• Spending overview
• Policy overview
• Diseases overview

Spending overview

As with most other economic and industrial indicators, healthcare spending in China has risen rapidly, increasing from US$1.7bn in 1980 to US$208bn in 2008. By 2014, healthcare spending is expected to be 82% higher than the level in 2010 in local currency terms, driven both by the launch of health services and by the gradual ageing of the population. Although it has risen in the past couple of years, in 2005 the proportion of total healthcare expenditure accounted for by the government stood at just 18%. This compares with 87% of total healthcare spending coming from the government in the UK. The increase in expenditure is likely to continue in the forecast period. The rise in spending will largely be driven by the government's healthcare reform agenda, which aims to roll out a basic package of care for the population by the end of the 2009 and universal access to a full range of healthcare services by 2020.

Increased health expenditure has been accompanied by an improvement in health indicators. Life expectancy is rising while the infant mortality rate is falling. The UN expects the proportion of the population aged over 65 to rise from 6.1% in 1995 to 9.3% in 2015, and is projected to more than double in the subsequent 20 years, to more than 19% in 2035. This process will increase demand for healthcare. A US-based think-tank, the Centre for Strategic and International Studies, has warned that China could be the first major country in the world to grow old before it becomes rich.

Policy overview

In urban areas, responsibility for financing healthcare spending has shifted from the government and state-owned enterprises to individuals, resulting in increased out-of-pocket expenditure on healthcare. In rural areas, medical provision, once provided by the Co-operative Medical System (operated by the communes), provided basic healthcare services to 90% of rural dwellers. However, with the disappearance of the communes, the system began to break down, leaving most of the rural population with the prospect of financing all of their healthcare costs out of their own pockets. In 2000 China's Ministry of Health estimated that 87% of rural patients paid the full cost of medical treatment themselves. Officials say that 200m Chinese have no insurance.

To tackle these problems, the government unveiled a series of reform plans in November 2008 in a report entitled Healthy China 2020. The ultimate goal is the provision of universal access to healthcare, funded through national health insurance, by 2020. Areas of focus include: improved healthcare infrastructure, free medical examinations to under-3s and over-65s, improved pre-natal care, and a national drug-supply system. A major objective of the reforms is to prevent government-owned hospitals from relying on payments exacted from patients for tests, medicine and other treatments. Reports in the state-run press say that more than 90% of hospitals' income comes from charges for providing services and medicine. Weaning hospitals and doctors off these sources of funds will be a difficult task.

Diseases overview

China faces serious health challenges, most notably from HIV/AIDS and smoking. The World Health Organisation (WHO) and the Joint UN Programme on HIV/AIDS (UNAIDS) estimate that there are around 650,000 people with AIDS in China, although the WHO believes that the number could start to rise rapidly. The government, which initially tried to cover up the problem of HIV/AIDS, has in the past few years become much more proactive in its attempts to combat the spread of the disease. In 2003 the government announced a new comprehensive AIDS treatment programme, which aims to increase provision of anti-AIDS drugs to infected patients. It also increased its support for preventive strategies, such as providing drug addicts with clean needles and syringes and encouraging condom use.

There is growing awareness of the health risks associated with smoking, in a country where 60% of adult males are regular smokers. In 2003 China joined the UN Framework Convention on Tobacco Control, which requires the country, over a period of five years, to ban advertising and sponsorship promoting tobacco products, forbid the sale of tobacco products to under-age smokers, force companies to print larger health warnings on cigarette packs and use taxation to reduce consumption. In addition, the government has banned the building of any new tobacco factories. Smoking is now prohibited in an increasing number of public places.