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China to Invest 850 billion yuan in Medical Reform

Cover issue 406 February 16
Translated by Liu Peng

Original article: [Chinese]

The Chinese government intends to invest 850 billion yuan in its on-going medical sector reform over the next three years, the Economic Observer has learned.

Of the amount, 330 billion yuan would come from the central government and the remainder from local governments.

The government planned to spend the funds in stages - 300 billion, 300 billion and 250 billion yuan for each year from 2009 to 2011.

When asked details on how the funds would be spent, Health Ministry spokesman Mao Qun'an told the EO that he wasn't authorized to release the details.

However, industry sources with insight on the reform said the funds would mainly be channeled to improving medical insurance systems, basic medicine delivery systems, local health care facilities and services, and revamping public hospitals.

An industry expert who requested anonymity projected that the total investments for the medical reform could reach 1.5 trillion yuan.

At the national medical conference in early January, Health Minister Chen Zhu had painted a promising picture of the reform. He said the State would give full support to the construction of 2,000 county hospitals and 29,000 health care stations in rural areas.

The EO also learned that 70 billion yuan was expected to be invested in supporting county hospitals.

Enhancing basic health care insurance for rural and urban residents was another key point.

According to the reform scheme spelt out by the government, the annual subsidy of basic health care insurance for each rural and urban resident would be upped to 120 yuan by 2010, requiring an estimated 120 billion yuan in investment.

In 2007, national health care costs reached nearly 1.13 trillion yuan. Of the amount, state spending accounted for nearly 21% or some 230 billion yuan, while the cost shouldered by individual citizens amounted to 45.6%. In other words, nearly half of the country's medical expenses were paid by the public.

Zhao Xin, a researcher at the China Health Economics Institute, said the above spending ratio was unbalanced.

He believed that with the three-year planned investment from the government, the medical burden weighing down on individual Chinese would be alleviated.

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