Risk Adjustment, Risk Sharing and Premium Regulation in Health Insurance Markets.

2018 : 263–278 . department of the interior :10.1016/B978-0-12-811325-7.00009-9



Health Insurance and Payment System Reform in China

Julie Shi and Gordon Liu Guest Editor ( s ) : Thomas G. McGuire and Richard C. avant-garde KleefAuthor information Copyright and License information Disclaimer Peking University, Beijing, ChinaCopyright © 2018 Elsevier Inc. All rights reserved. Since January 2020 Elsevier has created a COVID-19 resource center with unblock information in English and Mandarin on the novel coronavirus COVID-19. The COVID-19 resource center is hosted on Elsevier Connect, the company ‘s populace news and information web site. Elsevier hereby grants license to make all its COVID-19-related inquiry that is available on the COVID-19 resource kernel – including this research content – immediately available in PubMed Central and early publicly fund repositories, such as the WHO COVID database with rights for unrestricted research re-use and analyses in any form or by any means with recognition of the original reservoir. These permissions are granted for exempt by Elsevier for deoxyadenosine monophosphate retentive as the COVID-19 resource center remains active voice .


requital arrangement reform has become one of the primary targets of Chinese healthcare reform since 2009. This chapter describes the development of China ’ sulfur indemnity arrangement, along with a review of the policy and impacts of payment reform from fee-for-service to alternative schemes, while focusing on capitation payments. In China, public programs soon cover most of the population ; the participation of private insurance firms is express. Studies to date have found no significant impact of capitation payment on full medical consumption. The reason could be that providers are slow to respond. besides, the impact could have been diluted because reforms were implemented only on some policy programs paying providers, but not all. Keywords:

Health care, health insurance, payment reform, capitation payment, China

9.1. Introduction

The Chinese healthcare arrangement has experienced three different back-to-back periods of reform since the constitution of communist China in 1949 : the central planning era ( 1949–78 ), the market-based era ( 1978–2002 ), and the healthcare reform era ( 2003 to the present ). The structures of health insurance and healthcare manner of speaking systems varied in unlike periods. Wagstaff et al., 2009a, Wagstaff et al., 2009b and Ma et alabama. ( 2008 ) have provided detailed reviews of system changes during these periods. between 1949 and 1978, the chinese economy was governed by a instruction and control mannequin. Both health indemnity and healthcare rescue systems were under mastermind control of the government. Health indemnity was determined based on people ’ s working condition and residence. In urban areas, the Government Insurance Scheme ( GIS ) covered government officials and staff, and the Labor Insurance Scheme ( LIS ) covered employees at state-owned enterprises ( SOEs ). In rural areas, the Cooperative Medical Scheme ( CMS ) covered a lot of the population. All programs were government-based. No private insurance was available in that period. As for the manner of speaking system, all healthcare facilities, including village clinics, township health centers, and county and city hospitals, were owned and operated by the government, at different levels. Providers were subsidized by the government. Prices of healthcare services were kept low by rule, with the aim— “ adequate access to the healthcare system for all. ” In 1978, China implemented economic reforms, and the healthcare system cursorily transformed to a market-based system. due to the dissolution of communes there has been a lack of support, which resulted in an about total flop of CMS in rural areas. As many SOEs faced fiscal difficulties, a large number of SOE employees in urban areas lost insurance coverage. In 2003, 78 % of the population was uninsured ( Ministry of Health, 2008 ). Private health indemnity was introduced in the early 1980s, but its development was limited. As for the manner of speaking system, subsidies received by healthcare institutions decreased dramatically. Since hospitals had become financially autonomous, they had incentives to oversupply healthcare services in holy order to increase revenues. Although secret hospitals and clinics were permitted to enter markets, the percentage of private providers was relatively low. In 2003, there were entirely 2037 private hospitals, compared to 15,727 public hospitals ( National Health and Family Planning Commission, 2015 ). The share of total of visits in secret institutions was even smaller. In 2003, because of increasing social discontent about the approachability and affordability of medical caution, and triggered by the severe acute respiratory syndrome ( SARS ) outbreak, the chinese government implemented a series of healthcare reforms. From 2003 to 2008, reforms focused on building an insurance system with universal coverage. In the work, public medical expending kept increasing, and several policy programs were launched. In 2008, the uninsured rate dropped dramatically to 12.9 % ( Ministry of Health, 2013 ), which was regarded as an outstanding accomplishment for the government. Since 2009, the government launched a new round of golf of reforms focusing on institutional features, such as reforms of the public hospital management and payment systems. The rest of this chapter is organized as follows. section 9.2 introduces the stream health policy system in China, which serves as a basis for reforms going forward. section 9.3 describes the requital organization and how it is changing, focusing on the character and likely of capitation payment. Sections 9.4 and 9.5 evaluate and discourse ongoing issues and policies related to requital system reform .

