xii DEEPENING HEALTH REFORM IN CHINA Council,China;and Shangxi Liu,Director- Ali,Todd Lewis,Hannah Ratcliffe,Asaf General Chinese Academy of Fiscal Sciences Bitton,Gerard La Forgia(Chapter Four); A Technical Working Group (TWG), Gerard La Forgia,Antonio Duran,Jin Ma, consisting of technical leads from each of Weiping Li,Stephen Wright(Chapter Five); the government agencies as well as the WBG Mukesh Chawla,Mingshan Lu(Chapter Six); and WHO,was formed at the beginning Shuo Zhang,Edson Araujo(Chapter Seven); of the Study.The TWG has led technical Karen Eggleston,Barbara O'Hanlon,Mirja communications,provided important Sjoblom (Chapter Eight);James Cercone, comments and facilitated research data from Mukesh Chawla(Chapter Nine);and,Kedar different departments of the Ministries. S.Mate,Derek Feeley,Donald M.Berwick, Members of the TWG included:Licheng and Gerard La Forgia(Chapter Ten).Mukesh Yao,Xiang Peng,Lei Wang,Min Wang Chawla,Joy De Beyer,Aakanksha Pande and (MOF),Ning Zhuang,Yue Liu,Kun Qin, Rachel Weaver did the technical and content Shuli Zhao,Yahui Jiao,Kai Chen(NHFPC), editing of the final report. Guodong Wang,Zhihong Zhao,Chengjin Case studies and background studies Song (MoHRSS),Gerard La Forgia,Shuo were drawn from twenty one provinces and Zhang,Rui Liu(WBG),and Martin Taylor, municipalities in China,including Beijing, Chunmei Wen,Stephanie Dunn (WHO). Shanghai,Tianjin,Chongqing,Sichuan, Within the World Bank Group,Gerard Yunnan,Guizhou,Ningxia,Qinghai, La Forgia and Mukesh Chawla were the Anhui,Shandong,Guangdong,Jiangsu, Task Team Leaders with significant on the Jiangxi,Henan,Zhejiang,Hubei,Hunan, ground supports from Shuo Zhang in the Fujian,Xiamen and Shenzhen;as well as World Bank Beijing office as well as from internationally from New Zealand,Denmark, Elena Glinskaya,Daixin Li and Rui Liu. Norway,United Kingdom,Germany,United Martin Taylor was the core team member States,Netherlands,Portugal,Singapore, from WHO,with supports from Clive Tan, Brazil and Turkey.A number of international Ding Wang and Tuo Hong Zhang;and, and China experts contributed through these Edward Hsu Jiadi Yu from the International studies.By chapter,they comprised:Hui Finance Corporation(IFC).Mickey Chopra, Sin Teo,Rui Liu,Daixin Li,Yuhui Zhang, Jeremy Veillard,Enis Baris and Patrick Tiemin Zhai,Jingjing Li,Peipei Chai,Ling Lumumba served as the World Bank Group Xu,Yaoguang Zhang,David Morgan,Luca internal peer reviewers of the study reports. Lorenzoni,Yuki Murakami,Chris James, Valuable inputs were received from Simon Qin Jiang,Xiemin Ma,Karen Eggleston, Andrews (IFC);and Hong Wang (Bill and John Goss (Chapter One);Zlatan Sabic, Melinda Gates Foundation).The Joint Study Rong Li,Rui Liu,Qingyue Meng,Jin Ma,Fei team acknowledge media coordination work Yan,Sema Safir Sumer,Robert Murray,Ting from LiLi,translation,proofreading work Shu,Dimitrious Kalageropoulous,Helmut from Shuo Zhang,Rui Liu,Tianshu Chen, Hildebrandt,Hubertus Vrijhoef(Chapter editing work from Rui Liu,Tao Su,and the Two);Xiaolu Bi,Agnes Couffinhal,Layla tremendous administrative support from Tao McCay,Ekinadose Uhunmwangho(Chapter Su,Sabrina Terry,Xuan Peng,Lidan Shen, Three);Weiyan Jian,Gordon Guoen Liu, Shunuo Chen,and Xin Feng. Baorong Yu (Chapter Five);Christoph The report was prepared and coordinated Kurowski,Cheryl Cashin,Wen Chen, under the technical leadership of Gerard La Soonman Kwon,Min Hu,Lijie Wang,Alex Forgia.The chapter authors comprised Tania Leung (Chapter Six);Guangpeng Zhang, Dmytraczenko,Magnus Lindelow,Ye Xu, Barbara McPake Xiaoyun Liu,Gilles Hui Sin Teo (Chapter One);Asaf Bitton, Dussalt,James Buchan (Chapter Seven); Madeline Pesec,Emily Benotti,Hannah Jiangnan Cai,Yingyao Chen,Qiulin Chen, Ratcliffe,Todd Lewis,Lisa Hirschhorn, Ian Jones,Yi Chen (Chapter Eight);Dan Gerard La Forgia(Chapter Two);Ye Xu, Liu(Chapter Nine);Aviva Chengcheng Liu Gerard La Forgia,Todd Lewis,Hannah (Chapter 10).Licheng Yao,Xiang Peng,Yan Ratcliffe,Asaf Bitton(Chapter Three);Rabia Ren (MoF);Ning Zhuang,Kun Qin,Rui
