China's Healthcare: Developing a Universal Coverage Plan

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China's Healthcare: Developing a Universal Coverage Plan Alexander KOROLEV Far Eastern Affairs, No. 1, 2012, page(s): 45-76

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China's Healthcare: Developing a Universal Coverage Plan

Author: Alexander KOROLEV Abstract. Transition used to be seen as a unidirectional process: from plan to market, from public to private, from collective to individual. This research, on the contrary, focuses on the process of re-transition from over-marketization to a new form of state regulation in China's healthcare sector. Such process started in 2002 and included attempts to make provision of healthcare service a publicly funded industry. The new reform in China's healthcare sector is presented as a process of development of four medical insurance nets, namely UEBMI, NCMS, URBMI and BMI for migrant workers, and their subsequent integration into a universal coverage plan adopted in March 2009. It is demonstrated that after more than 20 years of marketization, Chinese leaders attempt to reengage with healthcare sector and make it effective instrument of state building. Keywords: healthcare, institutional change, marketization, re-transition. Introduction On the epochal Third Plenary Session of the 11th CCP Central Committee in December 1978 Chinese Government decided to step on the road of social modernization and set a policy of reform and opening up to the outside world. Since then, China has been sustaining economic growth unprecedented in history. During the last 30 years, China's gross domestic product grew 9.6% annually and poverty rate fell from 85% to 15.9%, or by 600 million people. 1 Such breathtaking achievements became possible due to the injection of market mechanisms into China's economy that enhanced its efficiency and productive capacity. However, besides impressive GDP growth rates, the full play of market forces in allocating resources has brought many serious problems to China's welfare sector. From this

Alexander Korolev, Ph. D. candidate of the School of Government and Public Administration, the Chinese University of Hong Kong, e-mail: [email protected].

page 45 1 Electronic copy available at: http://ssrn.com/abstract=2207378

perspective, one of the most fascinating and important aspects of China's recent institutional transformation has been the evolution of its healthcare system. Since the late 1980s, in light of market-oriented reforms, Chinese leaders have taken significant steps to privatize and marketize healthcare. Governmental funding for public health facilities has been reduced substantially and healthcare to a significant extent has become a revenuegenerating activity with diversified stakeholders, where non-state actors, as well as market principles and practices, became increasingly prominent. In the healthcare sector, which is characterized by greater information asymmetry and which has greater problem of market failure,2 the consequences of these changes were, among many, skyrocketing costs of healthcare, pro-rich inequality in healthcare delivery and utilization, increased out-of-pocket payments, inadequacy of health insurance coverage, inefficient use of medical resources, and perverse incentive mechanisms in the provider payment system and purchasing of healthcare services. Such situation has found its expression in "kan bing nan, kan binggui" (it is difficult and expensive to see a doctor) as well as in a well-known countryside saying: "Once the ambulance siren wails, a pig is taken to the market; once a hospital bed is slept in, a year of farming goes down the drain; once a serious disease is contracted, ten years of savings are whittled away." Ironically, in terms of the lack of social welfare, the Chinese Communist Party, which was proclaiming socialist modernization in 1978, has made Chinese society more capitalist than most Western nations. From around Hu Jintao and Wen Jiabao took office in 2002, active involvement of the central government took place and attempts were made to make healthcare more affordable. After more than 20 years of marketization, Chinese leaders attempt to re-engage with healthcare sector and have implemented series of healthcare reforms. The main reform initiatives included NCMS (New Cooperative Medical System), URBMI (Urban Resident Basic Medical Insurance), Basic Medical Insurance for migrant workers, and modernization of already existing UEBMI (Urban Employee Basic Medical Insurance) - the four nets, which in March 2009 started to be integrated into an ambitious new healthcare reform plan, aimed at guaranteeing equal access to affordable basic healthcare to every citizen by 2012.3 This essay focuses on the changes in China's healthcare system since 2002 and includes four sections. Section 1 summarizes some key problems in China's healthcare sector caused by intensive marketization and commercialization. Section 2 demonstrates the fundamental paradigm shift in healthcare policy (the re-engagement of the state and re-transition from overmarketization) since 2002, and analyzes four concrete reform initiatives: NCMS, URBMI, Medical Insurance for migrant workers, and modernization of UEBMI. Section 3 analyzes the recent healthcare reform, which intends to integrate these four health insurance nets. Background: From Plan to Market in Healthcare The evolution of China's healthcare system between 1949 and 2002 as well as the consequences of privatization and marketization of healthcare sector in the page 46 '80s and '90s are well documented in literature. 4 The problems which came to the fore over the first quarter century of reforms are multiple and interrelated. In general, before 2002, China's post-reform healthcare can be characterized by several macro trends: rapid annual increase in 2 Electronic copy available at: http://ssrn.com/abstract=2207378

total health expenditures, proportional reduction of government spending on healthcare, decrease in healthcare insurance coverage rate. All these trends took place simultaneously and demonstrated continuous withdrawal of government from the healthcare sector. In the post-reform period, annual increase in total health expenditure reached 11.8% and outstripped the growth rate of national GDP which amounted to 9.6%.5 The share of per capita income spent on healthcare rose from 1.9% to 4.7% between 1978 and 2003. 6 In monetary equivalent, annual per capita spending on personal health services in China increased by a factor of 40, from 11 to 442 yuan (roughly $1.35 to $55).7 The period of the most rapid health expenditure growth was the second half of 90s (1996-2002), when annual growth rate of GDP lagged almost 5% behind the annual increase in health expenditure (see Table 1). China's Health Expenditure Growth Rate % 1996-2009 Year

GDP Growth Rate

Health Expenditure Growth Rate 18.13 16.22 16.11 11.44 11.06 7.37 14.52 10.85 7.81 9.95 9.71 9.03 8.9 10.9

Health Expenditure Proportion of GDP 3.81 4.05 4.36 4.51 4.62 4.58 4.81 4.85 4.75 4.73 4.67 4.52 4.83 4.96

1996 10.01 1997 9.30 1998 7.83 1999 7.62 2000 8.43 2001 8.30 2002 9.08 2003 10.03 2004 10.09 2005 10.43 2006 11.65 2007 11.93 2008 9.00 2009 8.7 Source: Data from «Zhongguo Weisheng Shiye Fazhan Qingkuang Jianbao» (Brief Reports on the Development of Healthcare Sector in China): http://www.moh.gov.cn/publicfiles//business/htmlfiles/zwgkzt/pnb/index.htm

At the same time, the composition of China's healthcare expenditure has changed dramatically. As Table 2 demonstrates, the absolute number of government spending on healthcare has been growing. However, its share in total healthcare expenditure dropped from 32.1% in 1978 to 15.7% in 2002 that is 17% drop in 24 years. The share of government spending continued growing between 1978 and 1985 but fell precipitously by 23.4% during 17 years between 1985 and 2002. Quite similar picture can be observed with the share of society (social insurance) in total health expenditure. It grew in absolute figures, but decreased proportionally: from 47.4% in 1978 to 26.6% in 2002. As to the individual out-of-pocket spending, they nearly tripled in both absolute and proportional figures: from 20.4% in 1978 to 60% in 2001 - an increase by almost 40% in 23 years (see Table 2).

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Table 2: China’s Healthcare Expenditure Composition 1978–2009 Year

Total Expenditure (100 million yuan)

Share of Government (％)

Share of society (％)

Share of Individuals (％)

1978 110.21 32.1 47.4 20.4 1980 143.23 36.2 42.6 21.2 1985 279.00 38.6 33.0 28.5 1990 747.39 25.1 39.2 35.7 1995 2155.13 18.0 35.6 46.4 1996 2709.42 17.0 32.3 50.6 1997 3196.71 16.4 30.8 52.8 1998 3678.72 16.0 29.1 54.8 1999 4047.50 15.8 28.3 55.9 2000 4586.63 15.5 25.6 59.0 2001 5025.93 15.9 24.1 60.0 2002 5790.03 15.7 26.6 57.7 2003 6584.10 17.0 27.2 55.9 2004 7590.29 17.0 29.3 53.6 2005 8659.91 17.9 29.9 52.2 2006 9843.34 18.1 32.6 49.3 2007 11573.97 22.3 33.6 44.1 2008 14535.40 24.7 34.9 40.4 2009 17204.81 27.2 34.6 38.2 Source: «2010 Zhongguo Weisheng Tongji Nianjian» (China’s Healthcare Statistical Yearbook): http://www.moh.gov.cn/publicfiles//business/htmlfiles/zwgkzt/ptjnj/index.htm