9.2. Health Insurance System

As mentioned above, following economic reforms, much of China ’ s population had lost policy coverage in the 1990s. During that time, most people were paying their medical bills out-of-pocket. Catastrophic medical outgo became one of the leading reasons behind the poverty of low- and middle-income households. In 2003, among households living below the poverty line, 30 % claimed medical spending to be the reason behind their poverty ( Ministry of Health, 2004 ). The population was broadly dissatisfied with the health system ; “ Kanbingnan, kanbinggui ” ( expensive and poor entree to medical care ) had become a good public concern. With a opinion to addressing this trouble, the chinese politics started to rebuild its indemnity organization gradually. In 1998, Urban Employee Basic Medical Insurance ( UEBMI ) was introduced to cover urban employees. In the period 2003–2008, the New Rural Cooperative Medical Scheme ( NRCMS ) was piloted in certain local anesthetic areas and then expanded countrywide to cover rural residents. In 2009, Urban Resident Basic Medical Insurance ( URBMI ) was formally introduced countrywide to cover urban residents who were not eligible for UEBMI. The above programs, which covered over 95 % of the population, remained the three basic insurance programs in China. In 2012, Catastrophic Health Insurance ( CHI ) was besides introduced to provide coverage for enrollees in URBMI and NRCMS who had catastrophic medical spend. In late years, individual policy was besides allowed and encouraged to act as a append to populace insurance. illustrates the structures of the five types of policy programs .An external file that holds a picture, illustration, etc.
Object name is f09-01-9780128113257.jpgOpen in a separate window Since CHI is most relevant to the root of this volume, the follow description largely focuses on the implementation of CHI. The politics had gathered much experience by implementing previous programs, but faced problems in the process. It was bad and expensive to reform the existing system. CHI is the latest program, and has provided the government with an opportunity to design alternate policies. The scheme has a smaller budget than the other programs. As the fiscal risk is smaller, the politics has been willing to pilot new policies. A meaning dispute between CHI and other programs is that the secret indemnity firms involved participated more actively in the system. This was due to the fact that there were mechanisms designed to incentivize private firms. We besides briefly discuss the early four types of insurances. information about the three basic policy programs is summarized in. UEBMI provides coverage to urban residents who are either working in the courtly sector or are retired. The dodge covers employees but not their spouses or dependents. In 2014, the platform covered 283 million enrollees, or 20.7 % of the population. The sum claims amounted to 670 billion RMB. The program provides the most generous coverage to its enrollees, with the mean per-person claims at 2367 RMB ( or about $ 385 ) in 2014, which was four to five times the claims made in the early two programs. The premiums are contributed jointly by employees and employers. The employers ’ contribution is about three-fourths of the sum premiums .