xii DEEPENING HEALTH REFORM IN CHINA Council, China; and Shangxi Liu, DirectorGeneral Chinese Academy of Fiscal Sciences. A Technical Working Group (TWG), consisting of technical leads from each of the government agencies as well as the WBG and WHO, was formed at the beginning of the Study. The TWG has led technical communications, provided important comments and facilitated research data from different departments of the Ministries. Members of the TWG included: Licheng Yao, Xiang Peng, Lei Wang, Min Wang (MOF), Ning Zhuang, Yue Liu, Kun Qin, Shuli Zhao, Yahui Jiao, Kai Chen (NHFPC), Guodong Wang, Zhihong Zhao, Chengjin Song (MoHRSS), Gerard La Forgia, Shuo Zhang, Rui Liu (WBG), and Martin Taylor, Chunmei Wen, Stephanie Dunn (WHO). Within the World Bank Group, Gerard La Forgia and Mukesh Chawla were the Task Team Leaders with significant on the ground supports from Shuo Zhang in the World Bank Beijing office as well as from Elena Glinskaya, Daixin Li and Rui Liu. Martin Taylor was the core team member from WHO, with supports from Clive Tan, Ding Wang and Tuo Hong Zhang; and, Edward Hsu Jiadi Yu from the International Finance Corporation (IFC). Mickey Chopra, Jeremy Veillard, Enis Baris and Patrick Lumumba served as the World Bank Group internal peer reviewers of the study reports. Valuable inputs were received from Simon Andrews (IFC); and Hong Wang (Bill and Melinda Gates Foundation). The Joint Study team acknowledge media coordination work from Li Li, translation, proofreading work from Shuo Zhang, Rui Liu, Tianshu Chen, editing work from Rui Liu, Tao Su, and the tremendous administrative support from Tao Su, Sabrina Terry, Xuan Peng, Lidan Shen, Shunuo Chen, and Xin Feng. The report was prepared and coordinated under the technical leadership of Gerard La Forgia. The chapter authors comprised Tania Dmytraczenko, Magnus Lindelow, Ye Xu, Hui Sin Teo (Chapter One); Asaf Bitton, Madeline Pesec, Emily Benotti, Hannah Ratcliffe, Todd Lewis, Lisa Hirschhorn, Gerard La Forgia (Chapter Two); Ye Xu, Gerard La Forgia, Todd Lewis, Hannah Ratcliffe, Asaf Bitton (Chapter Three); Rabia Ali, Todd Lewis, Hannah Ratcliffe, Asaf Bitton, Gerard La Forgia (Chapter Four); Gerard La Forgia, Antonio Duran, Jin Ma, Weiping Li, Stephen Wright (Chapter Five); Mukesh Chawla, Mingshan Lu (Chapter Six); Shuo Zhang, Edson Araújo (Chapter Seven); Karen Eggleston, Barbara O’Hanlon, Mirja Sjoblom (Chapter Eight); James Cercone, Mukesh Chawla (Chapter Nine); and, Kedar S. Mate, Derek Feeley, Donald M. Berwick, and Gerard La Forgia (Chapter Ten). Mukesh Chawla, Joy De Beyer, Aakanksha Pande and Rachel Weaver did the technical and content editing of the final report. Case studies and background studies were drawn from twenty one provinces and municipalities in China, including Beijing, Shanghai, Tianjin, Chongqing, Sichuan, Yunnan, Guizhou, Ningxia, Qinghai, Anhui, Shandong, Guangdong, Jiangsu, Jiangxi, Henan, Zhejiang, Hubei, Hunan, Fujian, Xiamen and Shenzhen; as well as internationally from New Zealand, Denmark, Norway, United Kingdom, Germany, United States, Netherlands, Portugal, Singapore, Brazil and Turkey. A number of international and China experts contributed through these studies. By chapter, they comprised: Hui Sin Teo, Rui Liu, Daixin Li, Yuhui Zhang, Tiemin Zhai, Jingjing Li, Peipei Chai, Ling Xu, Yaoguang Zhang, David Morgan, Luca Lorenzoni, Yuki Murakami, Chris James, Qin Jiang, Xiemin Ma, Karen Eggleston, John Goss (Chapter One); Zlatan Sabic, Rong Li, Rui Liu, Qingyue Meng, Jin Ma, Fei Yan, Sema Safir Sumer, Robert Murray, Ting Shu, Dimitrious Kalageropoulous, Helmut Hildebrandt, Hubertus Vrijhoef (Chapter Two); Xiaolu Bi, Agnes Couffinhal, Layla McCay, Ekinadose Uhunmwangho (Chapter Three); Weiyan Jian, Gordon Guoen Liu, Baorong Yu (Chapter Five); Christoph Kurowski, Cheryl Cashin, Wen Chen, Soonman Kwon, Min Hu, Lijie Wang, Alex Leung (Chapter Six); Guangpeng Zhang, Barbara McPake , Xiaoyun Liu, Gilles Dussalt, James Buchan (Chapter Seven); Jiangnan Cai, Yingyao Chen, Qiulin Chen, Ian Jones, Yi Chen (Chapter Eight);Dan Liu (Chapter Nine); Aviva Chengcheng Liu (Chapter 10). Licheng Yao, Xiang Peng, Yan Ren (MoF); Ning Zhuang, Kun Qin, Rui
ACKNOWLEDGEMENTS xiii Zhao,Chen Ren (NHFPC);and,officials Yongsheng Fu,Kaihong Xing,Wei Zhang, in provinces provided significant support Jiayue Liu,Chao Li(MoHRSS);Yanfeng Ge, with the coordination of field studies and Sen Gong (Development Research Center mobilizing research data. of the State Council),Shangxi Liu (MoF During the study preparation,six Academy of Fiscal Sciences);Hongwei Yang, technical workshops and several consultative Zhenzhong Zhang,Weiping Li (NHFPC- roundtables were organized with active CHDRC);Dezhi Yu,Junwen Gao,Lijun participation from MoF,NHFPC,MoHRSS Cui,Beihai Xia (Anhui Commission for and select provincial governments.These Health and Family Planning,CHFP); workshops served as platforms for reciprocal Dongbo Zhong,Haichao Lei (Beijing policy dialogue and for receiving timely and CHFP);Xiaochun Chen,Wuqi Zeng,Xu Lin constructive feedback from the