre for Strategic and International Studies,
pp. 21–9.
Ying Y. 2009. The Benefit for Women and Children in the Rural Cooperative
Medical Scheme. Beijing: UNICEF China.
Yip WC-M, Hsiao WC, Chen W et al. 2012. Early appraisal of China’s
huge and complex health-care reforms. Lancet 379: 833–42.
Zheng M, Fu Q, Wang X. 2008. Comparative study on structural changes
in income disparities in urban households in Chongqing
Municipality, Shanghai Municipality and Sichuan Province.
Journal of Reform and Strategy 5: 98–101.
Zhou LA. 2010. Incentives and Governance: China’s Local Governments.
Singapore: Cengage Learning Asia Pte. Ltd.
Zhou Y, Wang H, Zheng J et al. 2009. Coverage of and influences on
timely administration of hepatitis B vaccine birth dose in remote
rural areas of the People’s Republic of China. The American Journal
of Tropical Medicine and Hygiene 81: 869–74.