Table 9.1

Who is eligible? Formal sector employees and the retired Urban residents who are not eligible for UEBMI (children, students, the elderly without previous employment, and the unemployed) Rural residents
Is enrollment mandatory? Yes No No
Individual or family contract? Individual Individual Family
Minimum contract period No 1 year 1 year
Maximum contract period No 1 year 1 year
Number of people covered 283 million (2014) 315 million (2014) 736 million (2014)
Total claims 670 billion RMB (2014) 144 billion RMB (2014) 289 billion RMB (2014)
Total claims relative to GDP 1.05% (2014) 0.23% (2014) 0.45% (2014)
Mean per person claims 2367 RMB (2014) 457 RMB (2014) 393 RMB (2014)

Open in a separate window source : statistical report on health and family plan development in 2014 ; Health and family plan statistical yearbook, 2014 ; Annual report card on sociable policy development, 2014. URBMI provides coverage to urban residents who are not eligible for UEBMI, including children, students, the aged without previous use, and the unemployed. In 2014, the program covered 315 million enrollees, or 23.0 % of the population. The sum claims were 144 billion RMB. The hateful rate of per-person claims in 2014 was 457 RMB ( or about $ 74 ), a short higher than the claims in NRCMS, but much lower than that in UEBMI. The politics heavily subsidizes the program, and individuals only pay a proportion of the sum premiums. NRCMS provides coverage to rural residents. In 2014, the course of study covered 736 million enrollees, or 53.8 % of the population. It is the largest policy platform not only in China, but around the populace. The total claims were 289 billion RMB. The government heavily subsidizes the course of study. Again, individuals only pay a proportion of the full premiums. Though both government subsidies and individual premiums kept increasing, finance of the program has continued to be limited. The beggarly per-person claims were 393 RMB ( or about $ 64 ) in 2014, which is the lowest among the three programs. As the coverages of URBMI and NRCMS are limited, enrollees in the two programs have continued to face a risk of high out-of-pocket checkup spend. Since 2012, the government started to implement the CHI, with the drive of providing extra fiscal security for individuals facing catastrophic spend. The program was initially piloted in some regions, and was then quickly extended to the entire nation. Enrollees of URBMI and NRCMS automatically enroll in the CHI, without paying extra premiums. CHI plays the character of a supplementary policy coverage. It reimburses enrollees when their medical spend reaches the ceiling stipulated for the two basic programs. indeed, the insertion of the CHI is equivalent to extending the coverages of URBMI and NRCMS in terms of reimbursements to enrollees. however, it is unmanageable for the government to predict the magnitudes of the enrollees ’ responses to changes in reimbursement policies. The government is concerned that the program fund could become insufficient for compensation, if the coverage becomes besides generous. This was the reason for initiating a divide course of study, CHI, with a limited budget. even if the reimbursement rate was inappropriately designed, the program would have lone bear limited fiscal risk. In addition, the government has been encouraging private firms to manage CHI and to share in the risks associated. This is another benefit of the separate implementation of the CHI. The risk pools of all three basic policy programs and CHI are at the county or city levels, so the programs are all administered by the local government. Most of the basic programs are directly undertaken by the government, which collects premiums and makes payments to hospitals. There are merely a few exceptions where private indemnity firms participate in managing the public programs. however, experience has indicated that the government is ineffective in managing the insurance in terms of controlling aesculapian cost and improving timbre of care. In many places the objective of the local governments seems to be balancing the budget and to achieve a small excess. The authorities have little incentive to spend funds efficiently. many government employees in agitate of the programs have lacked the professional skills needed to engage in insurance administration. Hence, in CHI, alternatively of target management, a large helping of local governments have been choosing to sign out their reimbursement processes to private insurance firms, or they have been purchasing catastrophic policy from secret firms and providing it to the population. Each local government selects one insurance firm among competing candidate insurers, and contracts with the firm on insurance services for a given period. The government determines the degree of fund, designs the reimbursement policy, and supervises the work of the secret insurance company. The firm is given the duty of implementing the policy broadcast, and it chiefly undertakes four types of tasks. First, it provides consult services for enrollees and explains the insurance policy to them. second, it constructs an electronic system to collect and manage the medical claims information of the enrollees. Third, it reviews medical bills, controls unnecessary wish, and tries to detect deceitful behaviors on the parts of the enrollees or providers. Fourth, it implements the reimbursement procedures and makes payments to providers. In some areas, the policy firms in wonder do not take the hazard of loss from excess requital. In some regions, the secret firms share fiscal hazard with the politics. The model depends on communication and negotiation between the politics and insurance firms in local anesthetic areas. even though the private firms do not determine the premium levels or design the indemnity policy, they silent actively participate in the CHI plan. In places where the individual insurers partake risk with the government, the insurers could earn profits if the fund is managed efficiently. In addition, the individual firms have other considerations. In the course of administering the indemnity, firms could collect abundant medical information concerning the enrollees. This information could be used to support the blueprint and management of auxiliary secret indemnity. Furthermore, realization by the enrollees and the government is authoritative for the reputation of private insurers. Enrollees are more probable to purchase individual indemnity plans provided by the same insurance company, if they are satisfied with their CHI services. The lapp insurance company is more likely to be selected to undertake the three basic medical insurance programs, in the encase that the service-purchase model continues to be applied by the politics in the future. The markets for the basic programs are much larger than the CHI, and are more attractive to the secret firms. There are no statistics on the count or fraction of CHI programs administered by private firms countrywide, but fiscal reports of private firms are available. Between January and September, 2014, the full premium gross of individual indemnity firms from public programs was 22.48 billion RMB, of which 64 % was from CHI and the rest was from URBMI ( 27 % ), UEBMI ( 3 % ), NRCMS ( 4 % ), and medical care ( 1 % ) ( Yan, 2015 ).

