The Evolution of HTA in Emerging Markets Health-Care ... - TREE

OHE Consulting Report for PhRMA
5 January 2011
of the schemes. Some Provinces are seeking to integrate the management of the different schemes,
particularly the URBMI and the NRCMS, although they are still administering different benefit
packages. Nationally, there is a debate as to whether the MoHRSS should take over the MoH role,
becoming the purchaser for the NRCMS. The MoH would still own the hospitals and employ the
doctors. But the MoH has resisted.
As a consequence of the different schemes, the insurance benefit is not standardized, and the
benefits are not transferrable from one city to another. There are a large number of migrant workers
whose permanent residence is in a rural area but whose workplace is in one of the cities are still
unable to enjoy health benefits because of administrative rigidity. Research shows that the NRCMS
scheme has reduced migration to the cities as people do not want to lose health insurance.
However, this needs to be put in context. Many migrant workers are young with limited health care
interests unless they are already sick. When the URBMI has been rolled out it will be possible to
explore whether this has encouraged migration to the cities.
There are differences in philosophy between the MoHRSS and the MoH. The former is interested in
security, i.e. in treatment once the patient is ill, whereas the MoH has more focus on health
including prevention. There is also important heterogeneity of services reimbursed (for example,
inpatient and outpatient, and the type of hospital covered) not only across the schemes but within
them, depending on local resources. For example in the richer coastal areas the benefit package in
the UEBMI is better because the enterprises can afford to pay higher wages and also to contribute
more than the minimum percentage of salary.
The lack of autonomy for public hospitals
The second challenge to greater integration of health insurance schemes relates to the issue of
public hospitals. Currently, the public hospitals are under the control of MoH, and the operation and
management suffers from low efficiency. There are more than 70 million medical staff, but they do
not have the right incentives to perform well in this system, with service fees strictly under price
control and heavily distorted. Hospital managers are administrators – they do not have the power to
hire and fire. Doctors’ wages are too low, creating disincentives to becoming a doctor at a time
when more and better trained doctors are needed. Many older doctors in the rural areas are not
well trained in modern medicine. The MoH appears to be reluctant to introduce reform, in part
because it uses low wages to keep down health care costs. One solution to this problem could be to
ease the controls on hospitals, give the hospitals their autonomous administrative rights, and let
them decide how to invest and allocate the resources within the hospitals. However, this assumes
that payment mechanisms provide appropriate incentives.
The lack of an efficient fee schedule
Evidence from around the world indicates that fee-­‐for-­‐service is usually not an optimal
reimbursement system. Where it is used it is important that relative fees reflect relative costs and
that, overall, fee levels enable an efficient hospital to cover its costs. The existing pricing mechanism
for medical services in China is perverse. Price control by National Development and Reform
Committee (NDRC) prevails in this field. Many fee-­‐for-­‐service charges are now far below the market
price level. Hospitals are unable to cover costs without other revenue sources including providing
services that are not included in the insurance package, so they do not have the right incentives to
provide quality care. Doctors salaries are supplemented by bonuses of up to 50% of salary, linked to
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