These changes in financing structure took place in the absence of any medical insurance strategy. The number of people covered has been decreasing. In urban and rural areas of China, people covered by any kind of medical insurance were in minority and that number was constantly shrinking. According to the data from the Third National Health Services Survey, population covered by the urban medical security schemes (including UEBMI, LIS and GIS) reduced from 70.9% in 1993 to 49.8% in 1998 and 39.0% in 2003, whereas coverage in the countryside (CMS) dropped from 5.8% in 1993 to 4.7% in 1998 and 3.1% in 2003.8 Those who were covered were mainly advantaged groups, whereas rate of joining insurance schemes among low income segments of population was even lower. These trends had been exacerbated by the fact that healthcare costs grew much faster than population incomes. In comparable prices, from 1989 to 2001 per capita incomes increased by 544% in urban areas and by 393% in countryside, whereas diagnostic and treatment fees as well as hospital costs increased by 965% and 998% respectively during the same period of time.9 In other words, the healthcare costs increase rate was almost twice as the income increase in cities and three times as in countryside. Such situation caused many social problems and has made the new Chinese government undertake more decisive steps toward reforming healthcare sector. From 2002 on: The Emergence of Four Nets in Healthcare The above analyzed trends in the health sector can jeopardize future economic transformation and undermine people's support for market-oriented reforms. The new leadership quickly acknowledged that to exercise "balanced development" and build "harmonious society" more active social policy reform initiatives were required and the first steps in this direction had been made. In this sense, the year of 2002 can be seen as a start of historic transformation from pure 4

economic policies of '80s and '90s to the model in which social policies are considered to be an indispensable part and effective instrument of state development. 10 First, the change of developmental ideology took place. On the 16th National Congress of the CCP, the guiding formula of Chinese economic reforms -Xiaolu Youxian, Jiangu Gongping (Give priority to efficiency with due consideration to fairness) - had been reformulated as Chuci Fenpei Xiaolu Youxian, Zaici Fenpei Zhuzhong Gongping (Give priority to efficiency in primary distribution, but emphasize fairness in re-distribution).11 This meant that government intended to make adjustments to the pure market distribution through taxation, policy, laws and other measures to benefit disadvantaged groups. Second, the change of developmental ideology had been materialized by intensive government measures. As Table 1 and Table 2 demonstrate, beginning from 2002-2003, health expenditure growth rate slowed down by almost 5% (Table 1) and share of government and society in China's healthcare expenditure composition page 49 increased by 11.4% and 8 % respectively, whereas the share of individual spending reduced by 17.3 % (Table 2). Beyond these changes are concrete healthcare reforms, which were implemented after the new leadership took office. The reforms include modernization of UEBMI, reestablishment of NMCS, the nationwide piloting of URBMI, and the development of health security net for the migrant workers. To show the road to the universal coverage plan adopted in 2009, this section considers each of them in turn. Net One: UEBMI Basic Medical Insurance System for Urban Employees (UEBMI) was introduced in 1998 and was the first health security net in the post-reform China. The principal aim of the new scheme was to widen coverage of health insurance for the urban employees as well as contain medical costs.12 The UEBMI system attempted to integrate the two old systems - GIS (the Government Insurance Scheme for all government employees, disabled veterans, college teachers and students, and employees of non-profit organizations) and LIS (the Labor Insurance Scheme for employees of all state-owned enterprises and some collective enterprises) - which had been providing urban population with an access to basic medical services since the establishment of the PRC. However, the newly adopted UEBMI differed from the previous GIS-LIS system in fundamental ways. These differences have predetermined the need for its further reformation and introduction of additional health security nets in the subsequent years. The first fundamental difference laid in the institutional nature. Both Labor Insurance System (Lao Bao) and Government Insurance System (Gongfei Yiliao) were compulsory health insurance systems, when employer was obliged to and responsible for guaranteeing basic medical insurance for the employees. In case of LIS, every state-and collectively-owned enterprise paid healthcare fees of employees directly to the medical service provider. These expenses were included into the costs of each production project, and the exact amount of money had been defined according to the gross payrolls of each enterprise. When it was necessary, supplementary funds could be raised from the enterprise's labour insurance funds or regulated welfare funds. In 1969, Ministry of Finance issued a regulation according to which financial resources for medical expenses of employees, additional welfare expenses and bonus funds were merged into single Welfare Fund for Enterprise Employees (Qiye Zhigong Fuli jijiri).13 This step further emphasized the compulsory nature of the LIS system. In case of GIS, the situation was quite the same, with the only difference that financial resources for employees' medical care had been allocated to the administrative departments of public health on different levels according to 5

the principle of "special fund for special use" (zhuankuan zhuanyong). In practice, the government earmarked a page 50 fixed sum of money which should be used exclusively for its designated purpose, which was guaranteeing basic healthcare for the employees. This institutional arrangement also emphasized the compulsory nature of the GIS system. Thus, joining the LIS and GIS schemes has been almost automatic for employees of an organization linked to the insurance system. In case of the new UEBMI, however, although enterprises were required to participate, it was not made mandatory and some enterprises have chosen to stay away form the new scheme. In such situation, enterprises that are economically better-off or have a younger demographic profile among the employees have been more likely to stay out of UEBMI or purchase specific health insurance packages on their own. At the same time there were some organizations that could not afford joining the UEBMI. Consequently, insurance arrangements could vary from one enterprise to another and the decision to join UEBMI or not was largely in the hands of the employer and not the employees. 14 Another fundamental difference laid in coverage. Both LIS and GIS covered, though partly, employees' family members. In case of LIS, employees' or retirees' direct relatives could enjoy free diagnostic and treatment services in the enterprise's infirmary or hospital, or in hospitals engaged with the enterprise by special arrangement. Enterprise also paid 50% of medical operation fees and prescription charges. Such expenses as precious medicines, transportation fees, hospitalization fees, and nutrition fees during the stay in hospital usually had not been reimbursed, but for households with difficulties some financial resources were available from the enterprise's welfare funds mentioned above. As to the GIS, in case of sickness of employees' children, work unit could organize other workers to make a pool for paying health expenses or, as in case of LIS, withdraw some resources from its welfare funds.15 Thus, before the economic reform, even though the quality of medical services was not very high at the time, the combination of LIS and GIS provided inexpensive and equally accessible medical care for virtually all urban residents. The new UEBMI system, though it covered both employees and retirees in the public and private and joint-venture enterprises, did not cover any dependants of the insured. The system also did not cover the self-employed, employees in the informal sector and migrant workers. The UEBMI system developed very fast and became the most dominant scheme among the insured urban population, indicating an almost complete transition from LIS and GIS between 1998 and 2003. However, due to the above mentioned characteristics, the UEBMI system had considerable discontents. First, the transition from LIS and GIS to UEBMI did not extend medical insurance coverage. On the contrary, coverage reduced. In 1998, 49.9% of the whole urban population had social medical insurance: LIS and GIS systems covered 38.9%, and other systems covered 10.9%.16 But in 2003, only 43% of the whole urban population had social healthcare insurance: 30.4% entered the UEBMI, 8.6% were still covered by LIS or GIS17, and 4% by other kinds of health insurance. Thus, despite the fact that one of the principal aims of the UEBMI was to page 51 widen coverage of health insurance for the urban employees, actual coverage reduced by 6.6% between 1998 and 2003. 6

At the same time, the income of urban residents has become a critical predictor of their access to the health insurance. In 1998, among urban residents in the lowest income quintile, 20.1% enjoyed social health insurance, whereas among those in the highest income group the proportion of covered amounted to 63.9%. By 2003 the proportion of the poor and rich who had been covered by social health insurance became 12.2% and 70.3% respectively. 18 During the period from 1998 to 2003, insurance coverage of the low income urban residents decreased by 7.9%, whereas coverage of high income residents increased by 6.4%. As some argued, UEBMI more and more became a "rich men's club" (furen julebu)).19 In fact, vulnerable groups such as low income groups, short-term employees and rural-urban migrant workers had been left out of the system. Against the backdrop of these facts and as a result of the changing developmental ideology, modernization of the UEBMI took place after the new leadership took office. In the official line of the new Chinese government, the accents in the developmental priorities were changed. On October 14, 2003, The Third Plenary Session of the 16th CCP Central Committee adopted the Decision of the CCP Central Committee on Issue Regarding the Improvement of the Socialist Market Economic System (Zhonggong Zhongyang Guanyu Wanshan Shehuizhuyi Shichangjingji Tizhi Ruogan Wenti de Jueding), where, within the framework of the people-oriented approach and sustainable development, Chinese government proclaimed "Improving employment, income distribution and social security system" 20 to be an important task in the process of developing socialist market economy. Thereupon, the coverage of the UEBMI system started to extend to include non-state-owned sector and urban selfemployed and informal workers. Soon after that, in September, 2004, State Council adopted the White Book of China's Social Security and Its Policy, where it was stated that "the State will fur-flier expand the coverage of medical insurance to steadily include eligible people in all kinds of employment in urban areas in the basic medical insurance scheme." 21 Two years later, in November 2006, the Outline for the Eleventh Five Year Plan of Labor and Social Security Development (2006-2010) (Laodong he Shehui Baozhang Shiye Fazhan Shiyiwu Guihua Gangyao (2006-2010)) stated the importance of establishing a comprehensive social security system. The core objectives stated in the document included: "to further expand the coverage of social security programs, guarantee an equal access to those programs by people in all kinds of employment in urban areas, constantly improve the UEBMI policy's management, establish the full-fledged mechanism of medical protection, accelerate the development of medical rescue funds system, further complement the existing health insurance programs, emphasize the development of basic medical security, and establish multi-layered insurance system and extend its coverage." 22 As a result of these new measures, in 2005, UEBMI covered more than 137 million people and in 2006 this figure increased to 157 million that was a page 52 significant progress since 2003, when the system covered only 109 million employees.

