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Fixing Healthcare In China: First Fix Local Government

A big part of China’s widening inequality gap is disparities in the provision of healthcare, both between town and country and between rich and poor. Policy makers in Beijing want health care reform to play a leading role in closing the gap–one reason that the system is being overhauled to provide accessible and affordable healthcare widely. But as the World Bank notes in a new policy research working paper, Equity and Public Governance in Health System Reform: Challenges and Opportunities for China, national policy reform isn’t working through to implementation at provincial government level and below.

The funding and the instructions may be coming through from Beijing just fine: government spending on healthcare is now within touching distance of the 1.5%-2.0% of GDP the World Health Organization says it will take to provide primary health care for all, after having lagged for years in the 0.7%-0.9% range. But how and where the money is being spent is in local hands. At the prefectural, municipal and district levels priorities tend to transform into something different from those of central government. The mountains are high and the emperor far away.

As a result for the past decade, healthcare resources have been concentrated on the larger towns and wealthier areas in ways such as building expensive specialized urban hospitals. Beijing and Shanghai, for instance, the paper notes, are better equipped with magnetic resonance imaging machines and other advanced medical equipment than a typical European city. Meanwhile, rural areas are suffering from preventable deaths for lack of resources.

To redress all this, the Bank says:

It may be crucial to strengthen the role and accountability of provincial governments. Provincial governments may have to become explicitly responsible for equity and efficiency in public resource allocation, for national policy implementation, enforcement of laws, standards and regulations, and for adequate health system performance within the entire province.

The paper has detailed suggestions on how this could work. Were it to happen, healthcare would be similar to education, where achievement of the national goal of universal nine-year compulsory education is subject to performance evaluation at the local level. At present, healthcare is more like food safety, or product and environmental safety come to that, where strict national laws and regulations are undermined by poor local implementation.

For all that to change, it will require parallel reforms in local governance and the way local government is funded. That is also going to be necessary for all central government’s other plans to reduce inequalities across society through the provision of better social services as outlined, yet again, by Prime Minister Wen Jiabao in his web chat at the weekend. That in turn will provide a challenge for the new leadership that will have to transform almost beyond recognition a local officialdom that has hitherto had little incentive to deliver the efficient and equitable provision of public services.

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