ILO and China discuss reform measures of health insurance payment system
China is strengthening primary health care. Reform of the provider payment mechanism is central to deepening health care reform.
ILO and the Institute of Social Security Research (ISSR) of Ministry of Human Resources and Social Security jointly conducted a research on the Reform of Provider Payment Mechanism of Health Insurance. A research team composed by the ISSR researchers and Dr Schmidt of the ILO worked together in the last several months to review the provider payment mechanism in China and some European countries. The purpose of this research is to propose policy recommendations to the government on how to reform the health insurance payment system.
China has made remarkable achievement in building a healthcare system for 1.3 billion people. In the last three decades, China has substantially increased health spending and reduced the share of out-of-pocket expenses. The fast expansion of healthcare coverage is one of the reasons that China received the International Social Security Association (ISSA) 2016 Award for Outstanding Achievement. China achieved nearly universal healthcare within a short period. In this regard China set an outstanding example to the other developing countries and showcased that with strong political resolute countries can make fast progress in providing the social protection for all.
China is determined to foster a healthier population through an overhaul of its healthcare system. That resolve transpires from a series of recently adopted measures including the reform of public hospitals; reform of the payment system to properly incentivize providers; the reform of pharmaceutical pricing mechanisms; and pilot measures to allow doctors to operate as independent providers. All these are important steps towards building a more equitable and efficient healthcare system.
Reform of the provider payment mechanism is central to deepening health care reform. It features high on the agenda of the 13th Five-year plan and the Healthy China 2030 Programme. The participants had in-depth discussion on the reform of health insurance measures and covered the following issues:
China may need to be prepared for rising health expenditure. Containing healthcare spending is a recurrent battle facing all developed countries. From a longer-term perspective, bending the health expenditure curve is a difficult if not impossible task due to various factors such as an aging population that is living longer, advances in initially more costly medical technology and, indeed, rising health care expectations as standards of living continue to rise. In 2016, the average health expenditure of OECD countries hovered around 9 per cent of GDP, with the US being an outlier at 17.2 per cent. In comparison, the 6 per cent in the case of China is still within a reasonable range. History suggests that the percentage of health expenditure in GDP will increase along with the level of economic development, with one of the reasons being that the propensity of people to spend more on health will increase as they get more affluent. The upside, of course, is that a healthier population will significantly boost productivity which should benefit the sustained, inclusive and sustainable economic growth that the world has set itself as a goal in the 2030 development agenda.
Improving efficiency and containing cost are not the goal but only the means to providing affordable, accessible and high-quality healthcare. The question is then whether it would be possible to achieve better health outcomes while reining in spending? Countries that spend the most are not necessarily the ones that produce the best health outcomes, suggesting that cost-effectiveness of spending is important. Rising health expenditure may also result from an inefficient health insurance system, over-treatment, or outright fraud. These are the issues to be resolved through the reform of the provider payment system. More balanced provider payment schemes would lead to a better match between demand and supply in health care. As each payment method has its strength and weaknesses, the fundamental principle to bear in mind is not to sacrifice the quality of health care for the sake of efficiency measures. The ultimate goal of healthcare reform for any country should be to provide more equitable and affordable care to all and prevent illness-induced poverty.
Different localities in China have already been piloting various payment systems such as case-based system, case-mix point system, DRGs, capitation, etc., however more coordination at the national level is needed to achieve better consistency among the provinces. The overall direction of the health insurance payment system should be a combination of different payment methods. For inpatients, case-mix point payment and DRGs will be promoted as the main payment systems, while case-mix point payment may be the more practical interim payment method for the current stage of development but the DRGs will be the eventual goal. For outpatients, it is important to direct more patients from the tertiary and inpatients care to primary and outpatients care through the adoption of capitation and other payment methods. In this regard, the health insurance payment system must be reformed in tandem with the public hospitals and pharmaceutical system.
Well-developed associations of payers and providers would be highly instrumental in the well-functioning of the provider payment mechanism. The experiences of other countries show that only when such associations can fully negotiate based on market principles, the payment system itself would start to work.
Around 50 representatives from government, social partners, academia and media attended the seminar.