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Table 3: Urban Population covered by the UEBMI since 2003 Year

Total Number of Enrollees (million)

UEBMI coverage Employees Insured (million)

Retirees Insured (million)

1998 ---2003 109.02 79.75 29.27 2004 124.04 90.45 33.59 2005 137.83 100.22 37.61 2006 157.32 115.80 41.52 2007 180.20 134.20 46.00 2008 199.96 149.88 50.08 2009 219.37 164.11 55.27 Source: «2011 Nian Zhongguo Weisheng Tongji Tiyao» (Summary of China’s Healthcare Statistics, 2011.): http://www.moh.gov.cn/publicfiles//business/htmlfiles/zwgkzt/ptjty/index.htm

However, further extension of the UEBMI has many challenges. Responsible for handling medical insurance issues institutions on different levels, besides facing the problem of nonpermanent employees in cities and towns, needed to carry forward the work on increasing coverage for employees of the mixed ownership organizations and non-state-owned enterprises. Another problem was the poor enterprises, which were unable to make premium payments to the municipal insurance agencies, leaving their employees without medical insurance. To extend the coverage of the UEBMI scheme, some cities have experimented with providing insurance coverage for the employees' dependants as well as non-employees, however it became clear that transition from the Basic Medical Insurance for Urban Employees to the system which would cover all urban residents, including the unemployed, was needed. For that transition, implementation of additional health insurance net which would cover those who were outside the UEBMI system was necessary. Such additional scheme - URBMI (Urban Residents Basic Medical Insurance) - was implemented in 2007. To maintain chronological order, before turning to the analysis of URBMI, medical insurance for rural residents will be considered. Net two: NCMS In terms of institutional change, evolution of China's rural healthcare system is of particular interest. The place of rural healthcare on the China's health policy agenda changed dramatically since the beginning of economic reforms. page 53 Being a state priority in the pre-reform period, rural healthcare became a disadvantaged sector and was heavily underfunded after the economic reforms started. At the same time, since the rural residents usually have low income, rural healthcare system transformation is very indicative of how transition from state regulation during the pre-reform period to the laissez-faire attitude of '80s and '90s influenced life conditions of peasants, and what made the new Chinese leaders reconsider the role of pro-market mechanisms in rural healthcare. During the pre-reform period, healthcare in rural areas was considered to be a state priority. It was organized into well-known Cooperative Medical System (CMS), which had been officially adopted in November 1959, right after the Ministry of Health held in Shanxi province a nationwide conference devoted to the rural healthcare issues. On the June 26, 1965, Mao Zedong made his 626 Directive (liu er liu zhishi), which urged the health ministry "to put emphasis on medical facilities in rural areas" (Ba yiliao weisheng de zhongdian fang dao nongcun qu) and 8

pushed for a spread of collective medical system of "barefoot doctors" in village and township clinics. Thus, poor-oriented rural medical system - CMS - became an unquestioned priority of China's state health policy. In terms of coverage, the results of such approach were impressive. At the beginning of '60s, CMS covered about 20~30% of rural population; in 1975, coverage was 84.6%23 and in the end of '70s it exceeded 90%24 - achievements that received high estimations of the WHO in 1980 and made Chinese CMS famous worldwide for its high efficiency. However, after reforms in China started, the Chinese government implemented the System of Contracted Responsibility Linking Remuneration to Output (lianchan chengbao zeren zhi). According to this system, rural collectives, which were the economic core of CMS, had been replaced by farm households as the basic productive units in rural areas. As a result, the very economic basis of the CMS disintegrated and the number of covered which grew so fast during the '60s and '70s started shrinking even faster during '80s and '90s. Without support from the collective economy, the rural cooperative medical system quickly collapsed. In 1985, two years after the abolishment of the People's Communes (renmin gongshe), the number of villages still practicing cooperative medicine decreased from 90% in 1979 to only 5%. This trend continued and in 1989 the number of the covered decreased further to 4.8%. 25 In the '90s, there were continuous attempts to repeat the successful experience of the '60s and '70s and rebuild cooperative medical system, but unsuccessfully. Despite lots of official decisions had been adopted,26 the problem of underfunding and the newly implemented system of individual premiums did not allow achieving any significant progress. After ten years of policy initiatives, the rural cooperative medical system was not restored as expected. The number of people covered was always lower than 10 percent. 27 Such small coverage in rural areas, where the residents' income level does not allow them to pay out of pocket for medical treatment, caused troubling trends. page 54 Undertreatment became a widespread phenomenon. Thirty-seven percent of rural residents who needed medical treatment could not see a doctor and 65% of the sick who needed hospitalization were not hospitalized. Moreover, in 1993. 58.8% among them were not hospitalized due to economic hardships; in 1998 this percentage rose to 65.25%. At the same time, National Health Service Survey conducted in 1993 demonstrated that the percentage of illness-caused poverty amounted to 21.61% of the total poverty in rural areas and in some depressed areas this figure exceeded 50%.28 All this made many peasant households slip into "impoverishment - sickness impoverishment" vicious circle. Rural residents could pay neither healthcare costs nor health insurance premiums due to the lack of income. Commercial insurance companies aimed at profit-maximization had no motivation to work with poor peasants. In a country like China, where the majority of population lives in the countryside, such state of affairs, if unattended, can pose series of challenges for further economic growth as well as for the government legitimacy. The situation started changing considerably since 2003 (see Fig. 1), when the Chinese government changed its approach to the rural cooperative medical system and established the New Rural Cooperative Medical System (NCMS). As many other programs, this one started from experiments. As early as November 2002, CCP Central Committee and State Council issued the Policy Document No. 13 - Decisions of the State Council on Further Strengthening Rural Healthcare (zhonggong zhongyang, guowuyuan guanyu jinyibu jiaqiang nongcun weisheng gongzuo de jueding), which defined the main objectives of the NCMS. The issued Decisions required governments on different levels to 9

develop a new cooperative medical system which would reduce the risk of catastrophic health spending for rural residents in China. That time, this system was expected to cover all rural residents by the year of 2010. To address the problem of healthcare for the poorest residents, Decisions also required establishing a health expense safety-net program known as Medical Assistance (yiliao jiuzhu) simultaneously with NCMS. Medical Assistance program should be financed by the central and local governments and provide financial assistance with healthcare payments for poorest and most vulnerable in rural and urban areas, especially those covered by the Wu bao, Te kun and Di bao social assistance programs.29 It was an important supportive measure to the New CMS. In the same year, the State Council held the first nationwide conference in Beijing on rural healthcare issues, on which the further measures concerning the establishment of the NCMS were elaborated. In general, there are three specific guidelines for the design and implementation of the NCMS: 1) participation in the NCMS should be voluntary; 2) the administration must come from the county level; 3) the main emphasis of the NCMS would be placed on catastrophic illnesses, receiving funding from both the government (central and local) and individuals. page 55 In addition, to reduce adverse selection, the NCMS also requires full household participation. 30 The very idea of the new system was not completely new. As it was mentioned above, beginning from the '90s, the essence of rural healthcare reforms was the restoration and reconstruction of the well-known Cooperative Medical System (CMS). CMS had always been the main paradigmatic line of building health security system in rural China, which never disappeared and finally laid the basis for the New Cooperative Medical System which was officially established in January, 2003, when the State Council forwarded the Notice on Establishing a New Rural Cooperative Medical Service System (guanyu jianli xinxing congcun hezuo yiliao zhidu yijian de tongzhi), issued by the Ministry of Health the Ministry of Finance and the Ministry of Agriculture. The notice required provinces, autonomous regions, and municipalities to select at least two or three counties to try this new system, and then to expand the system to cover more rural residents.31 The NCMS experienced rapid expansion in coverage. The number of counties covered increased from 310 in 2004 to 2,451 in 200732 and to 2716 in 2009.33 The proportion of covered also increased dramatically from 9.5% of rural population in 2003 to 82.83% in 2008. 34 According to statistics provided by the Ministry of Health, in 2009 the NCMS coverage reached 94% 35 (see Fig. 1 below).

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Figure 1: Rural Cooperative Medical System Coverage since 90s (%)

100 90 80 70 60 50 40 30 20 10 0

1993

1997

1998

2002

2003

2004

2005

2006

2007

2008

2009

Source: «2011 Nian Zhongguo Weisheng Tongji Tiyao» (Summary of China’s Healthcare Statistics, 2011.): http://www.moh.gov.cn/publicfiles//business/htmlfiles/zwgkzt/ptjty/index.htm

page 56

One important characteristic of the NCMS was the increased role of the government in the resource allocation. The system experienced considerable increases of governmental subsidies since its inception in 2003. In 2003, the central government subsidized NCMS program in the central and western provinces at the rate of 10 yuan per enrollee per year. At the same time, local governments and enrollees were required to contribute to the premium no less than 10 yuan in order to receive subsidies from the central government.36 In 2006, both central and local governments' subsidies for enrollees in the central and western provinces had been increased to 20 yuan.37 In the 2008 Government Work Report, the government promised to raise the subsidies to 80 yuan per enrollee per year in the central and western provinces by 2010, with 40 yuan from the central government and the same amount from local governments. 38 Official data also demonstrates the growth of per capita premiums. In 2006 it was 52.1 yuan, but in 2007, 2008 and 2009, the amount of per capita financing increased to 58.9, 96.3 and 113.4 yuan respectively. The reimbursement rate also increased considerably. In 2004, 2005, 2006, 2007, 2008 and 2009 there were 76, 122, 272, 453, 585 and 759 million person-times reimbursed under the NCMS with total reimbursement amounts of 2.64, 6.18, 15.58, 34.66, 66.20, 92.29 billion yuan respectively (see Table 4). Table 4: The Growth of NCMS’ Premiums and Reimbursements (2004-2009) Year

Per capita premiums (person/yuan)

Reimbursement rate (million person-times)

Total reimbursement amounts (billion yuan)

2004 2005 2006

50.4 42.1 52.1

76 122 272

2.64 6.18 15.58

11

2007 2008 2009

58.9 96.3 113.4

453 585 759

34.66 66.20 92.29

Source: «2011 Nian Zhongguo Weisheng Tongji Tiyao» (Summary of China’s Healthcare Statistics, 2011.): http://www.moh.gov.cn/publicfiles//business/htmlfiles/zwgkzt/ptjty/index.htm

