World Bank Urges China Health-Care Reform to Save 3% of GDP

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  • Health cost could be 15.8 trillion yuan in 2035 without reform
  • World Bank recommends building a strong primary care system

A series of structural changes to China’s current health-care system could save Asia’s largest economy up to 3 percent of GDP, according to a study released Friday.

Conducted jointly by the World Bank Group, the World Health Organization and Chinese government agencies, the report suggests China take ten years to fully implement changes, including bolstering its primary care system and allowing private sector players fair competition with the public sector. Without such measures, the World Bank projects that health expenditure in China will increase in real terms from 3.5 trillion yuan ($529 billion) last year to 15.8 trillion yuan in 2035, and from 5.6 percent of GDP to 9.1 percent in the same time frame, according to the report.

In recent decades, China has made efforts to improve health-care access, extending a basic public health insurance network to virtually all of its people in some form since 2009. But public hospitals are overwhelmed by the task to treat close to 90 percent of patients for conditions ranging from the common cold to terminal cancer.

The report "makes a strong case for a new model that would both improve quality and save the economy up to 3 percent of GDP," Jim Yong Kim, president of the World Bank Group, said in a conference call late Thursday. "We’re confident that these reforms will help China build a strong foundation to create a healthier population, which will be an engine for job creation and sustainable economic growth in China."

Hospitals still rely on medicine sales for revenue, creating skewed incentives for doctors to over-prescribe. Patients often need to wait hours for a brief consultation, and physician-patient relations can be tense. Local media frequently report cases where disappointed patients have violently attacked or even killed their doctors.

The number of Chinese above the age of 65 is expected to grow from 140 million at the moment to 230 million by 2030, according to the World Bank report. That leaves the Chinese government with the task paying for adequate medical services for an aging population with soaring incidence of cancer, diabetes and heart disease.

China needs to slow down the main cost drivers of health care, and avoid creating a "high-cost-low-value" system that is seen in some high income countries, the 200-page summary report says.

The report’s foreword is jointly signed by Kim, the World Health Organization’s Director-General Margaret Chan and three Chinese ministers in charge of finance, health and family planning, as well as human resources and social security. The ministers wield significant power over the health-care and insurance system.

The report’s recommendations "will contribute positively to the formation of the 13th Five-Year Plan on health reform," Liu Yandong, Vice Premier of the State Council of China said in a statement accompanying the report.

— With assistance by Hui Li

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