Health Service Finance in Rural China

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Health Service Finance in Rural China
Community-Based Prepayment compared to the
Out-of-Pocket scheme Sukhan Jackson School of
Economics University of Queensland,
Brisbane,Australia Adrian C. Sleigh National
Centre for Epidemiology and Population Health The
Australian National University,Canberra,
Australia Li Peng Henan Insititute of Parasitic
Diseases Zhengzhou,PR China Xi-Li Liu Henan
Insititute of Parasitic Diseases Zhengzhou, PR
China
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Aim 1. Compare pilot community-based prepayment
with the out-of-pocket system in rural China 2.
How can China organize finance for equitable
health care to rural citizens ie most of its huge
population? Focus on 1. Utilization rates 2.
Cost of health services to patients at township
(commune) hospitals-lowest level for farmers to
access qualified doctors) 3. Effect on hospital
incomes and their viability
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CHINA HEALTH SECTOR RENOVATION
BEFORE 1979
Gov Ins Scheme (GIS) Labor Ins Scheme (LIS) Co-op
Med Scheme (CMS - communes)
IN 1980s
Part GIS, LIS OUT-OF- POCKET (rural)
GIS LIS
BY 1990s
by LATE 1990s
Revived RCMS (Rural) NEW RCMS (RURAL) (SET UP
FROM 2003)
Our Research Topic
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Chinas Rural Health Care 3-tier health delivery
system
Focus of our study
. utilization
. patient costs
. services provided

Top level county hospital
Middle level township hospitals (township
medical centres)
Basic level village clinics run by paramedics
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IMPACT OF ECONOMIC TRANSITION AND HEALTH SECTOR
REFORM CAUSED HEALTH INEQUITIES
URBAN
RURAL

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Chinese Ministry of Health, and researchers,
reported in 2002 Many sick farmers were
hesitant to seek medical treatment for fear of
considerable out-of-pocket expenses. If a
family has a serious illness, the whole family
may become destitute.
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Importance of rural health finance Chinas
political stability is highly dependent on rural
development - ie living standard
improving. Farmers discontent is something the
Chinese government does not ignore. An important
issue is the health of 800 millionrural
residents, 70 of Chinas total population.
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Evolution of rural co-operative medical schemes
(RCMS) 1990s

• 350 counties in 22 provinces started an RCMS by
  1997
• Counties collect annual pre-payments from local
  population as community health insurance
• Unfortunately, many RCMS counties, lacking
  financial resources and political support,
  dropped out one by one

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Operational aspects - RCMS in Study Area, Henan

• Finance. Some support from local governments
  (county and township).
• In Gongyi, county government - 1 yuan
  ( 0.12)/head
• Participating township governments - 2-3 yuan
  ( 0.25-0.37)/head.
• RCMS farmer-members - premium of 2-5 yuan
  ( 0.25-0.62)/head.
• Management. The RCMS management committees
  function at three levels county (Gongyi) level,
  township and administrative village. Townships
  manage their own RCMS (township pop range 8-40
  thousand)

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• Specifically we asked
• Can RCMS deliver more equitable health care than
  the out-of-pocket system?
• better utilization rates?
• lower patient costs?
• more viable township hospital finance?