The addition of public funds greatly helped to promote the development of the new system. However, NCMS is only one, though perhaps the most important, building block in the future universal coverage scheme. For the universal coverage for all residents to be achieved, many serious challenges should still be met. The most considerable one is to address the healthcare needs of the migrant workers or so called "floating population", 39 which is measured by millions of people, who migrate from rural to urban areas in search of better employment page 57 and life opportunity. Taking into account the total number of migrant workers and their role in China's further economic development, the success of healthcare reforms will be shaped to a large extent by how migrant workers are incorporated into the rural or urban insurance schemes and how effective population health initiatives are in reaching migrant population. 40 Since 2002, series of measures were undertaken to address the problem of medical insurance for migrant population. Due to a considerable scale and scope of those measures, more attention should be paid to the issue. Net three: BMI for migrant workers China's economic development, modernization and urbanization caused dramatic increase in population's mobility and especially rural-urban migration. The most important motive for migration from rural to urban regions is the search for better employment. Thus, millions of people with rural registry started working in cities. The provision of health insurance to this segment of population turned to be problematic. As it was demonstrated by the above analysis, the basic framework of China's healthcare system consisted of UEBMI and NCMS, plus additional Medical Assistance (yiliao jiuzhu) sub-system for the poorest and most vulnerable. The affiliation to a certain system and package of services one can enjoy is determined by the enrollee's residential status: rural or urban. In such situation such pendulum migrants as nongmingong (migrant peasant workers) who are nong (peasant) and gong (worker) at once and, thus, cannot classify for any of the existing systems, appeared to be in a health protection vacuum. To include them into one or another existing health insurance system turned to be problematic. For instance, to categorize nongmingong as rural residents and include them into NCMS caused many problems because despite the fact that the majority of migrant workers come from rural areas and have rural registry, and thus should be covered by the NCMS, they live and work in the cities and it is impractical for them to return to their hometowns for medical visits. Some NCMS plans reimburse medical bills from urban hospitals, but such reimbursements are usually a long, cumbersome, and unpleasant procedure; it is also often unclear which particular hospitals are covered by the NCMS policy, which causes confusion. Moreover, the remuneration package provided by the NCMS is insufficient for migrant workers due to higher risk of injuries and other work-caused diseases in cities. Therefore, the majority of migrant workers choose not to participate in NCMS.41 At the same time, to include migrant workers into health insurance system for urban employees (UEBMI) is also challenging because its premium payments are too high for both migrant workers, whose income is rather low, and for the employers who use cheap migrants' workforce. 12

Those employers are usually represented by small and medium enterprises with a financial capacity insufficient for buying health insurance.42 Thus, in terms of healthcare insurance, page 58 migrant workers appeared to be the most problematic segment of population. Such big number of migrant workers without enrollment in proper medical insurance posed serious problems. Since China's continued economic development, as some argue, will depend upon flows of labor out of agriculture and into urban industrial or service occupations, loss of productivity and poverty-induced illness for migrant workers will adversely influence overall standards of living and economic growth in China. 43 That's why expanding health coverage to the floating population is of particular importance. In light of this, medical insurance for migrant workers had been put on the agenda of the central and local governments. On the central government level, the Ministry of Labor and Social Security in 2003 and 2004 issued the Guiding Opinions on Participation in Basic Medical Insurance by Nonpermanent Employees in Cities and Towns (guanyu chengzhen linhuo jiuye renyuan canjia jiben yiliao baoxian de zhidao yijian) and the Opinion on Employees of Organizations of Mixed Ownership and Non-state-owned Enterprises to Participate in Medical Insurance (guanyu duijin hunhe suoyouzhi qiye he feigongyouzhi jingji zuzhi congye renyuan canjia yiliao baoxian de yijian). The documents required local offices of labor and security to cover all migrant workers from rural areas who have already formed stable working relationships with employers in cities and towns. As to those migrant workers who are self-employed in urban areas, the Opinion required them to join the insurance system as nonpermanent employees. 44 These documents were the first steps toward building health insurance net for migrant workers. In March 2006, the State Council issued the Policy Document No. 5 - Views on Resolving Rural Worker Problems (guanyu jiejue nongmingong wenti de ruo-gan yijian). The document emphasized "the importance of resolving the problem of high medical expenses for migrant workers."45 Later on, the Ministry of Labor and Social Security issued the Opinions of the Implementation (shishi yijian), which were expected to put the project into practice. Two months later, in May 2006, the ministry issued the Notice on Special Expansion of Medical Insurance for Migrant Workers (guanyu kanzhan nongmingong canjia yiliao baoxian zhuanxiang kuoda xingdong de tongzhi), which aimed at covering more than 20 million migrant workers under the medical insurance system by the end of 2006, and to cover with basic medical insurance all migrant workers who have established long-term working relations with employers in cities and towns by the end of 2008. 46 After such health policy orchestration started coming from the central government, many local governments undertook various steps in an effort to solve medical insurance problems for migrant workers. Chronologically, the first region where migrant workers were provided with healthcare insurance was Guangdong province (1994). However more active efforts took place after 2002: Shanghai (2002), Chengdu (2003), Beijing (2004), Shenzhen (2005) and other regions attractive to migrant workers issued series of page 59 policy documents aimed at providing urban newcomers with basic medical insurance. 47 Despite each region ended up with its specific insurance arrangement for migrant workers, many scholars tend to discern three types of practical models. Those models were based on the already-existing 13

systems (UEBMI and NCMS); however certain amendments in terms of insurance contributions paid by the enrollees and types of their working relationships with the employer had been introduced. As some scholars classified, the three models were UEBMI for migrant workers, CMS for migrant workers, and exclusive insurance system for migrant workers (dull sheji zhonghe baoxian moshi)48 (see Table 5). The first one (UEBMI for migrant workers) implied that migrant workers should enjoy health insurance treatment identical to that of urban workers. In this case, migrant workers are given special health security card, allowing them to receive medical treatment. Financing mainly comes from the employer who is obliged to pay premiums; some minor contributions are paid by the enrollees. To integrate the poorest migrant in-service employees into the UEBMI system, government lowered the contribution base as well as subsequent basic insurance contributions and, in special cases, could also provide some subsidies. Such system expanded the coverage of UEBMI by enrolling migrant workers and can be called Employment Basic Medical System for Migrant Workers (EBMSMW). It was implemented in Beijing and Guangdong and was managed by government-run agencies, such as municipal or district Health Bureau. 49 Another model - Cooperative Medical System for Migrant Workers (CMSMW) - had officially been introduced in Shenzhen on March 1, 2005, when an experimental CMSMW was initiated within the framework of the newly-adopted Piloted Cooperative Medical System for Labor Workers in Shenzhen City (Shenzhen laodong wugong hezuo yiliao shidian banfa) to provide coverage for services by contracting specific designated healthcare providers. In June 2006, CMSMW formally developed into the Medical Insurance System for Migrant Employees (MISM). This new system was open to all migrant workers in the city and is compulsory for employers. According to the Ordinance of Labour Workers for the Shenzhen Special Economic Zone (SZSEZ), migrant workers who were eligible for the scheme were those employed by legal employers but who lived in Shenzhen without permanent residential registrations (HuKou). The monthly contribution to CMSMW per individual worker was 12 RMB: 8 RMB were paid by employers and 4 RMB by the workers themselves. Half of the fund (6 RMB) was designated for out-patient services and 5 RMB for in-patient services. A further 1 RMB was saved as an optional pool for further utilization.50 The attempts of the government to step in and regulate healthcare provision for migrant workers can be demonstrated by many facts. For instance, the CMSMW scheme applied to designated health providers (DHP) which included hospitals and community centers that were designated through a formal accreditation process undertaken by the municipal or district Health Bureau and licensed by the city's Social Security Bureau.51 According to the system, payment to each DHP is based page 60 on the number of migrant workers for whom the DHP provides outpatient services, whereas inpatient service reimbursement as well as referral is managed by the city's Social Security Bureau through standardized procedures. Since June 2006. MISM has become compulsory in all 6 districts of the Shenzhen city and CMSMW and MISM schemes have been subsidized by city government.52 As to the third model (exclusive medical insurance system for migrant workers), it was initiated in September 2002, when the city of Shanghai issued the Temporary Methods of Comprehensive Insurance for Migrant Laborers in Shanghai (Shanghaishi wailai congye renyuan zonghe shehui baoxian zhanying banfa) to establish the comprehensive social insurance system exclusively for migrant workers.53 In March 2003, the city of Chengdu issued the Temporary Methods of 14

Comprehensive Insurance for Non-urban Resident Workers in Chengdu (Chengdushi feichengzhen huji congye renyuan zonghe shehui baoxian zhanxing banfa); this system was designed to provide comprehensive social insurance to non-urban resident workers (migrant workers from rural areas).54 These systems are quite focused on migrant workers and provide different insurance packages independently from UEBMI and NCMS. The three models are simplified and summarized in Table 5. Table 5: Three models of migrant workers health insurance arrangement Parameter of insurance system Region of implementation Category of enrollees

Financial sources Medical services reimbursed Handling institution

UEBMI for migrant workers

CMS for migrant workers

Beijing, Guangdong

Shenzhen, part of Zhejiang

Workers with rural household register who have formed stable working relationships with employer in cities

Workers with rural household register who have official working relationships with employer in cities

Exclusive migrant workers system Shanghai, Chengdu Fixed-term and non-fixedterm workers with rural household register

Employer’s contribution

Employer’s and individual worker’s contribution

Employer’s contribution for fixed-term workers and individual worker’s contribution for non-fixedterm workers

In-patient services

In-patient and out-patient services

In-patient services

Municipal or district Health Bureau

Municipal or district Health Bureau

Commercial insurance companies

Despite active piloting, the progress was rather slow. As some scholars noted, by the end of 2006, 23.67 million migrant workers had participated in the medical page 61 insurance system and this number increased to 24.1 million by March 2007. 55 Some sources say that only 23.4% of migrant workers had been covered by medical insurance of any kind in 2006.56 As some later studies demonstrated, in the end of 2008, there were about 140 million migrant workers in China more than 70% of which had no medical insurance. 57 According to statistics provided by the Ministry of Human Resources and Social Security, nowadays the rate of joining medical insurance by migrant workers is only about 10%.58 For instance, the total resident population of Zhejiang province is 48.98 million; the proportion of migrant workers among the total resident population is 24.5% and 39.15% among the total working population, which is 30.35 million. However, among such a big group, 75.5% pay for healthcare out of pocket, only 8.17% are covered by UEBMI and 9.7% by NCMS; 2.55% bought commercial health insurance.59 Thus, in sum only 20.42% of migrant workers are covered by the health insurance.60 Figures might differ from source to source, but they still demonstrate the general picture and tendencies in healthcare for migrant workers. Despite certain progress had been made, medical insurance for migrant workers was still the weakest health insurance net, in comparison with the other two (UEBMI and NCMS). The reasons for that are multiple; however the fundamental one is that migrant workers are stuck between the two tracks of urban-rural double track social security system. Nongmingong is a transitory phenomenon caused by rapid transformation and urbanization experienced by China in the course of economic reforms. 15