A good example of how a private firm can become involve successfully in the public policy sector is from the city of Zhanjiang in Guangdong state. In 2008, the government combined URBMI and NRCMS into a individual indemnity course of study, namely, the Urban and Rural Resident Basic Medical Insurance ( URRBMI ). In 2009, the government made a contract with a secret insurance firm to manage URRBMI, including making payments, reviewing medical bills, and managing fiscal risk. The firm—the PICC Health Insurance Company—was the first health insurance company in China. It was founded jointly by the People ’ s Insurance Company of China ( PICC ) and the DKV in 2005. The early has continued to be one of the clear comprehensive examination policy companies in China, and the latter is the largest commercial indemnity party in Europe. The firm was given permission to sell auxiliary individual indemnity plans in the market. In 2012, the city implemented the CHI, and the firm continued to manage the associated CHI services. In that year, over 86 % of the population in Zhanjiang was being served by the private firm. In 2014, the individual bounty for CHI was 15.8 RMB. Individuals were reimbursed by URRBMI, if the spending was below 20,000 RMB. spend above the doorway was compensated by CHI. In Zhanjiang, the insurance company shared fiscal risk with the government under a symmetrical risk corridor policy and a ceiling design. The range of profit/loss rate was 3 %. Within this compass, the insurance company took full province for the profit or the loss. In the case that the profit or personnel casualty exceeded 3 %, the insurance company merely took half of the profit/loss, and the other half was shared by the politics. At the same time, CHI had a ceiling on coverage. The programs were entirely responsible for compensating for medical spend under 500,000 RMB. Spending above that come should be paid out-of-pocket or by supplementary private health policy, if applicable. Though there has been little academic research on the impingement of private engagement in the public insurance system, there is some tell in populace reports that secret insurers have been performing well ( Chen, 2013 ). Insurers have comparative advantages while providing professional services. For example, in Zhanjiang, approximately 700 employees would be hired to implement the CHI if the program was directly provided by the politics. rather, by purchasing services from private firms, no extra positions were added to the government. 1 In addition, the electronic system and office equipment are provided by the private firms, which has besides saved the politics from providing fund. 2 For example, in Zhanjiang, this denationalization was estimated to have saved the politics about 8 million RMB in relevant investment. While collaborating with the government, the insurance company has to make an attempt to provide high-quality services while controlling the aesculapian costs, such as helping the enrollees to understand the policy policy, reviewing the aesculapian bills to reduce fraud, and improving the information system to speed up the reimbursement action. Per caput inpatient medical spend decreased from 8851 RMB in 2007 to 3869 RMB in 2011 in Zhangjiang ( Chen, 2013 ). As a result, the work conducted by the private insurance company has been applauded by the government, and the Zhanjiang model is being considered for expansion to other areas. Besides public indemnity, consumers could besides purchase private health indemnity in commercial markets, though the markets are less develop. not only is there little information on private health policy in public reports, but there is about no academic inquiry on private insurance markets, probably because about no data are available. In 2011, only 0.3 % of the population, or about 4.0 million people, were covered by private policy ( Ministry of Health, 2013 ). The majority were urban residents with relatively higher incomes. In 2013, the total claims of private policy merely accounted for 1.3 % of sum healthcare outgo ( Yan, 2015 ). In general, private policy is much more expensive than public indemnity and the coverage is normally more generous. Both adverse choice and moral hazard appear to be at work in the market for private insurances. The average medical spend for the population with secret policy is therefore much higher than that for the population without it. In China, private insurance is largely provided by comprehensive indemnity firms. such firms provide not only health insurance, but besides other types of policy, such as life indemnity, property indemnity, and car insurance. Premium revenues on health indemnity report only for a belittled fraction of the total agio tax income. For case, the fraction was 1.74 % in 2012 in the PICC ( China Insurance Regulatory Commission, 2013 ). Further, commercial policy markets are highly disconnected. For example, there were 62 countrywide insurance firms providing health policy plans in 2012, and different firms focus on services in different regions. As the coverage of basic policy is limited, there is an increasing demand for auxiliary insurance coverage for the population. shows the agio gross and growth rate of private health policy for the menstruation 2006–15. 3 Though the magnitudes are limited, it is clear that individual policy has been growing quickly in holocene years ; emergence rates have been above 20 % since 2012. In 2014, the government issued an administrative document to encourage individual indemnity in the healthcare sector, which largely stimulated the secret policy markets ( State Council, 2014 ). The emergence rates in premiums in 2014 and 2015 were about 40 % and 50 %, respectively. It is anticipated that the individual indemnity markets will continue to grow .An external file that holds a picture, illustration, etc.
Object name is f09-02-9780128113257.jpgOpen in a separate window