government (Fujian CHFP);Xueshan Zhou,Shuangbao partners and researchers on the preliminary Xie (Henan CHFP);Patrick Leahy,Henrik study findings.The following leaders, Pederson (IFC);Xiaofang Han,Qingyue officials,experts made presentations and Meng,Gordon Liu,Jiangnan Cai,Asaf important contributions to the discussions: Bitton,,Jin Ma,Wen Chen,James Cercone, Shaolin Yang,Yingming Yang,Qichao Song, Ian Forde,Barbara O'Hanlon,Karen Haijun Wu,Licheng Yao,,Xuhua Sun,Fei Eggleston,Fei Yan,Guangpeng Zhang, Xie,Xiang Peng,,Lei Wang,Min Wang, Xiaoyun Liu,Qiulin Chen,Min Hu,Lijie Shaowen Zhou,Qi Zhang,Chenchen Ye Wang,Antonio Duran,Dan Liu (World Bank (MoF);Yan Hou,Minghui Ren,Chunlei Consultants),and Bang Chen,Junming Xie, Nie,Yuxun Wang,Wei Fu,Jinguo He, Roberta Lipson,Beelan Tan,Sabrinna Xing, Feng Zhang,Shengguo Jin,Jianfeng Qi, Jane Zhang,Alex Ng,Yuanli Liu,Jianmin Hongming Zhu,Yang Zhang,Ruirong Hu, Gao,Baorong Yu,Mario Dal Poz,James Ning Zhuang,Changxing Jiang,Liqun Liu, Buchan,Ducksun Ahn,Stephen Duckett. Yilei Ding,Yue Liu,Ling Xu,Kun Qin, The study team recognizes and appreciates Ge Gan,Zhihong Zhang,Yongfeng Zhu, additional funding support from Bill and Kai Chen,Yi Wang,Jianli Han,Yan Chen, Melinda Gates Foundation via Results Xiaorong Ji,Yujun Jin,Chen Ren,Rui Zhao, for Development,and,from International Liang Ye,Xiaoke Chen Meili Zhang,Ru Finance Corporation of the World Bank Yuhong,(NHFPC);Qinghui Yan,Shuchun Group.The Joint Study team is also grateful Li,Chengjin Song,Jun Chang,Yutong for all the contribution and efforts from the Liu,Guodong Wang,Zhengming Duan, individuals and teams not named above
ACKNOWLEDGEMENTS xiii Zhao, Chen Ren (NHFPC); and, officials in provinces provided significant support with the coordination of field studies and mobilizing research data. During the study preparation, six technical workshops and several consultative roundtables were organized with active participation from MoF, NHFPC, MoHRSS and select provincial governments. These workshops served as platforms for reciprocal policy dialogue and for receiving timely and constructive feedback from the government partners and researchers on the preliminary study findings. The following leaders, officials, experts made presentations and important contributions to the discussions: Shaolin Yang, Yingming Yang, Qichao Song, Haijun Wu, Licheng Yao, , Xuhua Sun, Fei Xie, Xiang Peng, , Lei Wang, Min Wang, Shaowen Zhou, Qi Zhang, Chenchen Ye (MoF); Yan Hou, Minghui Ren, Chunlei Nie, Yuxun Wang, Wei Fu, Jinguo He, Feng Zhang, Shengguo Jin, Jianfeng Qi, Hongming Zhu, Yang Zhang, Ruirong Hu, Ning Zhuang, Changxing Jiang, Liqun Liu, Yilei Ding, Yue Liu, Ling Xu, Kun Qin, Ge Gan, Zhihong Zhang, Yongfeng Zhu, Kai Chen, Yi Wang, Jianli Han, Yan Chen, Xiaorong Ji, Yujun Jin, Chen Ren, Rui Zhao, Liang Ye, Xiaoke Chen Meili Zhang, Ru Yuhong, (NHFPC); Qinghui Yan, Shuchun Li, Chengjin Song, Jun Chang, Yutong Liu, Guodong Wang, Zhengming Duan, Yongsheng Fu, Kaihong Xing,Wei Zhang, Jiayue Liu, Chao Li(MoHRSS); Yanfeng Ge, Sen Gong (Development Research Center of the State Council), Shangxi Liu (MoF Academy of Fiscal Sciences); Hongwei Yang, Zhenzhong Zhang, Weiping Li (NHFPCCHDRC); Dezhi Yu, Junwen Gao, Lijun Cui, Beihai Xia (Anhui Commission for Health and Family Planning, CHFP); Dongbo Zhong, Haichao Lei (Beijing CHFP); Xiaochun Chen, Wuqi Zeng, Xu Lin (Fujian CHFP); Xueshan Zhou, Shuangbao Xie (Henan CHFP); Patrick Leahy, Henrik Pederson (IFC); Xiaofang Han, Qingyue Meng, Gordon Liu, Jiangnan Cai, Asaf Bitton,, Jin Ma, Wen Chen, James Cercone, Ian Forde, Barbara O’Hanlon, Karen Eggleston, Fei Yan, Guangpeng Zhang, Xiaoyun Liu, Qiulin Chen, Min Hu, Lijie Wang,Antonio Duran, Dan Liu (World Bank Consultants), and Bang Chen, Junming Xie, Roberta Lipson, Beelan Tan, Sabrinna Xing, Jane Zhang, Alex Ng, Yuanli Liu, Jianmin Gao, Baorong Yu, Mario Dal Poz, James Buchan, Ducksun Ahn, Stephen Duckett. The study team recognizes and appreciates additional funding support from Bill and Melinda Gates Foundation via Results for Development, and, from International Finance Corporation of the World Bank Group. The Joint Study team is also grateful for all the contribution and efforts from the individuals and teams not named above
