Health sector reform in China

Key facts

  • China has a population of more than 1.3 billion people, with approximately 7 million added annually. Almost half of the population lives in rural areas (48.73%).
  • Life expectancy at birth rose from 35 years before 1949 to 75 years in 2010, which has resulted in population ageing. In 2010, people aged 60 and over accounted for 13% of the total.
  • It is expected that by 2015, the proportion of population aged 60 years and over will reach 15%, further increasing to 24% by 2030.
  • Noncommunicable diseases (NCDs) (cardiovascular diseases, cancer, diabetes mellitus and chronic lung diseases) are the main cause of mortality in China. More than 85% of mortality in China is attributed to NCDs.
  • Although the main disease burden has evolved from communicable diseases to noncommunicable diseases, communicable diseases remain a problem in some western provinces.
  • China’s total health expenditure in 2010 was 199.80 billion RMB (about US$29.51 billion). It accounted for 5.1% of GDP, lower than the average for all middle-income countries (6.6%). Per capita health expenditure is 1490 RMB (about US$220).
  • China operates a three-level medical service system: national level, province level, and county level.
  • At the end of 2011, China had a total of 877,727 medical institutions and 3.5 medical institution beds per thousand residents. However, there is a marked difference between urban and rural areas, with 6.24 hospital and health centre beds per thousand people in urban areas, and only 2.80 in rural areas.
  • In 2008 there were 5.58 health technical personnel per thousand in urban areas, more than twice the number for rural areas.

Health sector reform

  • The Health Care System Reform was launched full scale in 2009 as the Central Committee of the Communist Party of China (CPC) and the State Council issued the Opinions on Deepening the Health Care System Reform.
  • The State Council issued the Implementation Plan for the Recent Priorities of the Health Care System Reform (2009-2011).
  • The overall goal of health care reform is to establish and improve the basic health care system covering urban and rural residents, and provide the people with secure, efficient, convenient and affordable health care services.
  • The government identified five priority areas for reform and established a committee across ministries to coordinate the policy formulation and implementation. Five priorities are:
    • accelerating the establishment of the basic medical security system;
    • establishing a national essential medicines system;
    • strengthening health services at grass roots level;
    • promoting the equalization of basic public health services; and
    • promoting pilot projects for public hospital reform


  • The urban employee basic medical insurance (UEBMI), the urban residents basic medical insurance (URBMI) and the new rural cooperative medical system (NRCMS) are the most important components of the China health insurance system.
  • Commercial health insurance, and a variety of other forms of medical insurance, serve to supplement the system.
  • In 2011, the total insured urban and rural residents amount to 1.295 billion, or about 95% of the population.
  • National Poverty Health Funding System is playing an important role of subsidizing the poor to contribute the funds to participate in URBMI and NRCMS as well as providing the second reimbursement of inpatient bills of the poor.

Basic medical and health services system

  • The basic medical and health services system includes county hospitals, community health organizations, township health centres and village clinics.
  • The central Government has invested about 63 billion RMB (approximately 10 billion USD) to support the 33,000 county hospitals and grassroots level of medical and health institutions. Local governments have also increased capital inputs.
  • Besides the infrastructure, the Central Government also allocates funds to train health professionals working in grassroot-level health institutions. 36,000 primary care providers from 127 health centres were trained.

Essential public health services

  • Essential public health services comprise ten kinds of basic public health services and seven categories of major public health services, including residents' health records, health education, immunization, communicable disease, maternal and children health, chronic disease management and mental health.
  • Other important programmes includes providing hepatitis B vaccine free of charge for people under the age of 15, pre-natal services to rural women, including early pregnancy folic acid supplements, services for poverty-stricken cataract patients, and support for water quality laboratories.

Public hospital reform

  • Health services in China are provided mainly by the public system, which covers 90% of emergency and inpatient services.
  • Public hospital reform is currently in progress, and 17 national pilot cities and 37 provincial pilot cities have been organized. Experience has been accumulated in innovation of the system, with mechanisms tested.
  • China government has decided to put emphasis on comprehensive reform of county-level public hospital and plan to complete the staged reform by 2015.
  • Official statistics show that, in the pilot areas, the out-of-pocket health expenditure as a percentage of total health expenditure has dropped from 40.4% in 2008 to 35.5% in 2010.

Essential medicines

  • The national essential medicine system is seen as an important innovation in health reform.
  • A policy for the sale of essential medicines with zero-markup has been carried out in public medical and health institutions since July, 2011.
  • At the beginning of 2009, a list of essential medicines was confirmed, and the system of drug supply strengthened.
  • Policies have been promulgated, including making use of the market mechanism, promoting improved medicines production, developing unified delivery systems, strengthening the quality of drugs, and fixing drug prices.
  • Reform of the basic drug system is the key aspect of the reform of medical and health institutions. This was completed at the end of 2011.
  • The public management system, the competitive employment mechanism, incentive mechanisms, and long-term compensation mechanisms are implemented so that high medical charges were removed at grassroots level of government medical institutions.