9.3. Provider Payment Design

In China, requital largely takes the phase of public fund transferred from the government to providers. As the engagement of individual insurance firms in the indemnity arrangement in China is quite limited at portray, a major concern of the government is how to make payments to providers, most importantly, to hospitals. In the US Medicare arrangement and in some european models, requital methods are tools for the politics to regulate individual insurers. In China besides, the politics, represented by public indemnity authorities, uses payment tools to influence providers ’ behavior with the same targets of cost restraint and efficiency improvement. It is worth noting that the write out of payment methods arises only after the government has rebuilt its public insurance system. prior to 1998, as there was about no public indemnity, there were no payments transferred from public indemnity to providers. A big proportion of hospital revenues come from patients at the time of service manipulation, and alone a belittled fraction comes from politics subsidies. The come of subsidy was not large enough to influence providers ’ behavior. Along with the expansion of the policy system, hospital revenues have relied more and more heavily on payments from public insurance, so requital methods have become an significant cock to regulate provider ’ south behavior. besides, as government ’ s support of the healthcare sector keeps increasing, the government has incentives to use payment methods to control the growth of aesculapian costs. In China ’ south healthcare system, fee-for-service has remained the major requital method acting, as it is simple and easy to be implemented in practice. Take UEBMI as an example. In 2011, 77.1 % of regions made payments based on a fee-for-service method. 4 Recognizing that fee-for-service was inefficient, many regions have reformed their payment system to alternative methods, including ball-shaped budget, capitation, bundled payment, and payment by inpatient days. For case, the UEBMI in Beijing started to pay some hospitals under the Diagnosis Related Groups ( DRG ) in 2011, which is one of the earliest DRG pilots in China ( Jian et al., 2015 ). Since the purpose here is to discuss health design payments which are normally based on capitation, the following description focuses on that method. There are three types of capitation model applied in China. All change according to their degree of risk-sharing and the consumption of risk adjustment in determining payments. The first is a bare capitation system with no hazard sharing or risk adjustment. The capitation rate is calculated as the total bounty divided by the count of enrollees. The second model is capitated global budget ( CGB ) combined with the notion of a gamble corridor. The ball-shaped budget is determined by a dim-witted capitation rate. At the goal of the compensation period, government and providers parcel the excess or the loss of the fund. This method acting reduces the fiscal hazard hold by providers. The third gear mannequin is alike, but determines the capitation rate with a more sophisticate method acting. similar to risk adjustment models in early countries using regulate rival in the health indemnity sector, age and diagnoses are considered while determining the capitation rate for each enrollee. 5 different models are applied in unlike regions to suit the skills and policy choices of the local anesthetic government. Eggleston et aluminum. ( 2008 ) reviewed how local anesthetic systems moved away from fee-for-service and the consequences. We chiefly summarize findings of the reforms after 2007 .