Executive Summary Following decades of double-digit growth and water quality,education,nutrition and that lifted more than 600 million people out housing)resulted in a huge decline in mor- of poverty,China's economy has slowed in tality and an unprecedented increase in life recent years.The moderating growth adds expectancy.The 2009 reforms have achieved a new sense of urgency to strengthening a number of intended milestones,produc- human capital and ensuring that the popu- ing substantial positive results.Utilization of lation remains healthy and productive,espe- health services has risen and out of pocket cially as the economy gradually rebalances spending as share of total health expendi- towards services and the society experiences tures has fallen,leading to a more equitable shifting demographics and disease burdens. access to care and greater affordability.The The lower economic growth rates open the essential drug program is contributing to space for much needed reforms in the health reducing irrational drug use and improving sector as the high growth rates of health access to effective drugs.The reform,includ- expenditure in the past years may be difficult ing subsequent regulations,has encouraged to sustain under the New Normal':a recent greater private sector participation in part OECD study estimates that government to reduce overcrowding in public facilities. expenditures on health and long term care in Finally,the reform also spearheaded many China will increase three-fold as percent of innovative pilots in health financing and GDP over the next four decades if adequate service delivery at the local level-several of reforms are not undertaken.China now has which are examined in this report-and pro- an opportunity to rebalance its health care vide a strong foundation for the next stage system by embarking on a high value path to of reform.China is progressing quickly to better health at affordable costs. achieving universal health coverage and some China was a pioneer in primary care and of the reform achievements have attracted the prevention and control of infectious dis- worldwide attention.Significantly,a child eases,and more recently in universal insur- born in China today can expect to live more ance coverage.The introduction of barefoot than 30 years longer than her forebears half a doctors,urban and rural social health insur- century ago;it took rich countries twice that ance schemes and ambitious public health span of time to achieve these gains. campaigns combined with higher incomes, China now faces emerging challenges to lower poverty and better living standards meet the health care needs of her citizens, for both urban and rural areas (sanitation associated with a rapidly aging society and DEEPENING HEALTH REFORM IN CHINA XV
DEEPENING HEALTH REFORM IN CHINA xv Executive Summary Following decades of double-digit growth that lifted more than 600 million people out of poverty, China’s economy has slowed in recent years. The moderating growth adds a new sense of urgency to strengthening human capital and ensuring that the population remains healthy and productive, especially as the economy gradually rebalances towards services and the society experiences shifting demographics and disease burdens. The lower economic growth rates open the space for much needed reforms in the health sector as the high growth rates of health expenditure in the past years may be difficult to sustain under the ‘New Normal’: a recent OECD study estimates that government expenditures on health and long term care in China will increase three-fold as percent of GDP over the next four decades if adequate reforms are not undertaken. China now has an opportunity to rebalance its health care system by embarking on a high value path to better health at affordable costs. China was a pioneer in primary care and the prevention and control of infectious diseases, and more recently in universal insurance coverage. The introduction of barefoot doctors, urban and rural social health insurance schemes and ambitious public health campaigns combined with higher incomes, lower poverty and better living standards for both urban and rural areas (sanitation and water quality, education, nutrition and housing) resulted in a huge decline in mortality and an unprecedented increase in life expectancy. The 2009 reforms have achieved a number of intended milestones, producing substantial positive results. Utilization of health services has risen and out of pocket spending as share of total health expenditures has fallen, leading to a more equitable access to care and greater affordability. The essential drug program is contributing to reducing irrational drug use and improving access to effective drugs. The reform, including subsequent regulations, has encouraged greater private sector participation in part to reduce