China's new medical reform plan, which aims to provide universal basic services at reasonable prices, will increase government responsibility and input, said Health Minister Chen Zhu in Beijing on Wednesday.

In a report on the reform of medical care and the public health system delivered to the 31st session of the Standing Committee of the National People's Congress (NPC), China's top legislature, Chen Zhu said: "Government should play a leading role in providing medical care and public health service."

Both the central and local governments should "significantly" increase input in the health sector, the minister said.

While attending to both the needs of medical institutions and patients, additional funds will be mainly used to provide medicare in rural areas and urban communities to reduce medical costs borne by patients.

According to the report, the government, society and individuals will split the cost of basic medical care. Specialized medical care, however, should be covered by patients or through commercial health insurance.

Chen acknowledged the "imbalanced" allocation of medical resources, which were concentrated in major urban hospitals.

The minister promised in the report to initially set up the framework of a basic medicare network by 2010 to reduce the widening gap of medical services among different income groups and regions. By 2020, China will establish a basic medicare network for the whole population.

The public health service network will include rural cooperative medicare, urban community medical services and public hospital management systems.

According to the report, China would also set up an independent system on the production, procurement and distribution of basic drugs, which will be on a list drawn up by the central government, to ensure drug safety and reduce prices.

"The aim is to provide safe, effective, convenient and low-cost public health and basic medicare service to both rural and urban citizens," Chen said.

Due to a lack of government funding, public medical institutions have, for years, mainly operated using profits from medical services and drug prescriptions. This profit-driven method of management had "imposed heavy burdens on patients and led to a waste of medical resources," Chen said. Government funding has for years only accounted for about 17 percent of the expenditure of the health sector.

"We will gradually reduce hospitals' involvement with drug sales to cut drug prices," Chen said, noting that any resulting shortfall could be met by government subsidies and a reasonable rise in medical service fees.

The new medical reform plan also aimed to create a multi-faceted medicare security system to satisfy different types of public demand.

China will establish a cooperative healthcare network covering all rural residents by the end of 2008, and by the end of 2010 the medical insurance system for employed urban residents is expected to cover all urban employees, according to the report.

Altogether 730 million farmers, or 85.9 percent of the country's total, have benefited from the rural medicare system.

Under the system, farmers, local and central governments each chip in 10 yuan per year, per person, to a medical fund. Farmers who contribute to the plan can get a certain proportion of their medical expenses refunded.

"There are still 400 million people who are not covered by any form of medicare security system," Chen said.

After more than a year's work, China has worked out the basic outline and general framework for reform of the medical care and public health system, Chen said.

The reform covers a wide range of subjects including hospital management, medical insurance, drug manufacturing and distribution and supervision and relevant legislation.

Public complaint

Growing public criticism of soaring medical fees, lack of access, poor doctor-patient relations and the low coverage of the medicare system has compelled China to launch the medical reform, which involved 16 ministries and commissions in brainstorming the reform in 2006.

Eight think tanks or research organizations, including the World Health Organization, McKinsey, the World Bank, the Development Research Center of the State Council and four Chinese universities submitted their proposals on reform to the ministry.

Statistics from the Health Ministry showed that soaring medical costs have plunged many rural and urban Chinese back into poverty, with one third of rural patients choosing not to go to a hospital and 45 percent of rural patients discharging themselves from hospital before they were fully recovered.

A survey released last December by the Chinese Academy of Social Sciences showed health care expenses had risen to 11.8 percent of average household consumption, exceeding spending on education and transport, a very high percentage even compared with developed countries.

A 2005 report by the Development Research Center under the State Council, China's cabinet, harshly criticized health sector reforms and concluded that reforms over the past decade were "basically unsuccessful". The report stirred public debate.

China started medical service reform in 1992 to abolish a system under which governments covered more than 90 percent of medical expenses.

Medical insurance has been introduced and promoted in urban areas in Guangdong and some other provinces since 1992 and cooperative medical care has been tried in some rural counties to find a way to provide all Chinese with affordable medical service.

In 1998, urban employees began paying 2 percent of their salaries into individual health savings accounts and employers were obliged to contribute 4 percent of their payrolls to a social security fund operated by local governments.

(Xinhua News Agency December 27, 2007)