9.4. Evaluation of Capitation-Based Financing Payment Reform

The capitation payments in China are made from the government to providers, or specifically, from the public policy authority to hospitals. This incision will review some of the policy initiatives and studies regarding capitation-based requital reforms. payment reform was part of a more comprehensive examination reform on the local health systems, and is of big policy relevance. Accompanied by insurance expansion, checkup costs were escalating in China. Studies have shown that enrollees ’ out-of-pocket outgo had not reduced ( Wagstaff et al., 2009a, Wagstaff et al., 2009b, Lei and Lin, 2009 ). At the same time, there is no evidence showing that the quality of caution has been improved. A winder refer was overprescription of drugs, specially of antibiotics. The topic was particularly hard among primary healthcare providers, as they have limited prepare and capacity to perform examinations and tests and have a gamey incentive to overprescribe drugs. In view of this problem, Yip et aluminum. ( 2014 ) conducted a payment reform in Ningxia state between 2009 and 2012. Yip et aluminum. ( 2014 ) collaborated with the government and implemented the reform at township health centers and greenwich village clinics. After piloting the reform in two counties, the government of Ningxia province late expanded it to cover the stallion province. In the Ningxia case, the requital methods changed from fee-for-service to a capitated budget with pay-for-performance in the NRCMS. The capitated rate was set to cover the calculate cost of outpatient services for enrollees, and the capitated budget was estimated based on the rate and number of enrollees in each township health concentrate and village clinics. performance measures included antibiotic prescription rates and affected role gratification. It is found that the policy change led to a decrease of 15 % in antibiotic prescription and 6 % in total spend per chew the fat to village clinics. Yip et alabama. ( 2014 ) did not find a significant impingement on total spend per visit to township health centers, or drug outgo per visit to both types of institutions. In Changde City, the URBMI scheme paid hospitals based on a capitation model for inpatient worry since its implementation. Prior to 2007, there were only two populace programs in the city, UEBMI and NRCMS. In 2007, the local government decided to implement URBMI to expand indemnity coverage to urban residents who were not eligible for UEBMI. The new program faced great press to control medical costs, largely because the size of the fund was limited and the program was facing the gamble of not being able to pay providers under fee-for-service. therefore the indemnity agency of Changde City changed the traditional payment method acting and paid hospitals monthly on a per caput nucleotide rate. The rate was determined by city chest of drawers each year, and payments to hospitals differed by the number of contract enrollees. Two supplementary policies were implemented at the same time to support the capitation model. The beginning was an equalization fund, which constituted an extra fund used to compensate for the loss of little hospitals ex post. The second gear was open registration. Enrollees could freely choose any in-network provider as a doorkeeper when seeking care and were allowed to change the doorkeeper each class. Thus hospitals were incentivized to compete with each other to attract patients. Enrollees were able to get reimbursed lone when they received services from or were referred by the gatekeepers. The doorkeeper was responsible for all costs related to the enrollees, including the referrals. Gao et alabama. ( 2014 ) found that the capitation requital had reduced out-of-pocket inpatient costs by 19.7 % and distance of stay by 17.7 %. however, they found little impact on the overall inpatient expending. In two counties of Shandong province, a payment reform was conducted between 2011 and 2012 for township health centers. Prior to this reform, all centers were being paid through the fee-for-service method acting. In the reform, some of the hospitals were paid by CGB, and the rest by a combination of CGB and pay-for-performance. There was a third gear group which would keep the original fee-for-service model and dissemble as a control group. however, owing to coerce from the central politics, the local government was not will to retain the erstwhile model, and shifted away. The experiment was merely able to compare the impacts of CGB with CGB combined with