Migrant workers health insurance problems revealed some defects in the institutional arrangements of China's health insurance system. One of them is that health system has been managed from lower levels of government; as a consequence, it had low level of insurance pooling that causes many difficulties in switching through the system and, thus, creates many problems for mobile population moving across cities and provinces. To solve systemic problems, the involvement of central government is necessary, that's why the recent healthcare reform, aimed at eventually integrating the current public medical insurance policies into a single universal national public health insurance system, is characterized by the greater participation of the central government in overall reform management, financing and insurance pooling. Net four: URBMI Urban Resident Basic Medical Insurance system (URBMI) is the last element in building the universal healthcare coverage in China. After the development of the Basic Medical Insurance system for the Urban Employees (UEBMI) in 1998, re-establishment of the New Cooperative Medical System (NCMS) in 2003, and introduction between 2003 and 2007 of a health expense safety-net program known as Medical Assistance (yiliao jiuzhu), which provided financial page 62 assistance with healthcare payments for poorest and most vulnerable in rural and urban areas, employed urban residents and the major part of rural residents had a certain amount of health protection against diseases and injuries. However, such segment of population as urban residents without formal employment (about 420 million people) was completely left out of the state healthcare safety net.61 For them, the problem of kanbing nan, kanbing gui (it is difficult and expensive to see a doctor) had been exacerbated by the problem of yinbing zhipin, yinbing fanpin (poverty caused by illness or getting poor again because of illness).62 Thus, to develop a system, which would cover all nonworking residents, was a crucial step in closing the health insurance coverage gap and establishing universal safety net for all residents of China. As many other reform projects in China, the new Urban Resident Basic Insurance scheme (URBMI) began from pilot trials. On July 24, 2007, State Council issued Policy Document No. 20 Guiding Opinions of the State Council on the Pilot Scheme for Basic Medical Insurance for Urban Residents (gong-wuyuan guanyu kaizhan chengzhen jumin jiben yiliao baoxian shidian de zhidao yijian),63 which required to choose one or two cities in provinces that had sufficient financial capacity to introduce urban medical care program for protecting against catastrophic illnesses. This system intended to cover those people who were not eligible for the UEBMI, such as elementary and middle school pupils, teenagers and young children, the elderly, the disabled and other nonworking urban residents. Shortly after that, following the guidelines outlined in the State Council Policy Document No. 20, Ministry of Labor and Social Security adopted the list of 79 cities for a large-scale pilot of URBMI during the summer of 2007. Later, in his State Report to the 2008 People's Congress, Chinese Premier Wen Jiabao reaffirmed the policy goals to implement a pilot model in fifty percent of cities nationwide by the end of 2008, and to ultimately extend URBMI coverage to one hundred percent of cities by 2010. 64 Thus, a health insurance program for the 420 million urban residents began to being put into practice. In the process of implementation of the system, State Council set general guidelines. The new urban scheme is financed by government premium subsidies as well as by household contributions.65 The requirement of the central government is that URBMI premiums should generally be higher than those of the NCMS and lower than those of UEBMI, or, more specifically, that the total annual government subsidy for each URBMI participant should not be less than 40 yuan per enrollee per year and that enrollees with financial difficulties or a severe disability are to 16

receive an additional subsidy of 60 yuan per year, 30 yuan of which is financed by the central government.66 One important characteristic of the new system, however, is a great degree of regional variability. Beyond the basic policy guidelines, the bulk of the work was within the local governments' responsibility. Such policy latitude gave local health insurance bureaus a broad competence in determining starting day, eligibility requirements, benefits packages, and financial levels. page 63 Starting day of URBMI ranged from October 2006 in Chengdu city to October 2007 in the cities of Baotou, Changde, and Zibo. In terms of eligibility, for instance, the majority of cities did not cover migrant workers or their children, but there also were exceptions : in both Urumqi and Xiamen the new system covered migrant worker's children going to school, but the migrant workers themselves were not included in the coverage. Benefit packages for inpatient and outpatient services, emergency room usage, and free annual checkups also varied in different provinces and were more generous in the richer coastal cities such as Xiamen than in poor western or central regions. Financing strategies also varied from city to city. 67 For working age adults, for instance, the individual premium contributions per person per year were 110 yuan in Xining City and 270 yuan in Harbin City (see Table 6 below for the Harbin model of URBMI financing). The total amount of government financing ranged from 40 yuan to 100 yuan, with the exception of Xiamen city, where annual government subsidies could be as high as 460 yuan per person per year, 68 whereas in some poor provinces, government subsidy for each URBMI participant could be reduced to a minimum of 20 yuan per year. In other words, government contributions varied depending on the region's economic status and each individual's economic situation. On average, as it has been shown in some recent studies, the central and local government subsidized about thirty-six percent of the financing cost for adults that indicated that the majority of URBMI financing came from individual premium contribution.69 Table 6: Harbin model of URBMI financing Category of Urban residents

Premium (yuan/year)

Subsidies from central and local governments (yuan/year) 60

Individual contribution (yuan/year)

Unemployed adult urban residents 270 Participants of Urban Minimum Income Guarantee program 330 265 65 Severely disabled urban residents Urban residents over 60 from low income families Primary and middle school students 60 30 Disabled Primary and middle school students 90 and students participating in Minimum 80 10 Income program Source: Official cite of Harbin government: http://www.harbin.gov.cn/bxt/zty/ylbx.php page 64 Enrollment in URBMI is voluntary and exercised at household level. The idea behind enrolling 17

entire households is to reduce administrative costs and adverse selection. Despite its noncompulsory nature, URBMI system's coverage grew rapidly. According to statistics provided by the Ministry of Health, in 2007, 42.91 million of urban population entered the UEBMI scheme; in2008, the number of enrollees rose to 118.26 million that is 12.5% of urban population; in 2009, this figure increased up to 181 million of urban residents. 70 The research on URBMI is still scant and it is difficult to fully estimate the effects of the new system. According to some preliminary assessments, however, positive gains are observed in reducing financial barriers to care, especially for the poor and those with previous inpatient care experience. The poor tend to be happier with URBMI than their more affluent counterparts71 that demonstrate the pro-poor orientation of the system. Under direction of the State Council, the four nets of UEBMI, NCMS, URBMI and BMI for migrant workers eventually served as a basis for a universal safety net. Integration: The Universal Coverage Plan The above analysis has demonstrated how China developed its healthcare system after the new leadership took office in 2003. Taking into account the fact that in 2002 44.8% of urban population and 79.1% of rural had no medical insurance, whereas in 2009 the coverage rate of NCMS reached 94% and combination of UEBMI and URBMI significantly enhanced health security for millions of urban residents, the progress was quite significant. However, China's national healthcare system still faced many challenges and needed further reformation. The responsibility of the central government was still limited in terms of both financing and coordination. Despite the lack of resource allocation and underfinancing, the health insurance system lacked integration: between the four nets, between regions, between different levels of government. Consequently, insurance coverage and quality of health services were not homogeneous. It did not allow solving problems of transferring of health insurance relationships. As a result many enrollees, especially migrant workers, had to withdraw from the medical insurance. The withdrawing rate in some regions reached 95% that was called tuibaore (withdrawals fever).72 These difficulties increased unfairness of health insurance system and produced many negative consequences for China's further economic development. In light of this, the recent healthcare reform plan unveiled in April 2009 represents a change. It sets five general reform programs to be carried out from 2009 to 2011: 1) accelerate the establishment of the basic medical security system; 2) preliminarily set up the national essential medicines system; 3) improve the grass-roots healthcare services system; page 65 4) gradually press ahead with the equalization of basic public health services; 5) push forward pilot projects for public hospital reform. But more importantly, the way how the new healthcare reform plan was implemented has shown a higher level of overall healthcare reform planning (tongchou cengci) and insurance pooling and the increased central government's subsidies and systemic attempts to integrate four nets into a universal coverage plan. 18