overcrowding in public facilities. Finally, the reform also spearheaded many innovative pilots in health financing and service delivery at the local level – several of which are examined in this report – and provide a strong foundation for the next stage of reform. China is progressing quickly to achieving universal health coverage and some of the reform achievements have attracted worldwide attention. Significantly, a child born in China today can expect to live more than 30 years longer than her forebears half a century ago; it took rich countries twice that span of time to achieve these gains. China now faces emerging challenges to meet the health care needs of her citizens, associated with a rapidly aging society and
xvi DEEPENING HEALTH REFORM IN CHINA increasing burden of non-communicable dis- health system as observed in some high eases (NCDs).There are already over 140 income countries.China's health system is million persons above the age of 65 in China, hospital-centric,fragmented and volume- a number that is projected to grow to 230 driven.Service delivery has a strong bias million in 2030.NCDs are already China's toward doing more treatment than improv- number one health threat,accounting for ing population health outcomes,and serv- over 80 percent of the 10.3 million deaths ing more people at hospitals rather than at annually.More so than the aging population, grassroots levels.Health financing needs bet- high health risk behaviors such as smoking, ter integration and insurance funds need to poor diets,sedentary lifestyles,and alcohol become more active purchasers of health ser- consumption,as well as environmental fac- vices.There is a shortage of qualified medical tors such as air pollution,are powerful forces and health workers at the primary care level, behind the emergence of chronic illnesses which further compromises the system's abil- in China.Traffic safety is another emerging ity to carry out the core functions of preven- challenge. tion,case detection,early treatment and care Building on past successes,more needs to integration.Quality of care and population's be done to expand current reforms and build trust needs to improve,especially at the lower upon front-line innovations to make health levels,waiting times are long especially at the care delivery more effective and efficient higher levels,and people's satisfaction with throughout China.Health costs have been their interaction with providers often do not growing at a rate higher than GDP growth meet rising expectations.To some extent,this since 2008.While this growth started from situation affects citizens'confidence in health a comparatively low baseline level,but still care providers. below 6%by year 2015,the trend is not Recognizing these challenges,China's likely to reverse in the near future as expen- leaders have adopted far-reaching policies to diture pressures related to pent-up demand put in place a reformed delivery system.Since changing epidemiological and demographic the launch of health reform in 2009,China profiles,income growth and technologi- has invested significantly in health infra- cal change will continue to grow.As seen structure at the grassroots level and made in some high income countries,without progress in building the primary care doctors adequate controls rapidly escalating health system.Basic public health services capacity spending can lead to an unsustainable burden have been signficantly enhanced.The State on individuals,firms and government. Council General Office has also issued policy A study commissioned by the World guidance for promoting multi-tier diagnosis Bank for this report concluded that busi- and treatment system(Guo Ban Fa,]No.70, ness as usual,without reform,would result 2015).On October 29,2015 the 18th Session in growth of total health expenditure from of the Central Committee of the Fifth Ple- 5.6 percent of GDP in 2015 to 9.1 percent in nary Session of the CPC endorsed a national 2035,an average increase of 8.4%per year strategy known as“Healthy China”which in real terms.Over 60 percent of increase is places population health improvement as the expected to be in inpatient services.China main system goal.This strategy will guide could achieve significant savings-equiva- the planning and implementation of health lent to 3 percent of GDP-if it could slow reforms under the 13th Five-year Develop- down the main cost drivers that are the cost ment Plan,2016-2020(see Box).The Gov- per treatment episode and unit cost increases. ernment has also initiated enabling legislative To realize these savings health services to be actions.The Basic Health Care Law,which balanced with increased utilization of outpa- will define the essential elements of the health tient and primary health care.The report dis- care sector including financing,service deliv- cusses policy options to achieve that. ery,pharmaceuticals,private investment,etc. On the basis of the great achievements, has been included in the legislative plan of China needs to deepen its health reform to National People's Congress of China and is avoid the risk of creating a high-cost-low-value being formulated by the congress.The Basic
