Asian Bioethics Review (2018) 10:171–187 https://doi.org/10.1007/s41649-018-0052-1 O R I G I N A L PA P E R

Should a Country Follow WHO’s Guidelines on the Pathway to Universal Health Coverage? A Case Illustration with the Chinese Healthcare System Chunshui Wang 1 & Vincent H. Ng 2 & Reidar K. Lie 3

Received: 5 October 2017 / Accepted: 5 June 2018 / Published online: 27 June 2018 # National University of Singapore and Springer Nature Singapore Pte Ltd. 2018

Abstract The WHO Consultative Group on Equity and Universal Health Coverage published a comprehensive report titled BMaking Fair Choices on the Path to Universal Health Coverage^ detailing strategies that countries should adopt when moving towards providing healthcare coverage to the entire population. The report provides detailed guidelines on how to expand coverage to more people, what services should be covered, and how to prioritize these healthcare resources in achieving universal healthcare coverage (UHC). The main goal of this WHO report is to ensure fair and equitable access for all population groups within a country during the implementation of UHC. In principle, the group’s approach is sound and fair, but we argue that each country must take into account its own unique situations in designing a pathway towards UHC. China has achieved near UHC but did so by an approach that would have been deemed completely unacceptable based on this group’s recommendations. In this article, we provide a brief review of the Chinese healthcare system and argue that the implementation of the recommendations in the report is not always feasible. We argue that there are alternate pathways towards achieving UHC and there are good

* Reidar K. Lie [email protected] Chunshui Wang [email protected] Vincent H. Ng [email protected]

1

Department of Research, Beijing Obstetrics and Gynecology Hospital, Capital Medical University Beijing Maternal and Child Healthcare Hospital, No. 251, Yao Jia Yuan Road, Chaoyang District, Beijing 100026, People’s Republic of China

2

Department of Math and Sciences, Northern Virginia Community College, 2645 College Dr, Woodbridge, VA 22191, USA

3

Department of Philosophy, University of Bergen, Sydnesplassen 12/13, 5020 Bergen, Norway

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reasons for China’s departure from the approach outlined by the WHO report. Nevertheless, we acknowledge substantial inequities still exist for various segments of the population and among the diverse areas of China in accessing healthcare services and make suggestions on how to reduce such inequities within the system. Keywords China . Universal health coverage . Prioritization . Health insurance . Equity

Introduction During the past few years, there has been a sustained focus on achieving universal health coverage (UHC), both in affluent countries such as the USA and less wealthy ones. The fundamental challenge is the same: how to prioritize resources when it is not possible to cover everyone for every available medical intervention. The standard approach in the prioritization literature has been to rank condition/ intervention pairs according to their cost-effectiveness and then to recommend that governments fund the most cost-effective interventions until available resources are exhausted. This approach is evident in the recent report by a WHO Consultative Group on Equity and Universal Health Coverage although there are important modifications (World Health Organization 2014). Specifically, this report introduces additional criteria—beyond just cost-effectiveness—in ranking the importance of different medical interventions. The aim of the WHO report is to suggest a strategy that countries can adopt when they move towards increasing coverage of health services to the entire population. The report emphasizes that adoption of UHC means not only increasing the number of people covered by health insurance, but also increasing the categories of services covered and reducing out-of-pocket premiums for individuals. Given that a country cannot provide comprehensive coverage to everybody at once, trade-offs are necessary. For instance, governments may have to choose between increasing the range-of-services available to a segment of the population or expanding basic coverage to more people. The following statement from the WHO report summarizes the dilemma that a country may face in prioritizing healthcare resources (World Health Organization 2014, 4–5):

In each dimension, countries moving forward will face at least one critical choice regarding fairness and equity. When expanding priority services, countries must decide which services to expand first. When including more people, countries must decide whom to include first. And when reducing out- of-pocket payments, countries must decide how to shift from such payment toward prepayment. In order to assist countries with this process of prioritizing resources, the WHO report suggests a set of procedures that a country should follow. The crucial first step is that countries should classify services into three priority groups: high-priority services, medium-priority services, or low-priority services. The WHO report further states that the prioritization methodology should consider the following three criteria:

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& & &

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Cost-effectiveness Priority to the worse-off Financial risk protection

Once a country has finished classifying services into these three priority groups, countries should then decide on the following: (1) what services to provide to what population groups, (2) what services should be covered by co-payments, and (3) what amount the patient should pay. The basic idea put forth in the WHO report is that countries should first cover everyone with the services in the high-priority group before they cover anyone else for services in the medium- or low-priority groups. In other words, a country should first increase the number of people covered for services in the high-priority group before seeking to increase coverage for only some people in the medium- and low-priority service groups. According to the WHO report (World Health Organization 2014, 11):

