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An overview of China’s healthcare system and reforms

China’s healthcare system has grown immensely over the last 40 years. By peering through the lens of time, we discover the turbulent events and changes that China went through to bring its healthcare system to the level seen and experienced today.

In this article, Pacific Prime China will provide an overview of the country’s healthcare system from its inception as a hierarchical system, which inevitably deteriorated and gave rise to a focalized system, where the first point of entry in the treatment process began in the hospital. To achieve this we will rewind back 40 years to the economic reforms of 1978 – 1980 which marked the turning point in China’s healthcare transformation.

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The structure of the hospital network in rural areas

Up until the 1980s, the Chinese healthcare system was divided into 3 levels (and a top tier) of treatment access.

  • Tier-1 healthcare

Between 1966 and the beginning of the 1980s, village communities had access to free clinics. In these free clinics, treatment was administered by local workers who had been given a few weeks of training. These health workers were locally known as ‘barefoot doctors’, as they weren’t qualified health practitioners, but were trained to provide preventative treatment, ambulatory care, and first aid to the rural population.

  • Tier-2 healthcare

Tier-2 healthcare establishments were different from the free tier-1 health clinics as the setup and facilities were more advanced including the level of equipment provided for treatment. Tier-2 establishments dealt with patients who suffered from more serious illnesses.

  • Tier-3 healthcare

Tier-3 hospitals were structured at the district level. The level of healthcare was greater than both tier-1 and 2. These hospitals dealt with acute emergencies and offered members of the population access to state-of-the-art technology and standards. These hospitals were also staffed with senior healthcare staff, including specialist doctors and nurses.

  • Top-level healthcare

These hospitals had even higher grades of equipment, specialists, and standards, and operated at the provincial or national level.

As we can see, the structure that made up the public healthcare system varied in quality and standards, although treatment was mostly guaranteed free of charge.

The economic market reforms that changed rural healthcare

In 1978, China launched its economic reform which was led by former Chinese leader Deng Xiaoping. The visionary leader of the Communist Party laid out a pragmatic plan for China’s future that aimed at speeding up the development of the country’s unstable economy through fiscal decentralization and introducing market competition in labor and product. As a result of this pent-up reform, the funding for community hospitals from the government began to decline. Many of these community facilities and township hospitals had to close down because of decreasing public funding and increasing material cost. The three-tiered healthcare system weakened significantly and access to healthcare became a major dilemma for many poor households that relied on free public healthcare services. In very little time, tier-1 public establishments began to collapse, leaving those in rural areas without public healthcare treatment. Without public funding, local populations soon discovered that sources of treatment on offer had become private, and more expensive.

Tier-2 and Tier-3 public healthcare provider acquire autonomy to become private

As tier-1 public establishments phased out, tier-2 and tier-3 health facilities and providers soon gained greater control over their future and management of their profits. This allowed them to strategically invest in new equipment and acquire new medical technology. Consequently, as public funding for these establishments and hospitals were reduced, they were no longer subject to a duty of public service. Soon, many establishments transformed into private ones and the fact that they had an effective monopoly over their local geographical area allowed these public-private providers to set their own prices. Thus, the cost of treatment and admission increased to levels unseen before in China.

Healthcare system in urban areas

In urban areas, from 1949 to 1980, access to treatment and care was largely facilitated by and within state-owned enterprises. Each enterprise managed access to treatment on behalf of its employees and their children, as well as setting up a pension in preparation for retirement. Employees had access to either a district hospital, a municipal hospital, or a provincial hospital.

The economic market reforms that changed urban healthcare

The advent of the 1978 – 1980 economic reform, ultimately changed the landscape of healthcare for individuals in urban settings. During this period, state enterprises were transformed into semi-private or private businesses, which meant social security had to be managed by the businesses themselves. Since a portion of their profits was used to provide social security for their employees, bankruptcies built up and threatened to destabilize the whole system. This subsequently forced the government to step in and take action.

Rapid economic growth in the coastal areas and migration to urban centers

As China’s economy sky-rocketed, more rural living people began migrating to urban centers to take up job opportunities. Physicians and trained medical personnel likewise moved to cities. Most township health centers across China lost nearly all of their qualified doctors within the space of 15 years by 2001 as they moved to serve the thriving urban areas and cities.

2009 healthcare reforms

2009 marked a new era for healthcare in China, as the reforms proposed a universal health insurance system that consisted of three main social health schemes:

1. Urban employee basic medical insurance (UEBMI)

2. Urban resident basic medical insurance (URBMI)

3. Rural new cooperative medical scheme (RNCMS)

The 2009 healthcare reforms aimed to cover all the Chinese population with one of three basic schemes to give them greater financial protection.

To provide added protection to patients with critical illnesses, catastrophic medical insurance (also called critical illness insurance) was launched in 2012 and implemented nationally in 2015.

What has been achieved since the reforms of 2009?

The provision of health insurance had improved access to and the use of healthcare for China’s population. In 2011, China achieved near total-universal health insurance coverage (95 percent of the Chinese population were covered by health insurance). The percentage of people who were listed as a “need” for hospital admission but did not receive inpatient care decreased from 29.6 percent in 2003 to 25.1 percent in 2008, and to 17.1 percent in 2013.

The expansion of health insurance coverage in China also reduced people’s out-of-pocket health expenses and enhanced financial protection for poor populations.

Private health insurance for expats and group health insurance

China’s improving healthcare system makes it an attractive country to move to for expats looking to start new careers. Additionally, China has been benefiting from an explosion of start-ups companies that themselves will require group health insurance to bolster their appeal for international and local talent. Securing health insurance is indeed the best choice for most as these will help cover out-of-pocket expenses that can be extremely expensive.

Secure health insurance from a reputable broker

Contact our helpful advisors at Pacific Prime China today, to discuss the various types of health insurance plans on offer in China, or read the latest health news and trends from the company’s blog page.

Pacific Prime China’s advisors can compare health insurance plans from a range of health insurance providers, provide impartial advice, and negotiate the best plan deals on your behalf.

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Disclaimer: Pacific Prime China solely represents, operates and manages locally regulated insurance products and services in the territory of PR China. Any references to Pacific Prime Global Company or Group, the international services, insurance products or otherwise stated written or verbally, is for introduction purposes about our overseas network only as each entity is fully independent.


Content Creator at Pacific Prime China
Jimmy is a content writer who helps simplify insurance for readers interested in international private medical insurance. He is on a mission in Thailand to support locals, expatriates, and businesses by bring the latest news and updates to his Pacific Prime blog articles.

His expert view and wealth of knowledge on insurance can also be found in his blogs for China, Dubai, Hong Kong, and Singapore.