Abstract
BackgroundIn the transition from a planned economy to a market-oriented economy, China’s state funding for health care declined and traditional coverage plans collapsed, leaving China’s poor exposed to potentially ruinous health care costs. In reforming health care for the 21st century, equity in health care financing has become a major policy goal. To assess progress towards this goal, this paper examines the equity characteristics of health care financing in a province of northwestern China, comparing the equity performance between urban and rural areas at two different points in time.MethodsAnalysis of whether health care financing contributions were progressive according to income were made using the Kakwani index for each of the four health care financing channels of general taxes, public and private health insurance, and out-of-pocket payments. Two rounds of surveys were conducted, the first in 2003 (13,619 individuals in 3946 households) and the second in 2008 (12,973 individuals in 3958 households). Household socio-economic, health care payment, and utilization information were recorded in household interviews.ResultsLow-income households have undertaken a larger share of the health care financing burden in recent years, reflected by negative Kakwani indices, which indicate a regressive system. We found that the indices for general taxation were −0.0024 (urban) and −0.0281 (rural) in 2002, and −0.0177 (urban) and −0.0097 (rural) in 2007. Public health insurance presented different financing distributions in urban and rural areas (urban: 0.0742 in 2002, 0.0661 in 2007; rural: –0.0615 in 2002,–0.1436 in 2007.). Out-of-pocket payments were progressive but not equitable. Public health insurance coverage has expanded but financing equity has decreased.ConclusionsHealth care financing policies in China need ongoing reform. Given the inequity of general consumption taxes, elimination of these would improve financing equity considerably. Optimizing benefit packages in public health insurance is as important as expanding coverage, both for health care financing and for utilization management as well. Although they are progressive, out-of-pocket payments are not equitable in China and have the effect of excluding the poor from health care as they cannot afford to pay for medical care and so withdraw from treatment.
Highlights
In the transition from a planned economy to a market-oriented economy, China’s state funding for health care declined and traditional coverage plans collapsed, leaving China’s poor exposed to potentially ruinous health care costs
Compared to developed countries, where direct taxes account for the majority, the dominant part of general taxes are the indirect taxes in China, which is a pro-rich policy so that the better-off can transfer the tax burden to the poor: in 2010, the value-added tax (VAT), sales tax, and excise tax on specific goods such as alcohol, tobacco, gasoline accounted for 52.35% [45]
For some indirect taxes where vulnerable individuals bear more burden relative to their ability to pay, tax reduction and abolition should be done to cope with this financing inequity, especially given the context that more financing liabilities have been transferred to the low-income population in recent years
Summary
In the transition from a planned economy to a market-oriented economy, China’s state funding for health care declined and traditional coverage plans collapsed, leaving China’s poor exposed to potentially ruinous health care costs. In reforming health care for the 21st century, equity in health care financing has become a major policy goal. Financing equity has been set up as one major policy goal in health care reform across a number of countries [1,2,3]. In contrast to earlier studies on health care financing in one particular period, two sets of data for this study were collected from different years This allows deliberate consideration of whether equity of health care financing in a specific year from any panel of data is sound, but whether the health care financing system is making progress in the evolution of the health care reform in China as well
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