Coverage for low-or medium-priority services should generally not be expanded before there is near universal coverage for high-priority services. Similarly, universal coverage for low-priority services should generally not be sought before coverage for medium- priority services is fully expanded. The basic picture that emerges from all of this is quite clear. High-priority services and interventions should be available to everyone, and out-of-pocket payments should also be reduced for these services first. It is acceptable for some population groups not to have access to medium- and low-priority interventions if that is necessary to ensure everyone has access to high-priority services and interventions. There is only one allowable exception for this general rule. If it can be shown that the health gains of expanding services in the medium-priority category would greatly outweigh the health gains of expanding services in the high-priority category for certain population groups, then expanding services in the medium-category before expanding services in the high-priority category can be justified (World Health Organization 2014, 40):

For example, expanding coverage for a given service from 90 to 100 percent in certain hard-to-reach areas can sometimes be extraordinarily difficult and costly. If the resources involved could produce vastly larger improvements in coverage and health outcomes in areas that are only somewhat better off, that may be acceptable. However, it must be ascertained that all other feasible steps have been taken and that the evidence strongly and unambiguously suggests that those policies are the best overall. We believe there is some justification for the group’s recommendations. A country should prioritize those health services that will maximize population health—and this will generally be done if a country chooses highly cost-effective interventions for everyone first. It also seems inherently unfair that some population groups, without additional justifications, should have access to cost-effective interventions while other

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large groups do not. However, the current reality in many low- and middle-income countries is that it is not possible to expand coverage to anything but a very basic package of healthcare services to everyone, even though a sizable group of people have access to a much broader package of healthcare services. Using China as an example, we shall argue that recommendations for achieving UHC should accept that different levels of benefit coverage for different population groups will continue to exist during its implementation. The primary focus should not be placed on expanding the same package of services to everyone first before anyone can get extra coverage, as the consultative group purports (only allowing rare exceptions with strong justifications). Here, we first provide an overview of the Chinese health insurance system and then show how the introduction of the various insurance schemes for covering different populations was done in a way that would have been completely unacceptable to the WHO’s group recommendations. Finally, we shall argue that there are good reasons for China’s departure from the group’s recommendation to illustrate there are alternate pathways for achieving UHC.

Overview of the Chinese Medical Insurance System The national basic medical insurance system (NBMIS) in China has been in existence for over 60 years. The system has developed through three phases since its establishment in the 1950s: the initial stage (1950s–1980s), the transitional stage (1980s–2009), and the current stage (2009–to present). During the initial stage, the NBMIS covered the majority of the population in the country and provided everyone with nearly free healthcare services. In the 1980s, when China experienced rapid economic system transition from a planned economy to a market economy, the system collapsed. The rising healthcare costs in the 1990s created major social tensions. This prompted a major reform in the NBMIS which was finally completed in 2009. The healthcare reform initiated in the 1990s in China led to the establishment of three separate insurance schemes that cover different populations and is defined by employment and residence status. They are the Urban Employee Basic Medical Insurance Scheme (UEBMIS), the New Rural Cooperative Medical Insurance Scheme (NRCMIS), and the Urban Resident Basic Medical Insurance Scheme (URBMIS). Currently, these three schemes are run independently and are funded by separate mechanisms. They collectively make up the current NBMIS in China. An individual may not be covered by more than one scheme, and the benefits are generally not transferrable between the schemes. The Chinese central government has mainly been responsible for developing policy guidance on all the three schemes in the NBMIS. The central government has put forward a Bnational basic health care service package^ which describes a catalogue of medicines, diagnostic tests, and hospital services to be covered in each scheme (MoL&SS 1999a, b). The central government also provides some subsidies to the insurance funds in some areas. Governments in various administrative regions,1 such as 1

China implements the local administrative system under the Central Government, in which there are 34 administrative regions including 23 provinces, 5 autonomous regions, 4 municipalities, and 2 special administrative regions. Each administrative region has both local urban areas such as cities and local rural areas such as counties and countryside (Central People’s Government 2013).

