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'Let private sector tie up' with gov't

By Hu Yuanyuan (China Daily)
Updated: 2007-03-16 07:01

One of the world's largest reinsurance companies has weighed into discussions on China's healthcare reform, stressing the need for public-private partnerships in the sector.

"Faced with inequitable access and runaway expenditure, China should all, in cooperation with the government, let the private sector play a more prominent role in the healthcare system," Wil Chong, head of Life & Health division of Swiss Reinsurance (China), told China Daily.

He headed a healthcare report project titled "Reforming Chinese healthcare through public-private partnership" at the request of the China Insurance Regulatory Commission.

Commercial insurers, which can redirect State medical spending to the rural areas through insurance penetration, was a good alternative to improve access to healthcare in the country and alleviated the imbalance in access to care between rural and urban communities.

"However, since the current basic medical insurance is operated by local social security authorities, an immediate step is to define clearly the boundary between public and private carriers," Chong stressed, adding commercial insurers were not willing to take part in the social security system under an ambiguous policy environment.

Currently, social health insurance in China already covers more than 100 million people. But to make it a more sustainable model, more attention is needed in the health-financing program.

"Tax incentives or premium subsidies are an efficient way of encouraging corporate and individual participation in health insurance, which has proven to be an effective model in other countries," Wil Chong, said.

Meanwhile, Third-Party Administrators (TPA), which are not risk-bearing entities, should be encouraged to take part in China's health financing system. TPAs were a viable means of raising administrative efficiency in large countries such as India and the United States.

Statistics from the Ministry of Health show that China's total health spending increased 69 percent from 458.7 billion in 2000 to 759 billion in 2004. "Hospitals should move from item-based billing to diagnosis or procedural-based billing," Chong said.

Also, the government should encourage service providers to engage insurance companies to develop a prospective payment system in which hospitals are reimbursed in advance for care they render to patients, instead of on a fee-for-service basis.

"The new payment system should at the least shift a portion of the underlying risk to medical service providers to offer them the incentive to keep treatment costs within reasonable and medically necessary bounds," Chong said.

To make the mode work, there would be data sharing between participants in the financing structure.

Under the scheme, both the insurance and healthcare providers would centrally collect and publish key data such as cost of care per episode or procedure by patient's insurance status, length or stay.

(China Daily 03/16/2007 page7)