Orchestration from above: the role of Central Government in healthcare reform What makes the recent healthcare reform different from the former reform initiatives (UEBMI, NCMS, URBMI, BMI for migrant workers) is that the role of central government in overall reform orchestration increased immensely. If during the former health reforms the central government often limited its participation to issuing specific directives, opinions and notices, leaving the lion's share of policy implementation work for the local authorities, this time the State Council led the whole process beginning from agenda setting to the final policy drafts elaboration. This work spanned across multiple ministries, agencies, interest groups and usual citizens to better integrate existing nets into a universal coverage plan. In September 2006, the State Council Healthcare Reform Leading Group was formed. Initially, the Group involved 14 ministries and commissions, but then this number had been broadened to 16, including The State Commission Office for Public Sector Reform, Ministry of Education, Ministry of Civil Affairs, Ministry of Personnel, National Population and Family Planning Commission, State Council Research Office, State-owned Assets Supervision and Administration Commission of the State Council, State Food and Drug Administration, State Administration of Traditional Chinese Medicine, China Insurance Regulatory Commission, All-China Federation of Trade Unions, where five - National Development and Reform Commission, Ministry of Health, Ministry of Finance, Ministry of Agriculture and Ministry of Labor and Social Security - played the most important role in the process of healthcare policy-making. Premier Wen Jiabao himself held several hearings to discuss the draft with stake-holder groups. In Zhongnanhai, premier listened to suggestions given by medical workers, experts and scholars, people in charge of production and realization of pharmaceutical products, villagers, peasantworkers, leaders of enterprise labor unions, workers of state-owned enterprises and foreign companies, New Rural Cooperative Medical system managers, leaders of different neighborhood committees, presidents of middle schools and other groups influenced by the healthcare reform. Suggestions made by Democratic Party were also included into the consideration when preparing and re-making reform drafts. page 66 The reform plan was also posted on the Internet for public review and comments. From September 26 till December 30, 2006, preliminary suggestions on the first draft were made (wo wei yigai jianyan xiance). That time about 15,000 critical suggestions had been solicited. After those suggestions were taken into account, the renewed policy draft was also opened to and evaluated by the general public during the period of time from October 14 till November 14, 2008. 73 It was the period of soliciting opinions on the final reform draft (guanyu shenhua yiyao weisheng tizhi gaige de yijian (zhengqiu yijian gao) gongkai zhengqiu yijiari) and 35,929 comments were solicited.74 Moreover, educated and professional support had been widely used by the policy makers in all stages of the reform. Between 2006 and 2008, the State Council Leading Group for Coordinating Healthcare System Reform directed by the First Vice-Premier of China Li Keqiang conducted numerous seminars and field visits to more that 20 provinces, consulting with health experts and eliciting private proposals for healthcare reform in China. During this time, the group received 9 discrete proposals from several domestic and international groups, including the World Health Organization, World Bank, McKinsey & Co., Peking University, Fudan University, Tsinghua University and Harvard University (jointly), and the PRC State Council Development Research Center.75 In May 2007, the Healthcare Reform Coordination Group held conference in Beijing where different reform proposals were analyzed and evaluated. Among participants of the conference 19

were policy makers from different ministries, representatives of reform proposals providing groups as well as the most influential Chinese and overseas healthcare policy experts and advisors, including Gregg Bloche - Obama's senior adviser on health law and policy, Leonard D. Schaeffer a founding Chairman and CEO of WellPoint, the U.S.'s largest health insurance company, Harvard healthcare economist William Hsiao and many others. Such organizations and universities as Renmin University of China, Chinese Academy of Social Sciences, Beijing Normal University, Sun Yat-Sen University, UK Department for International Development, China International Capital Corporation (CICC) also joined the process of healthcare reform elaboration76 Such involvement of advisors and academic and nonacademic professionals into the process of healthcare policymaking demonstrates the high degree of reliance on knowledge and professional consulting in the healthcare policy implementation in China. On January 14 and 15, 2008, the former Vice-Premier of the State Council Wu Yi directed two symposiums on which the members of Education, Science, Culture and Health Committee of the National People's Congress as well as members of Subcommittee of Education, Science, Culture, Health and Sports gave their opinions on the healthcare reform project and outlined directions of further developments. After the draft which was to be exposed to the public supervision (guanyu shenhua yiyao weisheng tizhi gaige de yijian (zhengqiu yijiangao chugao)) was elaborated in February 2008, it was subject to numerous refinements, amendments and corrections. More than 50 changes were made in page 67 the draft before it was exposed to the public supervision in form of zhengqiu yijian gao. On the 10th of September 2008 it was decided to solicit opinions nationwide. The new version was called guanyu shenhua yiyao weisheng tizhi gaige de yijian. This version was subject to 137 corrections and amendments.77 These numerous changes and amendments demonstrate the fact that elaboration of the universal coverage plan was characterized by balancing different interests and looking for compromise between them. Such huge scope and scale of the work on the new universal coverage could hardly be possible without active involvement of the central government which took responsibility for the elaboration of the reform project and its future implementation. All this also demonstrates a fundamental change happened in the central government's approach to the healthcare. The whole process and the new plan itself indicated a new determination by China's leaders to tackle healthcare as priority. Integrative nature of the new healthcare reform The result of the work described above was the adoption on March 17, 2009. of the Opinions of the CCP Central Committee and the State Council on Deepening the Health Care System Reform (Honggong Zhongyang, Guowuyuan guanyu Shenhua Yiyao Weisheng Tizhi Gaige de Yijian)78 as well as Implementation Plan for the Recent Priorities of the Health Care System Reform (20092011) {Yiyao weisheng tizhi gaige jinqi zhongdian shishi fangan (2009-2011)).79 It needs to be admitted that, since the details of China's health reform have yet to be announced and time is needed to estimate the effects of the new universal plan, the assessment of China's recent healthcare reform is tentative and preliminary and we still need to wait for the nationwide statistical data on the effects of the new system. However, some fundamental principles underlying the new reform plan as well as new tendencies in healthcare policy still can be discussed. The key element of the revealed documents is the promise of affordable basic healthcare for everyone. The new guidelines place the main emphasis on reasonable distribution of healthcare resources, whereas the issues of equity and accessibility have become the core of the program. The most important innovations include conceptual change in the development of China's healthcare sector and the new level of 20

comprehensiveness in approaching the national healthcare system as a whole. The implementation of the five priority reform programs mentioned above aims at effectively solving kanbing nan, kang bing gui problem, which caused intense public concerns. As it is stated in the policy documents, "in promoting the establishment of basic medical security system, all urban and rural residents will be included into the system to effectively reduce the burden of drug expenses on the individuals."80 The reform is aimed at making the basic healthcare system a public good - a conceptual change (in comparison with market-orientation of '80s and '90s) which is to be implemented in new institutions which will be able page 68 to provide everyone with basic healthcare services. The documents say that "all urban and rural residents should be entitled to basic public health services, for prevention of diseases to the maximum extent."81 Such conceptual innovations are materialized by the increased subsidies and new approaches to healthcare system financing. To improve the basic medical security level, in 2010, subsidies on URBMI and NCMS by government budgets at various levels had been increased to 120 yuan per person per annum. The proportion of hospitalization expenses reimbursed by UEBMI, URBMI, and NCMS are also planned to be increased step by step. The scope and proportion of reimbursement for outpatient expenses will also be expanded. The maximum amount payable by UEBMI and URBMI shall be increased to about six times of annual average salary of local employees and disposable income of residents respectively. The maximum amount payable by NCMS shall be increased to over six times of the per-capita net income of local farmers.82 Besides the increase of government's subsidies and proportion of healthcare expenses reimbursed, funding for public health services had also been increased. According to the documents, "the government will provide fully from the budget the costs of specialized public health institutions related to staffing, development and construction, general administration expenses and business operation, and the service revenue of these institutions shall be turned over to a special fiscal account or integrated into budget management."83 The policy guidelines require governments at various levels to readjust the expenditure structure, transform the investment mechanism, reform the compensation methods, ensure funding for the reform, and the benefit of fiscal funds. In order to realize the reform goals, governments at various levels should increase investment in healthcare by 850 billion yuan, including 331.8 billion yuan from the central government in 2009-2011. The new plan implies significant centralization of the management of the healthcare system. Starting from 2009, the system of resident's health records with standardized management nationwide is being implemented. This system is expected to allow conducting regular health checkup for different groups of senior citizens over 65, regular growth checkup for infants and children under three, regular prenatal examination and postnatal visits for pregnant women. The system is also expected to provide guidance of prevention and control to patients with diseases such as hypertension, diabetes, mental disorders, HIV/AIDs, and tuberculosis. The new reform plan also pays close attention to the so called vacuum zone - those who experience difficulties with entering different insurance plans. Retirees of closed-down and bankrupted enterprises should be entitled to the benefits of the basic medical insurance regardless of the premiums affordability by these enterprises. To enable insurance participation, central government is expected to undertake a duty to give appropriate subsidies to retirees of closed-down and bankrupted state-owned enterprises in financially constrained regions. 84 Temporary contract workers are expected to volunteer their participapage 69 21

tion in either UEBMI or URBMI. Migrant workers with difficulties in participating UEBMI can opt for URBMI or NCMS in their registered permanent residence. Thus, the URBMI appeared to be a new choice for them. To make a progress in providing migrant workers with basic healthcare, however, requires government to make further steps toward realizing direct settlement between medical insurance handling institutions and designated healthcare institutions. To enhance integration between healthcare institutions of different regions, the pooling area is to be expanded. For that purpose, referral procedures for accessing healthcare services beyond the county is streamlined. An account settlement mechanism is being established for relocated retired insurants. Despite the fact that reform plan did not delineate concrete procedures for this, it was stated that "efforts should be made to formulate methods of transferring and connecting basic medical insurance accounts so that the problems in transferring basic medical security accounts from one region to another, or from one system to another, of those temporary contract workers including migrant workers, can be resolved." 85 The Plan also stated the necessity to make proper connection between UEBMI, URBMI, NCMS and Medical Assistance. Though exact measures had not been outlined, attention to the issue of integration between different nets in the frame policy document demonstrates the recognition of this problem by the central government. In terms of central local relations, central government as usually encourages pilot projects at local levels. However, this time "the State Council will form a leading group on deepening the healthcare system reform to organize and coordinate the reform work," 86 that is to be in charge of overall coordination and the guidance of the pilot projects in various localities, as well as organization and coordination of the overall reform work. The greater emphasis is placed on strengthening leadership, organization and implementation. Admittedly, it is difficult to undertake detailed analysis of the recent healthcare reform implementation relying on the frame documents issued by the State Council. Some citizens in China after reading reform projects exposed to the public comments on the Internet described it as excessively zhuan (specialized), se (obscure), rao (imprecise) and would like to see government making further elaborations. However, what is clear from the documents is that there appeared a new approach toward healthcare issues as well as to the process of policy making in China. Conclusion The above analysis has demonstrated the process of China's healthcare system evolution since 2002. China's modern healthcare system consists of different building blocks, which have been emerging at different times and finally were integrated into a universal coverage plan in 2009. These developments took page 70 place within the "second generation reform strategy", which started placing accent on the vigorous promotion of state building.87 The practical implementation of that plan nationwide will require long years and substantial financial resources and the concrete measures of that implementation are still to be elaborated. What is clear now, however, is that relationship between state and market has changed in the modern China. Beneath the changes in social expenditures growth dynamic demonstrated above is the change of the role of the state in the resources allocation. Today's model of China's development is different from that which dominated in the '80s and '90s. When being interviewed by Fareed Zakaria in 2008, Premier Wen Jiabao answering the question concerning the China's model of development 22

argued that the complete formulation of China's economic policy is to give full play to the basic role of market forces in allocating resources, but under the macro-economic guidance and regulation of the government. In other words, both hands (visible and invisible) need to be given full play. The analysis of the healthcare system after the new leadership took office has shown that series of attempts to strengthen the role of the central government in health policy regulation had been made. The new Chinese leadership has recognized the limited role of the self-regulated market in healthcare provision and demonstrated the willingness to be the main guarantor of basic human rights (health) of the residents.