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the provincial governments and the municipal governments (hereafter collectively refer to as Blocal governments^), administer these insurance schemes at the local levels. The local governments are responsible for operating the local basic medical insurance schemes and prescribing the benefit coverage according to the local situation based on guidance from the central government. They are required to cover all the healthcare services defined in the national benefits package with only slight adjustments allowed for local needs (30 years of health reform in China 2008). The local governments are also responsible for determining how the schemes which they administer are funded. Different schemes run by various local governments only used to pay for benefits in their specified local healthcare facilities. However, in the last few years, many hospitals started accepting insurance payment from the UEBMIS from different parts of China, but the reimbursement rate can differ substantially between plans administered by various local governments. Typically, patients still need to make co-payment for hospitalization and the insurance schemes pays about 20–50% of the total treatment costs, subjected to an annual cap (see Table 2 below). The NBMIS currently covers more than 95% of the country’s population, compared to 22% of the population covered in 2003 (MoH 2011, 2012, 167). In 2012, 75% of the urban population (536 million/712 million) was covered by either the UEBMIS or the URBMIS, and over 98% of the rural population was covered by the NRCMIS (People’s Daily Online 2011; NBoS 2013). Most people can access some healthcare services without serious financial burden. Moreover, the risk of impoverishment from healthcare expenses has been greatly reduced compared to the period prior to the implementation of these schemes (Meng and Tang 2010, 23). Patient out-of-pocket expenses have also been significantly reduced. For instance, the individual out-of-pocket payment accounted for 35% of the total healthcare expenses in 2011, compared to about 59% in 2000 (MoH 2012, 167; NBoS 2012).

Coverage of Different Population Groups In this section, we shall show that China did not conform to the recommendations of the WHO consultative group at all when they introduced and expanded UHC. According to the group, the following trade-offs are unacceptable (World Health Organization 2014, 39; 40):

To expand coverage for well-off groups before doing so for worse-off groups when the costs and benefits are not vastly different. This includes expanding coverage for those with already high coverage before groups with lower coverage.(p.39, unacceptable trade-off III) To first include in the universal coverage scheme only those with the ability to pay and not include informal workers and the poor, even if such an approach would be easier.(p.40,unacceptable trade off IV) China started its reform of its healthcare coverage system by covering the urbanemployed population first, then the rural population, and then the urban non-employed

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population. The UEBMIS was formally established in 1998 to cover the employed populations in the urban areas funded by contributions from employers and employees (State Council 1998). Under this scheme, retirees in the urban areas could continue to enjoy the same medical insurance benefits without paying insurance premiums if they have paid into the UEBMIS for at least 15 years. Employers typically pay about 80% of the premium and employees pays about 20%. The scheme has progressed steadily since its establishment. A National Health Service survey in 2008 showed that the UEBMIS covered 44% of the urban population, compared to 30% in 2003 (MoH 2009, 153). The UEBMIS only covers individuals in the urban area who are employed. Coverage for the rural population was introduced in 2003 by the introduction of the NRCMIS in accordance with the legislation BGuidance on Establishing the NRCMIS^, formulated jointly by the Ministry of Health, Ministry of Finance, and Ministry of Agriculture (MoH, MoF, and MoA 2003). It became a nationwide program in 2010. After the introduction of these two schemes, a significant segment of the population—urban nonemployed population—was still left out. The urban non-employed population is people who have urban resident registration status and do not have any formal employment that allows them to participate in the UEBMIS. This group includes the self-employed, students, young children, some retirees (those not having previous employment that participated in the UEBMIS), the elderly, and migrant workers (people who move from rural areas to the urban areas to seek a better livelihood). These categories of Chinese citizens, which constituted about 50% of the urban population, were not eligible to participate in either the UEBMIS (which covered only employees) or the NRCMIS (which covered residents in their respective rural residency only). In order to provide coverage for these uninsured people in urban areas, the URBMIS was piloted in 79 cities in 2007 in accordance with the legislation BDecision on Piloting the URBMIS^ (The State Council (2007) No.20). The scheme became a nationwide program in 2009 after the legislation BNotice on Developing the URBMIS Nationwide^ was passed (State Council 2007; MoHR&SS and MoF 2009). The urban employees are clearly the more well-off groups in China compared to rural populations, migrant workers, and non-employed urban residents. However, the WHO consultative group’s recommendation clearly states that expanding coverage for the well-off groups before the worse-off groups when the costs and benefits are not vastly different is unacceptable (World Health Organization 2014, 39, unacceptable trade-off II). The urban employed populations also have a higher ability to pay and they are the ones who got coverage first (World Health Organization 2014, 40, unacceptable trade-off IV). This puts the Chinese NBMIS directly in conflict with the guidelines of the WHO Consultative Group. The criteria for coverage in the Chinese system are basically based on residency location and employment status. The urban population, being the most Bwell-off^ group, was covered first and has the best coverage.