xvi DEEPENING HEALTH REFORM IN CHINA increasing burden of non-communicable diseases (NCDs). There are already over 140 million persons above the age of 65 in China, a number that is projected to grow to 230 million in 2030. NCDs are already China’s number one health threat, accounting for over 80 percent of the 10.3 million deaths annually. More so than the aging population, high health risk behaviors such as smoking, poor diets, sedentary lifestyles, and alcohol consumption, as well as environmental factors such as air pollution, are powerful forces behind the emergence of chronic illnesses in China. Traffic safety is another emerging challenge. Building on past successes, more needs to be done to expand current reforms and build upon front-line innovations to make health care delivery more effective and efficient throughout China. Health costs have been growing at a rate higher than GDP growth since 2008. While this growth started from a comparatively low baseline level, but still below 6% by year 2015, the trend is not likely to reverse in the near future as expenditure pressures related to pent-up demand changing epidemiological and demographic profiles, income growth and technological change will continue to grow. As seen in some high income countries, without adequate controls rapidly escalating health spending can lead to an unsustainable burden on individuals, firms and government. A study commissioned by the World Bank for this report concluded that business as usual, without reform, would result in growth of total health expenditure from 5.6 percent of GDP in 2015 to 9.1 percent in 2035, an average increase of 8.4% per year in real terms. Over 60 percent of increase is expected to be in inpatient services. China could achieve significant savings – equivalent to 3 percent of GDP – if it could slow down the main cost drivers that are the cost per treatment episode and unit cost increases. To realize these savings health services to be balanced with increased utilization of outpatient and primary health care. The report discusses policy options to achieve that. On the basis of the great achievements, China needs to deepen its health reform to avoid the risk of creating a high-cost-low-value health system as observed in some high income countries. China’s health system is hospital-centric, fragmented and volumedriven. Service delivery has a strong bias toward doing more treatment than improving population health outcomes, and serving more people at hospitals rather than at grassroots levels. Health financing needs better integration and insurance funds need to become more active purchasers of health services. There is a shortage of qualified medical and health workers at the primary care level, which further compromises the system’s ability to carry out the core functions of prevention, case detection, early treatment and care integration. Quality of care and population’s trust needs to improve, especially at the lower levels, waiting times are long especially at the higher levels, and people’s satisfaction with their interaction with providers often do not meet rising expectations. To some extent, this situation affects citizens’ confidence in health care providers. Recognizing these challenges, China’s leaders have adopted far-reaching policies to put in place a reformed delivery system. Since the launch of health reform in 2009, China has invested significantly in health infrastructure at the grassroots level and made progress in building the primary care doctors system. Basic public health services capacity have been signficantly enhanced. The State Council General Office has also issued policy guidance for promoting multi-tier diagnosis and treatment system (Guo Ban Fa,] No. 70, 2015). On October 29, 2015 the 18th Session of the Central Committee of the Fifth Plenary Session of the CPC endorsed a national strategy known as “Healthy China” which places population health improvement as the main system goal. This strategy will guide the planning and implementation of health reforms under the 13th Five-year Development Plan, 2016-2020 (see Box). The Government has also initiated enabling legislative actions. The Basic Health Care Law, which will define the essential elements of the health care sector including financing, service delivery, pharmaceuticals, private investment, etc. has been included in the legislative plan of National People’s Congress of China and is being formulated by the congress. The Basic