pay-for-performance. Sun et aluminum. ( 2016 ) found that, compared to the CGB model, the compound requital model significantly reduced inappropriate order, but had no affect on out-of-pocket spend. In Fengsan township of Guizhou state, a 5-year community-based rural health indemnity program was conducted between 2003 and 2007. In the program, greenwich village doctors were paid a wage plus a bonus based on performance. The performance measures included service quality ( such as appropriate drug use or intravenous injections ), price containment, and patient satisfaction. Wang et aluminum. ( 2011 ) found that unnecessary manage and prescription drugs were reduced. aesculapian spend was reduced at the greenwich village tied, but patients were more likely to be referred to township or hospital facilities, where the costs were higher. Hence, total healthcare spend was not significantly reduced. In drumhead, all studies found no significant impact of capitation payment on total medical expending. There are several possible reasons to explain why no significant impacts are found. First, providers may not change their demeanor immediately. As stated in Yip et alabama. ( 2014 ), it takes about a class for providers to understand the incentives embedded in the reform. It is potential that impacts might appear if studied over a longer clock period, though current studies contain no testify about this. Second, the reforms were implemented for some but not all indemnity programs that made payments to providers, frankincense potentially diluting their effects. For model, the Ningxia reform alone implemented NRCMS, and the Changde reform entirely implemented URBMI. It is possible that the plowshare of gross from the reform programs, or the reform services, was insufficient to change the behavior of providers. Third, some reforms imposed limits on policy designs. For exercise, in the Shandong reform, the comparison is between CGB and CGB combined with pay-for-performance, so the conclusion is that pay-for-performance had not significantly affected checkup outgo under the capitation payment system. The cause could be that the performance measures were not appropriately selected, at least, measures on total spending, or the incentives were not firm enough to influence doctor behaviors. In regions where pay-for-performance was implemented, unnecessary care, such as inappropriate prescription drug, was reduced. There were early regions that had implemented capitated payment reform in holocene years, such as for outpatient care in Hangzhou, Zhejiang province, and in Dongguan, Guangdong state. largely because of lack of data, there have been no rigorous research studies available evaluating the reform impacts. Two lessons can be learnt from the reform experiences narrated above. First, reform can be successfully implemented merely when the government, as the major payer, has an bonus to do indeed. In the sample described above, the reforms were either initiated by the politics or were using policies designed by researchers, but with hard politics digest. payment system reform was first recognized as a direction for reform by the government in 2009, and its importance kept increasing since then ( State Council, 2009 ). In 2011, the Ministry of Human Resources and Social Security issued a special document promoting payment arrangement reform, stating that local anesthetic governments were to be encouraged to explore option payment methods, including global budget, capitation on outpatient care, and bundled requital on inpatient care ( Ministry of Human Resources and Social Security, 2011 ). In the government text file issued in November 2016, payment system reform was one of the major tasks listed by the government, along with populace hospital reform and referral organization execution. It is expected that there will be more reforms in the future, and the implementation would increasingly become easier. second, pay-for-performance works well, at least with deference to the designated operation measures. In most reforms where pay-for-performance was introduced, inappropriate order was reduced. The change of incentives in this kingdom indeed changed the behaviors of providers. however, combined with the observation that full spend had not changed, it is unmanageable to draw a general conclusion that the quality of care had been improved or costs reduced. It is possible that the unnecessary order had been replaced by unnecessary examinations and tests. Changes of supplier behavior need to be assessed more comprehensively in future inquiry .