Conditions Covered Under the Different Schemes According to the report, a country should also not make the following unacceptable trade-off (World Health Organization 2014, 39, unacceptable trade-off I):

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To expand coverage for low- or medium-priority services before there is near universal coverage for high-priority services. This includes reducing out-ofpocket payments for low- or medium-priority services before eliminating outof-pocket payments for high-priority services. Again, China’s approach did not conform to these recommendations. Coverage clearly differs among the three schemes. Table 1 shows that UEBMIS has the highest gross insurance funds among the three schemes and pays the highest level of benefits. The NRCMIS had 736 million enrollees, about 2.6 times the number of enrollees in the UEBMIS in 2014, but the gross funds of the NRCMIS was only equal to about 37% of the gross funds of the UEBMIS in 2014. Meanwhile, the UEBMIS and the URBMIS covered similar number of enrollees in 2014, but the gross funds of the UEBMIS were about 4.9 times higher than the URBMIS in 2014 (NBoS 2015). Less funds available to the URBMIS and NRCMIS directly translates into fewer services/treatment options covered. Many NRCMIS and URBMIS do not cover vaccines, prophylactic use of medicines, pre-labor maternity care, ultrasounds, PET scans, CT scans, organ transplants, etc. (Hou 2016; GlMPG 2014). Table 2 lays out the average insurance funds and payout per capita in the three schemes. The average insurance funds per capita of the UEBMIS were about five to seven times higher than either the URBMIS or the NRCMIS nationwide in 2014. Even accounting for the higher costs of providing healthcare in the cities and possible differences in disease burden, Table 2 demonstrates that urban employees receive on average much more healthcare benefits than urban non-employees and rural residents. There are in fact many services what may be considered Blow or medium priority^ services that are available to the UEBMIS enrollees while basic Bhigh priority^ services are still not available to the enrollees of the other two schemes (World Health Organization 2014, 39, unacceptable trade-off I). For instance, certain advanced treatments for cancer (what the WHO group considers Bmedium or low priority treatments^) are covered by the UEBMIS whereas certain heart attack treatments (a high-priority treatment) are not covered by many locally run NRCMIS and URBMIS. We will use the example of Guangzhou, Guangdong province—one of the wealthiest coastal city in China—to illustrate the discrepancies between the UEBMIS and the URBMIS within the same city. To enroll in the city’s UEBMIS, the employer contributes 7% and the employee contributes 2% of his or her salary towards the city’s plan. Self-employed people would need to contribute 9% of their income to be eligible (GzMPG 2015; GzMHRSSB and BoFoGzM 2017). In 2017, the minimum required Table 1 The total number of enrollees and the financial conditions of the UEBMIS, the NRCMIS, and the URBMIS respectively in 2014 (NBoS 2015) Indicators Schemes

Total number of enrollees in 2014

Gross funds in 2014

Gross payout in 2014

UEBMIS

282M

¥804B

¥670B

NRCMIS

736M

¥303B

¥289B

URBMIS

314M

¥165B

¥144B

M million (1,000,000), B billion (1,000,000,000)

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Table 2 General comparison of the UEBMIS, the NRCMIS, and the URBMIS (NBoS 2015, 19–22) Schemes

Annual Average yearly insurance Average yearly payout Average individual reimbursement rate (%) reimbursement cap funds per capitaa in 2014 per capitab in 2014

UEBMIS ¥2851 ($464)*

¥2376($387)

64

¥180,000–350,000

NRCMIS ¥412 ($67)

¥393 ($64)

52

¥100,000–220,000

URBMIS ¥525 ($86)

¥459 ($75)

49

¥20,000–30,000

Note: *Official currency exchange rate in 2014,¥6.14 = $1 a

Average insurance funds per capita is calculated by dividing the gross insurance funds by the total number of enrollees in the basic medical insurance scheme in a given period of time

b Average payout per capita is calculated by dividing the gross payout of the basic medical insurance fund by the total number of enrollees in the basic medical insurance scheme in a given period of time