EXECUTIVE SUMMARY xvii Law CPC Central Committee Suggestions for short,the eight levers represent a compre- the 13th Development Plan as well as recent hensive package of interventions to deepen policy directives contain the fundamental health reform. components of service delivery reform.For As China continues to grow,health spend- example,policies emphasize strengthening ing will increase.However,for sustainability the three-tiered system,including primary and affordability the rate at which spend- care and community-based services,human ing on health increases can be managed by resources reform,optimizing use of social prudent choices related to the location,orga- insurance,and encouraging private invest- nization and production of health services ment(“social capital”)to sponsor health and the efficient use of resources,even while care.Policies also support "people first prin- making care far better.China will soon ciples"such as building harmonious relation- need to come up with a new model of health ships with patients,promoting greater care production,financing and delivery,which integration between hospitals and primary responds to the needs and expectations of its care facilities through tiered service deliv- population but at the same time is grounded ery and use of multidisciplinary teams and in the economic reality of today.China has facility networks,shifting resources towards already decided that doing nothing is not an the primary level,linking curative and pre- option:continuing the previous health ser- ventive care,reforming public hospital gov- vice delivery model in the current environ- ernance and strengthening regional service ment will result in increasing health costs planning.However,while important prog- and a heavier burden on the government or ress has been observed,it is mostly limited households or both.One of the key messages to pilot projects.This suggests strengthening of this report is the importance of creating implementation and emphasizing scale-up of value.Value means working toward three successful reforms.Acknowledging the diffi- goals simultaneously:better health for the culty of implementing these reforms and time population,better quality and care experi- required to achieve scale,they are collectively ence for individuals and families,and afford- referred to as reforms of the emerging"deep able costs for individuals and government.It water'”phase. also means bridging the gap between health The reforms proposed in this report aim and health care.In moving forward with the to support China during this deep water delivery reforms,China must maintain its reform phase.Eight sets of strategic reform focus on achieving more health rather than directions,referred to as“levers,”are pro- more treatment.It has to shift the focus from posed.Broadly,these reforms focus on rewarding volume and sales to rewarding improving 'downstream'service provision health outcomes-achieving more value for as well as creating an enabling 'upstream' the money spent.With proper delivery sys- financial and institutional environment for tem reforms,better care,better health and that improvement.Each lever contains a more affordable costs are all well within set of recommended core action areas and China's reach. corresponding implementation strategies to guide the 'what'and 'how'of deepening Recommendations service delivery reform.They are meant to provide policy implementation guidance The report proposes eight sets of strategic to all governmental levels.The levers are reform directions,referred to as "levers" interlocked and should not be considered or representing a comprehensive package of implemented as independent sets of actions. interventions to deepen health reform.Each Their roll out will require synchronization. lever contains a set of recommended core For example,actions taken by front line action areas and corresponding implemen- health care providers will require strong tation strategies to guide the what'and institutional support combined with finan- 'how'of deepening service delivery reform, cial and human resource reforms in order to and are meant to provide policy guidance achieve the aforementioned triple goals.In at all governmental levels.The levers are