9.5. Ongoing Issues and Reforms

Though the government has encouraged participation of private capital in recent years, there is an ongoing debate on whether this is the right reform guidance. The argue has concentrated not only on forwarding of secret investment in hospitals, but it has besides influenced the insurance sector. On the one handwriting, compared to politics bureaucracies, policy firms are professional institutions with more up-to-date methods and skilled personnel. They have come up with incentives to perform well and reduce unnecessary worry. On the other hand, as the goal of a firm is to earn profits, the quality of services may be affected if populace supervision is insufficient. How the private indemnity firms are managed and supervised remains an empirical question. Though many CHI programs are being operated by private insurers, there has been sparse analysis comparing privately operated and publicly operate on models. If it is found that private firms are more effective in operating public policy, a further doubt is how the government should structure contest in the marketplace. At present, each region has chosen a one insurance company to manage the policy. The mannequin is bare, and payment can be easily transferred. however, the disadvantage is that the government may have less negotiation ability while purchasing services from a one firm. It may besides be hard to switch to another insurance company, as those compensating services require a bombastic amount of investing on fixed monetary value in early stages, such as equipment and staff train. If contest were introduced, possibly in a manner alike to the Medicare Advantage system of the United States, insurers would face competitive pressure and may have greater incentives in controlling costs. When capitation is implemented in China, it would raise concerns about constrict supplier excerpt. In the capitation model, patients are normally restricted to seeking checkup care in shrink hospitals. In some models, referrals are allowed, but elementary facilities have small incentive to do so as they have to bear the cost of transmit patients. This is the reason why a distribute of capitation reforms were first piloted on outpatient services. Inpatient services involve more serious illnesses, and it may be ineffective to restrict patients to particular hospitals that may be able to treat them. however, flush with regard to outpatient wish, it remains a interview whether it is appropriate to keep all or the majority of the manage in one facility. medical resources are unevenly distributed, and there is a large fortune of the population living away from their position of registration. An model is rural-to-urban migrants, normally registered in rural towns but working in cities. As they enroll in NRCMS, the capitation payments are more likely to be paid to the township hospitals. In such a scheme, they may have no access to hospitals where they live and work. therefore, handiness and quality of care are probably to be affected. unfortunately, largely because of lack of data, little evidence is available on this emergence. Since 2009, the focus of Chinese healthcare reform has been shifting from universal joint indemnity coverage to policy changes in rescue and financing. Payment system reform plays a crucial function in this transition. The reform is even at an early stage. Both payment policies and the Chinese healthcare system are large, complicated, and differ in different regions. The chinese government is seeking to explore payment methods that better fit the chinese environment. It is normally agreed that fee-for-service is not an efficient payment method acting. different payment reforms have been piloted in different regions. theoretically, requital methods, such as capitation and bundle payment, are probably to perform better than fee-for-service in monetary value restraint. however, according to the chinese experience then far, none of the capitation reforms has reduced total medical expenditures. careful research is needed to explain the gap between theoretical predictions and actual outcomes .


The authors are grateful to the two editors, Thomas McGuire and Richard van Kleef, for helpful comments, and to Liang Zhang for inquiry aid. This inquiry is supported by the National Natural Science Foundation of China youth program ( 71503014 ) .


1In China, the number of government positions is highly regulated. Usually it is unmanageable to fire a government employee. sol, for a position providing the same services, the cost is higher if it is provided by the government than by a private firm. 2The pay back cost for the equipment is high for the private firms. however, as mentioned above, private firms have early considerations. so, in exercise they are will to make the investment. 3Statistics are cited from Sun et aluminum. ( 2016 ).

4Each region represents a risk pool, which could be a county, a city, or a state. 5No detailed information is available on the diagnoses used or the weights given to diagnoses for purposes of requital .

Further Reading

  • express Council, 2016. Opinions on Further Expanding and Deepening the experience of Reforms on Health Care and Drug System. hypertext transfer protocol : //news.xinhuanet.com/health/2016-11/08/c_1119874837.htm ? from=groupmessage [ accessed on January 8th, 2017 ] [ Chinese ] .

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