total (employer + employee) annual contribution is ¥4455, and the maximum total annual contribution is capped at ¥22,275 regardless of how much money an individual makes. Individuals who have contributed at least 15 years would be eligible to continue to receive benefits without paying premiums after retirement. The plan pays up to ¥300 per month for outpatient services (regular doctor visits and prescription) but patients need to pay 50% of the cost of the outpatient visits. Out-of-pocket co-payment for hospitalization (up to 15 days) is around ¥1200–3000 and out-of-pocket co-insurance is about 20–40% of the total charges (as low as 5% for some government employees). The maximum annual reimbursement cap is ¥534,576 (US $84,585) in 2017 (GzMLTB 2017; GzMHRSSB 2017). The city government also creates a Bflexible spending^ healthcare savings account for each individual and automatically deposits ¥100–300 (deposit amount increases with age) a month to each individual’s account. The funds do not expire and continue to accumulate if an individual chooses not to use it. Employers or employees may also opt to deposit additional funds into their healthcare savings account by themselves and many companies offer such deposits as a bonus to the employees. The funds in the healthcare savings account may be used to pay for any medical expenses including prescription, dental, vision, acupuncture, physiotherapy, psychological/psychiatric treatments, consultative services, and even cosmetic services, as well as any out-of-pocket expenses like co-payment and co-insurance. An individual may also use his/her healthcare savings account funds to pay for a family member’s medical expenses. Participants may choose hospitals or healthcare providers anywhere in the city and any other facilities in the country that accept Guangzhou’s UEBMIS plan. On the other hand, the annual individual premium for the URBMIS in Guangzhou is only ¥182 (with ¥436 combined subsidy from the central/city government) (GzMHRSSB and BoFoGzM 2016). An individual must visit a designated healthcare center for outpatient visits and the plan only pays up to ¥100 of monthly benefits and the patient needs to pay for 40% of the expenses. Out-of-pocket co-payment at the designated hospital for in-patient hospitalization stay is ¥1600. The total insurance reimbursement cap per year is only ¥30,000 (US $4746) for regular medical expenses with out-of-pocket co-insurance of about 40% (GzMIA 2016). If a patient has incurred medical expenses above the plan’s cap, a separate Bcatastrophic diseases^ fund (subsidized mainly the Guangzhou City Government) may reimburse 50–70% of the expenses up to ¥348,000 (US $55,000) (Xie 2017). However,

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the plan does not cover dental, vision, many preventative care, or many diagnostic services. There are also no flexible healthcare spending accounts to cover the rather high amount of co-payment and co-insurance. Participants may usually only seek treatments in their designated healthcare facilities. The range of service and reimbursement limit is clearly much worse than the UEMBIS plan.

Higher Priority to Financial Protection Finally, the following is also an unacceptable trade-off (World Health Organization 2014, 39, unacceptable trade-off II):

To give high priority to very costly services whose coverage will provide substantial financial protection when the health benefits are very small compared to alternative, less costly services. The Consultative Report does allow a trade-off between health gains and financial protection, and this is a vast improvement compared with previous WHO recommendations. China, however, has arguably given higher priority to financial protection than envisaged by the Report. The government has set up various medical assistance schemes (MoCA, Moh, and MoF 2003; MoCA et al. 2005; MoCA, MoF, and MoL&SS 2007; State Council 1994), with the specific aim at providing financial protection for out-of-pocket expenses for costly treatment that may or may not yield substantial health gains (e.g., advance treatments for cancer and other catastrophic healthcare expenses). This is in direct conflict with the guidelines which state that it is unacceptable to give high priority to very costly services whose coverage will provide substantial financial protection when health benefits are very small compared to alternative, less costly services. These medical insurance schemes actually serve very important functions. In the past few decades, China has expended a considerable effort in eliminating infectious diseases like malaria, typhoid fever, and schistosomiasis that affect many developing countries. Chronic diseases like cardiovascular diseases, cancer, and diabetes are now more prevalent in China. Treatments of those diseases tend to be more expensive, and it is important to provide people with financial protection against these costly diseases. Large out-of-pocket expenses pushed a lot of people into poverty in China. Many people may not seek treatment when necessary. For example, in urban areas, about 42% of the lowest income population did not utilize hospitalization healthcare services when needed in 2003 compared to 17% in the highest income group (MoH 2004). Providing financial protection is a means of encouraging people to seek healthcare services when needed.

China’s Universal Healthcare Coverage Development: A Challenge for the WHO Group’s Proposal We have shown that the development of UHC in China departs markedly from the recommendations by the WHO consultative group. In this section, we shall argue that