EXECUTIVE SUMMARY xvii Law CPC Central Committee Suggestions for the 13th Development Plan as well as recent policy directives contain the fundamental components of service delivery reform. For example, policies emphasize strengthening the three-tiered system, including primary care and community-based services, human resources reform, optimizing use of social insurance, and encouraging private investment (“social capital”) to sponsor health care. Policies also support “people first principles” such as building harmonious relationships with patients, promoting greater care integration between hospitals and primary care facilities through tiered service delivery and use of multidisciplinary teams and facility networks, shifting resources towards the primary level, linking curative and preventive care, reforming public hospital governance and strengthening regional service planning. However, while important progress has been observed, it is mostly limited to pilot projects. This suggests strengthening implementation and emphasizing scale-up of successful reforms. Acknowledging the diffi- culty of implementing these reforms and time required to achieve scale, they are collectively referred to as reforms of the emerging “deep water” phase. The reforms proposed in this report aim to support China during this deep water reform phase. Eight sets of strategic reform directions, referred to as “levers,” are proposed. Broadly, these reforms focus on improving ‘downstream’ service provision as well as creating an enabling ‘upstream’ financial and institutional environment for that improvement. Each lever contains a set of recommended core action areas and corresponding implementation strategies to guide the ‘what’ and ‘how’ of deepening service delivery reform. They are meant to provide policy implementation guidance to all governmental levels. The levers are interlocked and should not be considered or implemented as independent sets of actions. Their roll out will require synchronization. For example, actions taken by front line health care providers will require strong institutional support combined with financial and human resource reforms in order to achieve the aforementioned triple goals. In short, the eight levers represent a comprehensive package of interventions to deepen health reform. As China continues to grow, health spending will increase. However, for sustainability and affordability the rate at which spending on health increases can be managed by prudent choices related to the location, organization and production of health services and the efficient use of resources, even while making care far better. China will soon need to come up with a new model of health production, financing and delivery, which responds to the needs and expectations of its population but at the same time is grounded in the economic reality of today. China has already decided that doing nothing is not an option: continuing the previous health service delivery model in the current environment will result in increasing health costs and a heavier burden on the government or households or both. One of the key messages of this report is the importance of creating value. Value means working toward three goals simultaneously: better health for the population, better quality and care experience for individuals and families, and affordable costs for individuals and government. It also means bridging the gap between health and health care. In moving forward with the delivery reforms, China must maintain its focus on achieving more health rather than more treatment. It has to shift the focus from rewarding volume and sales to rewarding health outcomes – achieving more value for the money spent. With proper delivery system reforms, better care, better health and more affordable costs are all well within China’s reach. Recommendations The report proposes eight sets of strategic reform directions, referred to as “levers” representing a comprehensive package of interventions to deepen health reform. Each lever contains a set of recommended core action areas and corresponding implementation strategies to guide the ‘what’ and ‘how’ of deepening service delivery reform, and are meant to provide policy guidance at all governmental levels. The levers are