NOTES: 1. Poverty Facts and Stats. - http://www.globalissues.org/article/26/poverty-facts-and-stats. 2. On application of market failure theory to the healthcare see Kenneth J. Arrow, "Uncertainty and the Welfare Economics of Medical Care", American Economic Review (American Economic Association) Vol. 53, No. 5 (Dec, 1963): 941-973. On the effects of the market in the healthcare see William C. Hsiao, "Abnormal Economics in the Health Sector", Health Policy 32(1995): 125-139. 3. Zhonggong Zhongyang, Guowuyuan Guanyu Shenhua Yiyao Weisheng Tizhi Gaige de Yijian (2009.03.17) [CCP Central Committee's, State Council's Opinions on Deepening Health Care Reform], March 17, 2009, available at http://www.gov.cn/jrzg/2009-04/06/content_1278721.htm. 4. For an exhaustive review of recent studies on China's healthcare system and its reform see Wagstaff et al., "China's Health System and Its Reform: A Review of Recent Studies", Health Economics, Vol. 18, Issue S2 (Jun., 2009): 7-23. For a literature review from the perspective of health service delivery, see Eggleston et al., "Health Service Delivery in China: A Literature Review", Health Economics, Vol. 17, Issue 2 (Feb., 2008): 149-165. 5. Guojia Tongji: "Zhongguo guonei shengchan zongzhi hesuan lishi ziliao (1952-2004)" [National Bureau of Statistics of China: accounting records of China's GDP (1952-2004)], Beijing, 2007. 6. Hu Shanlian, Tang Shenglan, Liu Yuanli, Zhao Yuxin, Maria-Luisa Escobar, David de Fer-ranti, "Reform of how health care is paid for in China: challenges and opportunities," The Lancet, Vol. 372, Issue 9652 (Nov. 2008), p. 1847. 7. David Blumenthal, William Hsiao, "Privatization and its discontent - The evolving Chinese health care system," The New England Journal of Medicine, Vol. 353, No. 11 (Sep. 2005), p. 1167.

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8. Shi Guang and Gong Sen, "Di Er Baogao:Gaige Kaifang yilai Zhongguo Weisheng Touru jiqi Jixiao Fenxi" [Report No. 2: The Analysis of China's Health Care System and Its Performance After the Policy of Reform and Opening], analytical report for the Development Research Center of the State Council. - http://www.drc.gov.cn/cbw.asp?tlist=32618. 9. Ibid. 10. Professor Wang Shaoguang, when projecting Karl Polanyi's ideas about utopianism of self-regulating market onto the Chinese reality, calls the process of emergence of social policies in China "The Great Transformation" (Da Zhuanxing) and emphasizes its significance as a historic turning point. See Wang Shaoguang, "Da Zhuanxing: 1980 nian yilai zhongguo de shuangxiang yundong" [The Great Transformation: The Double Movement in China], Zhongguo shehui kexue [Chinese Social Science], No. 1 (2008): 129-148. For the analysis of why such transformation took place see Wang Shaoguang (2006), "Cong Jingji Zhengce dao Shehui Zhengce de Lishixing Zhuanbian" [The Historic Transformation from Economic Policies to Social Policies], available at the Wang Shaoguang's personal webpage: http://www.cuhk.edu.hk/gpa/wang_files/Publist.htm. 11. Jiang Zemin, "Quanmian jianshe xiaokang shehui, kaichuang Zhongguo tese shehuizhuyi shiye xin jumian: zai Zhongguo Gongchandang di shiliu ci quanguo daibiao dahui shang de baogao," [Comprehensive Building of Affluent Society, Opening New Phase in Building Socialism with Chinese Characteristics: The Report on the 16th National Congress of the Communist Party of China], Renmin ribao from 18.11.2002. 12. Liu Yuanli, "Reforming China's urban health insurance system," Health Policy, Vol. 60, Issue 2 (May 2002), pp. 133-150.

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13. Laodongbu boaxian fulisi baogao (Ministry of Labour Department for Insurance and Welfare), 1988, p. 145. 14. Xu Ling, Wang Yan, Charles D. Collins, Tang Shenglan, "Urban health insurance reform and coverage in China using data from National Health Services Surveys in 1998 and 2003," BMC Health Services Research, 7:37 (2007): 1-14, available from http://www.biomedcentral.com/1472-6963/7/37. 15. Gong Sen, "Baogao si: chengzhen zhigong yiliao baozhang tizhi de huigu yu zhanwang" [Report No. 4: Review and Outlook of UEBMI system], analytical report for the Development Research Center of the State Council. http://www.drc.gov.cn/cbw.asp?tlist=32618. 16. Data from the Second National Health Services Survey done in 1998, when UEBMI did not exist yet. 17. The new system was not implemented at once and for a long time existed in parallel with the old LIS and GIS. 18. The Third National Health Services Survey (2003). 19. Gong Sen, "Baogao si: chengzhen zhigong yiliao baozhang tizhi de huigu yu zhanwang" [Report No. 4: Review and Outlook of UEBMI system], analytical report for the Development Research Center of the State Council. http://www.drc.gov.cn/cbw.asp?tlist=32618. 20. "Guowuyuan guanyu jianli chengzhen zhigong jiben yiliao boaxian zhidu de jueding" [State Council's decisions on development of Urban Employee Basic Medical Insurance] dated 14.12.1998, available at http://www.gov.cn/banshi/200508/04/content_20256.htm. 21. China's Social Security and Its Policy White Book, available at http://www.china.org.cn/e-white/20040907/index.htm. 22. Ministry of Labor and Social Security: "Laodong he shehui baozhang shiye fazhan 'shiyi-wu'guihua gangyao (20062010)" [The Outline for the Eleventh Five-Year Plan of Labor and Social Security Development (2006-2010)] available at: http://www.molss.gov.cn/gb/zt/2006-ll/08/content_146879.htm. 23. The World Bank, China: The Health Sector, Washington, D.C., 1984, p. 155.

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24. Cai Renhua (eds). "Zhongguo yliao boazhang gaige shiyong quanshu" [Encyclopedia of Chinese Health Care Reform], Beijing: 1998, p. 344. 25. Wang Yanzhong, "Shilun guojia zai nongcun yiliao weisheng baozhang zhong de zuoyong" [My preliminary observations on the state role in rural medical insurance coverage], available at http://www.cc.org.cn/wencui/020603200/0206032015.htm, cited from Wang Shaoguang, "The Great Transformation: The Double Movement in China," Boundary 2, Vol. 35, No. 2 (Summer 2008), p. 35. 26. Among the most important are: - 1991, State Council approved and forwarded "Guanyu gaige he jiaqiang nongcun yiliao weisheng gongzuo de qingshi" [Request for Instructions on the Issue of Reforming and Strengthening Healthcare in the Countryside]. - 1993, Central Committee of CCP issued "Guanyu jianli shehui zhuyi shichang jingji tizhi ruogan wenti de jueding" [Decisions on Some Issues of Building the Socialist Market Economic System]. - 1997, Central Committee of CCP and State Council issued "Guanyu weisheng gaige yufazhan de jueding" [Decisions on the Reforming and Development of Healthcare]. -1998, Third Plenary Session of the 15th Central Committee of the Chinese Communist Party passed "Zhonggong Zhongyang guanyu nongye he nongcun gongzuo ruogan zhong-da wenti de jueding" [Decisions of the Central Committee of CCP on Some Important Issues of Rural and Agricultural Work]. -2001, General Office of the State Council forwarded to the State Council Economic Restructuring Office and other departments "Guanyu nongcun weisheng gaige yu fazhan de zhidao yijian" [Instructions Regarding Reforming and Development of Healthcare in Rural Areas]. 27. Zhang Wenkang, lecture delivered at the Strategic Renovation Forum (zhuangxin zhanliu luntan), China Science Academy (zhongguo kexueyuan), January 31, 2002. - http://www.cas.ac.cn/html/Dir/2002/01/31/5616.htm, cited from Wang

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Shaoguang, "The Great Transformation," p. 36. 28. Wang Leijun, "Baogao wu: dui Zhongguo nongcun yiliao baozhang zhidu jianshe de fansi yujianyi" [Report No. 5: Reflections and Recommendations on Building Healthcare Insurance System in Rural China], analytical report for the Development Research Center of the State Council. - http://www.drc.gov.cn/cbw.asp?tlist=32618. 29. Adam Wagstaff Winnie Yip, Magnus Lindelow & William C. Hsiao, "China's health system and its reform: A review of recent studies," Health Economics, Vol. 18, Issue Supplement 2 (July 2009): S7-S23. 30. Lei Xiaoyan, Lin Wanchuan, "The New Cooperative Medical Scheme in Rural China: Does More Coverage Mean More Service and Better Health?" Health Economics, Vol. 18, Issue Supplement 2 (July 2009): S25-46. 31. Wang Shaoguang, "The Great Transformation," p. 36. 32. Lei & Lin, "The New Cooperative Medical Scheme in Rural China," p. 27. 33. Ministry of Health. 34. Wang, "The Great Transformation," p. 37. 35. Ministry of Health. 36. Lei & Lin, "The New Cooperative Medical Scheme in Rural China," p. 26. 37. China Ministry of Health 2006. 38. Lei & Lin, "The New Cooperative Medical Scheme in Rural China," p. 26. 39. Karen Eggleston, Wang Jian, Rao Keqin, "From Plan to market in the health sector? China's experience, " Journal of Asian Economics, Vol. 19, Issue 5-6 (November-December 2008): 400-412.