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there are good reasons for China’s policy choices. The concern that drives the model proposed by the WHO consultative group is health maximization, suitably weighted by concerns for the worse-off, and financial protection. Maximizing health in the way proposed by the WHO consultative group also satisfies concerns for equity—namely everyone gains access to the same level of services in the process of expanding health coverage. Undoubtedly, this model is attractive in wealthy countries like Europe. In the case of many European countries, universal coverage was established when there were few very expensive and effective interventions and increase in coverage occurred in parallel with economic growth. In China’s case, and in many other low- and middleincome countries, the universal health system was established at a time when many expensive, life-saving interventions had been developed, but before there was sufficient national income or infrastructure to cover these services for everyone. In these countries, policies to introduce UHC typically start when some segments of the population (usually the more well-off groups) already have access to relatively decent healthcare, either through a separate insurance scheme or use of their private resources to pay for services. This reality provides the following three reasons why a country would reasonably want to depart from the WHO consultative group’s recommendation. First, a country government has to decide whether to incorporate existing financing mechanisms in a national scheme, or leave those already with access to healthcare outside of the national plan and concentrate on expanding coverage for the majority of the population. Leaving the well-off groups outside the national scheme would free up government resources to cover the larger population. However, this would lead to a two-tiered private/public system, with the private system outside of government control. This may not be acceptable to many governments from the policy perspective, and therefore not an option. There are then two remaining choices if a government decides to incorporate the existing schemes in a national UHC scheme: (1) It can leave the coverage in the existing schemes unchanged, or (2) It can combine the resources of the existing schemes with any new funding mechanisms and establish a unified system with the same level of benefits for all. The latter approach to establish UHC would conform to the recommendations by the WHO Consultative Group in providing the same coverage for everyone in the country first. However, this would lead to a substantial lowering of the benefits of the original covered groups whom may already enjoy fairly decent coverage or require very large sums of money to make sure everybody gets the same level of benefits. In the case of China, the per capita UEBMIS insurance fund in 2014 was about 2,851 yuan versus 525 yuan for the URBMIS and 412 yuan for the NRCMIS (see Table 2). However, there are actually over four times more enrollees in the URBMIS and NRCMIS combined than the UEBMIS. That means about 2000 billion (or 2 trillion) yuan of the subsidies is needed to the URBMIS and the NRCMIS to even out the insurance funds of the three schemes (NAO 2012). This is an astronomical sum of money for the government to cough up and is virtually impossible at this stage. The only way to equalize the benefits across the population would be to substantially cut benefits for those who already enjoy better coverage and forcing them to join a national plan with lowered benefits. While this may be acceptable from the point of view of ideal justice and fairness (as strongly purported by the WHO Consultative Group), it certainly is not a feasible policy option. This leaves only one alternative, namely to incorporate the existing insurance schemes and financing mechanisms in the national system, but accepting there WILL be inequalities within the

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system. This is exactly what China has done. Although there are also different tiers of benefits in the current system, at least they are all under government control, either local or central. Second, different existing insurance schemes may have different sources of funds, as in the case of China. The UEBMIS is largely funded by contributions from both the employees and the employers. In contrast, the insurance funds of both the URBMIS and the NRCMIS heavily depend on the government subsidies, since most enrollees are poor and cannot afford to pay the premiums. For instance, government subsidies account for only 3.5% of the UEBMIS funds but 82% of the NRCMIS and URBMIS funds in 2011 (see Table 3). The UEBMIS is therefore funded largely by the enrollees’ own resources. The introduction of the scheme, with mandatory contributions by employers and employees, and with a specified benefit package, could be done without large and unsustainable financial consequences for the government budgets. Most of the insurance funds in the UEBMIS actually come from the corporate profits and contribution from employees in the urban area. It only makes sense for the UEBMIS to design its benefit coverage that is catered to the needs of the urban employees. Meanwhile, the central government is already providing proportionately a lot more subsidies to the NRCMIS and URBMIS that cover the poorer populations (Table 3). Such an approach is consistent with other socio-economic policies of the central government of promoting social welfare in less advantaged areas to maintain political stability. Third, geographical constraints and regional differences within a country would impose difficulties on the funding of a unified, nationwide health insurance system. China is a populous country with over 1.3 billion people and landmass over 9.6 million square kilometers. Given the large landmass, China utilizes a local administrative system under the guidance by the central government (Central People’s Government 2013). Healthcare system and resources also follow the same locally managed administrative model which no doubt will lead to unequal distribution of healthcare resources. Moreover, the coastal region also developed much more quickly than the central and western region of China. The huge disparity in wealth between different regions also caused huge disparity in healthcare resources as wealthier people would naturally demand and consume more healthcare services. The coastal region has been the growth engines and leading China in both social and economic development. Therefore, it does not seem unreasonable to push forward medical system reform in the coastal region to protect the urban employees first. Protecting the health of the workers in coastal region could be viewed as a way to protect the economic development of China. More than 500 million people were lifted out of poverty in the past three decades. The poverty rate Table 3 Financial sources of insurance funds of the UEBMIS, the NRCMIS, and the URBMIS in 2011 (NAO 2012, No.34) Indicators Schemes

Gross funds (unit: billion yuan)

Government subsidies (%)

Employer contributions (%)

Individual/household contributions (%)

Others (%)

3

UEBMIS

482

3.5

73

20.5

NRCMIS

198

82.1

0

15.8

2.1

URBMIS

43

82.1

0

15.8

2.1

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in China fell from 84% in 1981 to 13% in 2008 as measured by the percentage of people living on the equivalent of US$1.25 of less per day in 2005 purchasing price parity terms (NAO 2012). With the new wealth, the government was then able to increase subsidy to poor. This is evident by the fact that the majority of the insurance funds of the URBMIS and the NRCMIS come mostly from government subsidy as discussed earlier. From the policy perspective, there were certainly good reasons for China to have developed the healthcare system this way even though it clearly favored the better-off first.

