73
private sector has taken over the responsibility for about a third of the production of such
services (Kin et al., 2002). (However, some assets (medical facilities)
are still owned by
public-sector authorities, and rented to private agents.) In itself, this shift to private
producers is not necessarily a problem. As
in the case of education, and more so, the real
problem is rather that the public sector has reduced and decentralized its responsibility for
the
financing
of these services. Only about 125 million individuals in urban areas seem to
have comprehensive health-care insurance today,
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and perhaps
about the same number
participate in modest cooperative health plans in rural areas (Chow, 2006b). This is the
background of the earlier mentioned fact that private financing in China covers about 60
percent of the total health costs, usually taking the form of pocket money. The central
government has, however, announced ambitions to expand the coverage both in urban and
rural areas.
In spite of the
weaknesses of health services, there has been a rapid increase in total
health spending – today amounting to 5.3 percent of GDP, which is 2-3 percentage points
higher than in countries with a similar level of per capita income in Southeast Asia
(except for Vietnam). The apparent paradox of increased spending and stagnating – and in
some respects even deteriorating – health services suggests inefficiencies of health care
(presumably reflecting deficiencies both in the organization and
in the incentive
structure). An additional indicator of inefficiencies is frequent reports of moral hazard in
health care, for instance, in the form of excessive health investigations of patients (Chow,
2006b) – a rather common problem in a number of countries, in
particular when health
care is financed by insurance.
A more specific indicator of inefficiency in the Chinese health sector is that about 68
percent of government funding was recently reported to have gone to hospitals rather than
health clinics and preventive health, in spite of the fact that many experts regard the latter
activities as potentially more important (on the margin) for the overall
health situation
(UNDP, 2000, p. 3).
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The inefficiencies in health care are also a result of the uneven
144
Blumenthal and Hsiao (2005) report that the share of employees in urban areas with health insurance is 55
percent (in 2003) – a fall from 77 percent in 1993, largely a result of reduced employment in state firms and a
rise in private and informal employment (UNDP, 2005, p. 65). In particularly poor areas of the country, many
private doctors charge service fees simply because local governments often cannot afford to finance the
services.
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Of China’s total health expenditure (in 2002), 50 percent is reported to have been allotted to urban hospitals,
and only 7 percent to health centers. It also appears that only about 7 percent was devoted to “public health”