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Henan RCMS Study Two adjacent counties
compared Pre-payment health financing
(RCMS) Gong Yi County (total population 784,000)
Av annual farm income 3000 yuan
(US375) Out-of-pocket system (no RCMS) Yan Shi
County (total population 807,000) Average
annual farm income 2600 yuan (US325)
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Gongyi
Yanshi
Henan Study Counties Gongyi (RCMS) and Yanshi
(no RCMS)
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Methods Compare two CMS and two non-CMS
township hospitals (i)
Utilization rates, viability of hospital (ii)
costs paid by patients (services drugs) (iii)
Community satisfaction, manager survey
Data not presented here
To address the issue of equitable health care
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(No Transcript)
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Township hospital outpatients or inpatients
sampled in Gongyi (RCMS) and Yanshi (non-RCMS),
Aug 2001
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Township hospital outpatients and inpatients
sampled (continued)
Missing values Education outpatients 3 in
Yanshi, 8 in Gongyi Dependents outpatients 3
in Yanshi Household inpatients 1 in Gongyi.
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Results Outpatient costs (RCMS vs
non-RCMS) Average total cost per visit RCMS
Beishankou 22 yuan (US2.75) RCMS Zhanjie
23 yuan (US2.87) Non-RCMS Guxian
37 yuan (US4.5) Non-RCMS Licun 22 yuan
(US2.8) Average daily income US1.25 (10
yuan) or less
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Inpatient costs (RCMS vs non-RCMS) Averag
e cost per inpatient admission RCMS Beishankou
1008 yuan (US126) RCMS Zhanjie 718 yuan
(US89.7) Non-RCMS Guxian 826 yuan
(US103) Non-RCMS Licun 483 yuan
(US60) Average monthly income 300 yuan
(US38) or less.
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p-value is the value for a 2-tailed test of
difference in means between (a) Beishankou and
Guxian (b) Zhanjie and Licun. indicates the
values between RCMS and non-RCMS that were
statistically significantly different at the 5
level.
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Utilization rates services
(RCMS vs non-RCMS) Visits per person per year
No. of services/visit RCMS Beishankou 0.47
4.83 RCMS Zhanjie 0.70
1.25 Non-RCMS Guxian 0.30
2.32 Non-RCMS Licun 0.25 2.02
Although Licun least expensive, it had the
lowest utilization rates.Possibly service quality
was inferior? RCMS Beishankou had the highest
no. of services per visit longest inpatient
stay duration. Possibly over-servicing?
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Community Utilization of Township Hospitals 2001
and 2002
Gongyi County (RCMS)
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TownshipHospital Income
2001 2002 RCMS (Beishankou - Zhanjie)
boosted total hospital income by 10-14
Important effect
Zhanjie

• 22,4703

1,159,136
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• REFLECTIONS ON STUDY FINDINGS
• Gender equity not bad for access to medical
  treatment
• More female inpatients than males maternity
  cases.
• Utilization rates for outpatient visits are
  quite low
• RCMS hospitals visit rates higher than non-RCMS
  
• Utilization rates for inpatients also low RCMS
  hospitals non-RCMS similar, despite higher
  costs at RCMS.
• RCMS yield good income for hospital.
  Pre-payment system had no evidence of
  moral hazards in our sample.

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• REFLECTIONS ON HEALTH EQUITY
• Can China organize finance to provide
• equitable health care to its rural population?
• RCMS premiums are too low at present to provide
• adequate insurance coverage, and require govt
  input too.
• Should raise to 10 yuan (US1.25 - 1 days
  income).
• Funding from local government only(township
  county)
• nothing from provincial and central
  governments.
• More govt funds needed esp. to close rural-urban
  gap.
• RCMS helped for catastrophic cases, but not
  other cases.
• RCMS yields substantial income for township
  medical centres ensuring they continue (key
  medical care points).

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Conclusions
Health care would be more equitable under
community-based insurance than the out-of-pocket
system, but it needs much more government help.

China Central Government has begun a new RCMS
(Party Central Committee/State Council document
No. 13, 2003). Central government - 10 yuan
per head per year for rural farmers in Chinas
Western Area if local government provides no
less than 10 yuan per head per year, and each
rural farmer contributes 10 yuan per head for
enrolment rebates will include drugs. (
1.25) Our study is timely with Chinas reforms
in rural health financing. Research outcomes are
considered and accepted by Chinese government.
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THE END
Acknowledgements This research received
financial support from Australian Research
Council Large Grant
Thank you
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Income from patient fees at RCMS (red font) and
non-RCMS township hospitals (2002)