How to Improve Equity in the National Basic Medical Insurance in China As we have illustrated, substantial inequities exist among the three schemes in the NBMIS in China. The question now is how to improve equity in access to healthcare in the country. We think recommendations by WHO Consultative Group would not be practical for China at all. This is because the report has not fully taken into account the current structural, political, and socio-economic constraints of a country when formulating recommendations for implementing UHC to minimize inequalities. The group envisages that policies should aim at identifying cost-effective interventions and then systematically introducing these services for the general population. In this section, we shall argue that this focus on identifying cost-effective interventions and systematically introducing these services should not be the most important policy goal. To gradually reduce equity to access to healthcare, government policies should focus on allocating resources systematically to current schemes with lower coverage and improving healthcare infrastructure in underserved areas. Simply identifying cost-effective interventions and promoting coverage for these services may not be as effective as identifying means of redistributing resources and improving infrastructure. Let us first focus on ways to redistribute resources in China. To improve healthcare access for the worse-off groups in China, the government would need to gradually increase the subsidy to the URBMIS and NRCMIS over time. This is what China has done. In 2011, the central government’s subsidies to the poorer areas like the middle and western region increased about 5.6 times compared to 2005. Meanwhile, the central government’s subsidies to the wealthier eastern areas increased about 4.5 times in 2011 compared to 2005 (NAO 2012). In 2014, the budget of the URBMIS has grown to 2.1 times the amount in 2011, 2.6 times for the URBMIS, and 1.4 times for the UEBMIS respectively (MoH 2014). Therefore, there has already been a systematic favoring of the disadvantaged groups in China. Given this commitment of the government to put more subsidy to the two less well-funded schemes compared to the UEBMIS, we argue that the Chinese NBMIS is largely in line with the principle laid down by the WHO consultative group which states that countries should not shift from out-of-pocket payment towards mandatory prepayment in a way that makes the financing system less progressive (p.40—unacceptable trade-off V). The central government has actually been redistributing resources from wealthier area to fund healthcare services in less healthy areas. Consolidating multiple schemes into one scheme is another policy option. However, immediately merging all three schemes into one scheme will involve substantial reduction in services offered and insurance payout of UEBMIS. Such Bleveling-down^

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approach of taking away benefits people already enjoy is clearly not politically feasible. There is a more gradual option, such as merging plans with similar level of benefits together first. The Chinese central government has recently put forward a plan to merge the URBMIS and the NRCMIS (State Council 2016). This would reduce inequities between services offered for residents in the rural areas and the non-employed population in the urban areas. Merging these two schemes may also mean residents are not restricted to receiving treatments in their own geographic regions. This can certainly encourage access to healthcare, especially for migrant workers who may constantly be moving from place to place in search of better employment opportunities. Meanwhile, some cities are already offering the same UEBMIS plan for everyone to join. In Guangzhou, any residents can participate in the UEBMIS if they pay the full premium themselves, but benefits would only start after at least 6 months of premium payments. In 2018, the lowest monthly premium for the UEBMIS in Guangzhou is ¥400 (US$56) (GzMLTB 2017). However, many migrant workers make just a little over the city’s minimum wage of ¥1895 ($300) a month (GzSSB 2017), despite the average wage for Guangzhou is at ¥7210 (US $1161) a month in 2017 (Tang 2017). The city’s UEBMIS plan is clearly not very affordable to migrant workers and other low-income groups despite being eligible to take part. Undoubtedly, policies still need to be identified to improve coverage for these groups. Finally, one should not underestimate the importance of sufficient healthcare infrastructure, both in terms of facilities and qualified human resources. Both physical and human healthcare infrastructures have not caught up with China’s rapid economic growth. Systematically favoring underserved areas when strengthening both physical and human infrastructure is another way to redistribute resources from wealthier to poorer areas. Improvement in healthcare facilities in rural areas would also naturally attract more investment which would in turn enhance the economic development of those areas. Many people also face high transportation costs to access their closest local healthcare facilities even though the services are covered by their local NRCMIS. Providing subsidies for the NRCMIS to reimburse transportation costs for the poor living in rural areas with difficulties accessing their local healthcare facilities, or setting up mobile clinics, would promote easier access to healthcare facilities and are clearly ways to improve equity in healthcare services. The development of the healthcare system in China demonstrates that perhaps the most important question is not what specific medical conditions/illnesses should be covered first, but how much and how fast a government should divert resources from more well-off groups to worse-off groups, given the political and economic realities of that country. Despite some progress, it may still be necessary to require the more Bwelloff’ population in China to contribute more, either through taxation or higher premiums. For instance, the premiums or deductible expenses may be tied to the income level to raise more resources for the schemes with less insurance funds. The government may also explore a more progressive tax system to raise more revenue for reducing the inequities of the current healthcare system. One could also argue that the government should commit more resources to healthcare services overall. In 2014, the total healthcare expenditure as % GDP is only about 5.5%, compared to around 10% for Japan and some Western European countries, and 17.1% for the USA (see Table 4). This shows that there is still room for growth in healthcare expenditure as China continues to develop.