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40. Ibid. 41. Guo, J., Liu, X., Zhu, X. (2007), "Migrant workers are not covered by NCMS," Outlook Weekly, 47(2): 12 (in Chinese), cf. Lei & Lin, "The New Cooperative Medical Scheme in Rural China," S. 26. 42. Wu Lingling, Chen Xinde, "Woguo nongmingong yiliao baoxian wenti yanjiu" [Analysis of Health Insurance Problems of Migrant Workers in China], Iliao Baoxian [Health Insurance], No. 2, 2010. 43. Karen Eggleston, Wang Jian, Rao Keqin, "From Plan to market in the health sector? China's experience," Journal of Asian Economics, Vol. 19, Issue 5-6 (November-December 2008), p. 410. 44. Wang Shaoguang, "The Great Transformation: The Double Movement in China," Boundary 2, Vol. 35, No. 2 (Summer 2008), p. 34. 45. Ibid. 46. Ibid. 47. Yao Jun, "Nongmingong Yiliao baoxian zhidu yunxing kunjing ji qi lilun chanshi" [Difficulties in the Functioning of Health Insurance System for Migrant Workers and Their Theoretical Explanation], Tianfu xinlun [Tianfu New Forum], 2010, No. 1. 48. For classificatory works on healthcare insurance systems for migrant workers in Chinese see: Yao Jun, "Nongmingong Yiliao baoxian zhidu yunxing kunjing ji qi lilun chanshi" [Difficulties in the Functioning of Health Insurance System for Migrant Workers and Their Theoretical Explanation], Tianfu xinlun [Tianfu New Forum], 2010, No. 1; Kang Caixia, Wang Hong, "Chengxiang tongchou beijing xia nongmingong yiliao baozhang zhidu tantao" [Analysis of the Migrant Workers' Health Security System in Cities and Countryside], Jiazhi Gongcheng [Value Engineering], 2010, No. 11; Liu Juanjuan, MaAixia, "Jiyu chengzhen yiliao baoxian he xin nonghe xiang xianjie de shijiao tantao goujian nongmingong yiliao boaxian zhidu de ding-weiyuanze" [Definining the Health Insurance for Migrant Workers from the Perspective of Integrating NCMS and Healthcare Systems in Cities], Zhongguo Yaowu Jingjixue [Chinese Farmo-economics], 2010, No. 1; Wu Lingling, Chen

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Xinde, "Woguo nongmingong yiliao baoxian wenti yanjiu" [Analysis of Health Insurance Problems of Migrant Workers in China], Iliao Baoxian [Health Insurance], 2010, No. 2. 49. Zheng Gongcheng, Linda Yeuk-lin Lai Wong, "Zhongguo nongmingong wenti yu shehui baohu" [Migrant Workers Issues in China and Social Protection], Beijing, Renmin chubanshe, 2007. 50. Jin Mou, Jinquan Cheng, Dan Zhang, Hanping Jiang, Liangqiang Lin and Sian M Griffiths, "Health care utilization amongst Shenzhen migrant workers: does being insured make a difference?" BMC Health Services Research, 2009, 9: 214. 51. Ibid. 52. Ibid. 53. Wang Shaoguang, "The Great Transformation: The Double Movement in China," Boundary 2, Vol. 35, No. 2 (Summer 2008), p. 34. 54. Ibid. 55. Ibid, p. 35. 56. Zheng Gongcheng, Linda Yeuk-lin Lai Wong, op. cit., pp. 380-381. 57. Wu Lingling, Chen Xinde, op. cit. 58. Guowuyuan ynjiushi ketizu 1 Zhongguo nongmingong diaoyan baogao A [Research Office of the State Council, Seminar 1, Chinese Migrant Workers Investigation Report "A"] and Zong baogao qicao zu 1 Zhongguo nongmingong wenti yanjiu baobao C [General Project Group 1, Chinese Migrant Workers Issues Research Report "C"], Beijing: Yanshi chubanshe, 2006.

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59. Wei Jie, Zhou Lulin, "Nongmingong yiliao baoxian xianzhuang ji moshi xuanze" [The Current Situation in Migrant Workers Health Insurance System and Choice of Methods for Modernization], Zhongguo Weisheng Shihi Guanli [Management of China's Health Protection]. 2010, No. 1, p. 31. 60. Cao Chunyan, Wei Jincai, "Nongmingong yiliao baozhang de kunjing yu chulu tanjiu - Zhejiang sheng nongmingong yiliao baozhang xianzhuang de diaocha" [Research into problems and solutions in migrant workers health insurance system investigation of modern conditions of migrant workers' health security in Zhejiang province], Zhongguo weisheng jingji [Chinese Health Economics], 2008, No. 4, pp. 79-80. 61. Lin Wanchuan, G. Liu Gordon and Chen Gang, "Urban Resident Basic Medical Insurance: a landmark reform towards universal coverage in China," Health Economics, 2009, Vol. 18, Issue Supplement 2: S83-S96, p. 83. 62. Zhongguo shehui baozhang wang zonghe: "Quanmian tuixing chengzhen jumin jiben yiliao boaxian" [Chinese Social Security Portal: 'Comprehensive Implementation of Urban Residence Basic Medical Insurance'], available at: http://www.cnss.cn/new/ztzl/200907/t20090727_238341.htm. 63. Available in Chinese at Zhongguo zhengfu menhu wangzhan [Web Portal of the Central People's Government of the People's Republic of China]: http://www.gov.cn/zwgk/2007-07/24/content_695118.htm. 64. Tsing-Mei Cheng, "China's latest health reforms: a conversation with Chinese health minister Chen Zha," Health Affairs (Millwood), Vol. 27, Issue 4 (July-August 2008), pp. 1103-1110. 65. Ibid. 66. State Council issued Policy Document No. 20 - Gongwuyuan guanyu kaizhan chengzhen jumin jiben yiliao baoxian shidian de zhidao yijian [Guiding Opinions of the State Council on the Pilot Scheme for Basic Medical Insurance for Urban Residents], available in Chinese at http://www.gov.cn/zwgk/2007-07/24/content_695118.htm. 67. For a detailed analysis of URBMI policy settings in 9 cities (Baotou City, Inner-Mongolia SAR; Changde City, Hunan Province; Chengdu City, Sichuan Province; Jilin City, Jilin Province; Shaoxing City, Zhejiang Province; Xiamen City, Fujian Province; Xining City, Qing-hai Province; Urumqi City, Xinjiang SAR; and Zibo City, Shandong Province) see Lin Wanchuan, G. Liu Gordon and Chen Gang, "Urban Resident Basic Medical Insurance: a landmark reform towards universal

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coverage in China," Health Economics, 2009, Vol. 18, Issue Supplement 2: S83-S96. 68. Ibid, p. 89. 69. Ibid. 70. Zhongguo Renmin Gongheguo Weishengbu: 2010 Zhongguo weisheng tongji niandu [Ministry of Health of the People's Republic of China: 2010 Chinese Health Statistical Yearbook], available at http://www.moh.gov.cn/publicfiles/business/htmlfiles/mohwsbwstjxxzx/s8208/index.htm. 71. Lin Wanchuan, G. Liu Gordon and Chen Gang, op. cit., p. 94. 72. Zhang Yan, "Nongmingong tuibao langchao de beihou" [Behind the Withdrawal Wave of Migrant Workers], Jingji Daokan [Economic Guide], 2008, No. 2. 73. The process of soliciting of public opinions on the issue of healthcare reform had been carried out through the Internet portal of the National Development and Reform Commission http://www.ndrc.gov.en/ygyj/ygyj_list.jsp?&type=2. 74. The Central People's Government of the People's Republic of China: "Guanyu shenhua yiyao weisheng tizhi gaige de yijian 'zhuiqiu yijian gonggao'" [Open Report of the Results of Soliciting Opinions on the Reform of the Medical Care System], available in Chinese at: http://www.gov.cn/gzdt/2008-10/14/content_1120143.htm.

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75. The U.S.-China Business Council 2009 - http://www.uschina.org/, State Council Leading Group for Coordinating Healthcare System Reform. 76. My talks with Professor Wang Shaoguang in Hong Kong in March 2010. 77. My talks with Professor Wang Shaoguang in Hong Kong in April 2010. 78. English version available at: http://www.china.org.cn/government/scio-press-confer-ences/200904/09/content_17575378.htm. 79. English version available at: http://www.china.org.cn/government/scio-press-confer-ences/200904/09/content_17575401.htm. 80. Implementation Plan for the Recent Priorities of the Health Care System Reform (2009-2011). http://www.china.org.cn/government/scio-press-conferences/2009-04/09/con-tent_17575401.htm. 81. Ibid. 82. Ibid. 83. Ibid. 84. Ibid. 85. Ibid 86. Ibid. 87. For general analysis of "The Second Generation Strategy" see Wang Shaoguang, Hu Angang, Zhou Jianming, "Di er dai gaige zhanlue: jiji tuijin guojia tizhi jianshe" [The second generation reform strategy: vigorously promote state building], Zhanlue yu Guanli [Strategy and Management], 2003, No. 2.

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