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Table 4 Healthcare expenditure and other economic indicators comparison of China with other countries (World Bank 2014, 2015) Indicators Population Countries (millions) 2014

Total GDP GDP % GDP per Total health Health expenditure ($ billions) growth 2013–14 capita expenditure as % per capita 2014 (US$)2014 of GDP 2014 (US$)2014

China

1364.27

10,354.8

7.3

7590

5.5

420

Japan

127.13

4596

− 0.11

36,189

10.2

3703

Germany

80.97

3868.3

1.6

47,774

11.3

5411

Norway

5.14

499.8

2.2

97,300

9.7

9522

UK

64.56

2988.9

2.9

46,297

9.1

3935

Canada

35.54

1785.4

2.4

50,231

10.4

5292

318.86

17,419.0

2.4

54,630

17.1

9403

USA

The latest data on healthcare expenditure are from 2014 (Index Mundi 2014), so data from the same year are chosen for the other indicators

Another Path Towards Universal Health Coverage The overall experience from China suggests that it may not always be important to focus the prioritization process solely on what specific medical interventions are to be covered first for the entire population, as suggested by WHO Consultative Group. This does not mean that it is wrong to identify cost-effective interventions, or interventions that are important for financial protection. Any sensible prioritization process will have to take these two issues into account. However, we argue that it is not always appropriate to start the process by identifying cost-effective interventions and then design the prioritization process by scaling up the provisions of interventions based on cost-effectiveness rankings alone. In China’s example, we think that it was justifiable to develop a more comprehensive healthcare system for the more well-off population (urban employees) first to protect the economic growth of the country before expanding healthcare coverage to less developed areas and less well-off population. After all, it is precisely that strong economic growth that is funding the expansion of more healthcare benefits coverage to the larger population. China has also given much higher priority to financial protection instead of expanding more basic coverage as dictated by healthcare needs of the population. However, once this process has started, there should be a continued systematic favoring of disadvantaged areas in terms of financing, physical infrastructure, and medical personnel training. If such policies are pursued, inequalities in healthcare services in China will shrink over time.

Conclusion In conclusion, China’s approach on developing its National Basic Medical Insurance, which currently covers over 95% of the population, is clearly not in agreement with the WHO consultative group’s recommendations on achieving universal healthcare. Each country will need to consider its own political, economic, and social policy situations in order to develop the most appropriate healthcare system for its own populations. We

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acknowledge that there is still huge inequity in accessing healthcare services in China despite relative success in covering most of its population. There is still a long road ahead for China to achieve true Buniversal healthcare^—defined as access by all to quality health services without financial hardship (World Health Organization 2015). Both the range of services covered as well as financial protection needs to improve in all three schemes under the NBMIS. Priority of new resources should be given to the URBMIS and NRCMIS to bolster their inadequate level of benefit coverage without reducing benefits in the UEBMIS and not endangering the economic growth in the wealthier areas. China can also make reference to many of the suggestions made in another WHO report titled BHealth Systems Governance for UHC^ (World Health Organization 2015) to improve its healthcare system by enhancing quality, safety, and continuity of care and establishing a more predictable public financing mechanism for funding healthcare. With better equity in accessing healthcare services and improved quality of care, China will benefit from a more stable and harmonious society with less social tension to further advance the development of the country.

Author Contributions CW wrote the initial draft. RL provided advice regarding the main objectives and methodology. All authors contributed to the revisions of the manuscript, providing key intellectual input during the revision process. All authors have read and approved the final manuscript.FundingNo funding except for salaries of authors from their respective institutions. Compliance with Ethical Standards Competing Interests

The authors declare that they have no competing interests.

Abbreviations: NBMIS, National basic medical insurance system; NRCMIS, New Rural Cooperative Medical Insurance Scheme; UHC, Universal health coverage; UEBMIS, Urban Employee Basic Medical Insurance System; URBMIS, Urban Resident Basic Medical Insurance System; WHO, World Health Organization

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