Universal Health Coverage in China - David S. Weis - ebook

Universal Health Coverage in China ebook

David S. Weis

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Opis

This study investigates the situation of Universal Health Care (UHC) in China from a health economic perspective. The first chapter introduces the historical background, analyzes the relevance of UHC and sheds light on the current health insurance status. In this chapter a new holistic health insurance theory is proposed that allows the inclusion of preventive medicine. The second chapter introduces the "Definition and concept" consisting of three dimensions: Firstly, the height dimension with the leading question "What proportion of the costs is covered?". Secondly, the depth dimension that is concerned with the question "Which benefits are covered?". This chapter puts a special focus on the important economic role of non-communicable diseases. Thirdly, the breadth dimension which investigates the question "Who is insured?". The third chapter, looking at the first dimension, found a high but shrinking amount of out-of-pocket payments and catastrophic health payments. Comparing the payment and benefit distributions, it found the ability to pay principle and insufficient separation of health service payments from its consumption. The second dimension discovered problems concerning the roles of ministries, financing and the benefit package. Reforming these areas will be necessary to provide people with appropriate health care. The third dimension showed that migrant workers are exposed to more health risks, have less access to health care and a lower health status. The de facto coverage rate for the Chinese population (including migrant workers) was calculated to be 81.19% in 2011 and 82.16% in 2020. The goals of the Chinese Communist Party (90% in 2011 and nearly 100% in 2020) are hence not reached. The study closes with a "Summary and conclusion, a "Boundaries and discussion" and an "Outlook" section.

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Erstgutachter:

Professor Doktor Birger P. Priddat

Zweitgutachter:

Professor Doktor Markus Taube

Tag der Disputation:

03. Mai 2016

Danksagung:

Mein Dank gilt zuvorderst meinem Erstbetreuer, Herrn Professor Birger P. Priddat, der

es mit seiner unvergleichlich, unkomplizierten Art geschafft hat, Unterstützung bei

auftauchenden Problemen zu leisten und Lösungswege aufzuzeigen. Über sein

Problemlösungstalent hinaus verfügt Herr Priddat über eine außergewöhnlich

motivierende Menschenführung, von der ich als Doktorand profitieren durfte.

Auch meinem Zweitbetreuer, Herrn Professor Markus Taube, bin ich zutiefst dankbar,

da er mit seiner wissenschaftlichen und praktischen China-Erfahrung während wichtiger

Arbeitsschritte immer wieder wertvolle und stets fundierte Hilfestellungen gegeben hat.

Frau Juliane Slotta danke ich herzlichst für das kompetente und engagierte Lektorat.

Nicht weniger dankbar bin ich auch all denjenigen Menschen, die außerhalb der

wissenschaftlichen Arbeit wichtige Unterstützung geleistet haben. Dazu zählt zu

allererst meine Familie, die mir nicht nur auf persönlicher, sondern auch auf ganz

pragmatisch organisatorischer Ebene immer eine wertvolle Unterstützung war. Nicht

zuletzt danke ich allen Freunden, die mich in schwierigen Zeiten unterstützt und in

leichten begleitet haben, sowie alle vergangenen und gegenwärtigen Philosophen mit

denen ich in Diskurs treten durfte.

Vielen Dank einem jeden oben Erwähnten, und auch einem jeden Unterschlagenen.

Ohne Ihre und Eure Unterstützung wäre diese Arbeit nicht möglich gewesen.

Table of Contents

Table of Figures

List of Tables

List of Abbreviations

Introduction

1.1 Historical background

1.2 Status quo and recent development

1.3 Reasons to aim for UHC

1.4 Status quo of health insurance coverage in China

1.5 Contributions to the scientific literature and structure of this thesis

Definition and concept

2.1 Height: "What proportion of the costs is covered?"

2.1.1 Theoretical views on cost-sharing in health insurance systems

2.1.2 Practical approaches concerning cost-sharing in health insurance systems

2.2 Depth: "Which benefits are covered?"

2.2.1 Theoretical views on services in health insurance systems

2.2.2 Practical approaches concerning services in health insurance systems

2.3 Breadth: "Who is insured?"

2.4 Overall findings

The situation in the People's Republic of China

3.1 The height dimension in China

3.1.1 Low user fees and OOP

3.1.2 Benefit distribution according to the need

3.1.3 Payments according to the ability to pay

3.1.4 Intermediate findings and interpretation

3.2 The depth dimension in China

3.2.1 The situation of appropriate health care in China

3.2.2 Relevance of the NCD-topic

3.2.3 What are possible health interventions to reduce this burden?

3.2.4 Making health effects comparable: cost-effectiveness and cost-benefit

3.2.5 Conclusion

3.3 The breadth dimension in China

3.3.1 Overview of literature: Does marginalization of migrant workers matter in the context of health?

3.3.2 Health Insurance Coverage in China – 2011 and 2020

Summary and conclusion

Boundaries and discussion

5.1 Analysis of the first dimension (height)

5.2 Analysis of the second dimension (depth)

5.3 Analysis of the third dimension (breadth)

Outlook

6.1 New aspects

6.2 International context

Bibliography

Annexes

Annex 1: Housing Choices for temporary migrants

Annex 2: Housing conditions for temporary migrants

Annex 3: Migration paths in China

Annex 4: Total Economic Value (TEV)

Annex 5: VSL and Equity

Annex 6: The Chinese situation in comparison with Europe and the USA

Annex 7: GDP, VSL and Correlations

Annex 8: Explanation of economic values used for calculations

Annex 9: Proposed targets and indicators for SDG goal 3.8

Table of Figures

FIGURE 1: "YEAR OF UHC LEGISLATION AND LEVELS OF GDP PER CAPITA", (STUCKLER ET AL., 2010, p. 17)

FIGURE 2: "RURAL AND URBAN HEALTH INSURANCE COVERAGE IN CHINA, BY PROGRAM, 1993-2011" (MENG ET AL. 2012A)

FIGURE 3: "THREE DIMENSIONS OF UNIVERSAL COVERAGE" (WHO, 2014, P. 5, 2010, P. XV; WHO AND LERBERGHE 2008, P. 26)

FIGURE 4: "CATASTROPHIC EXPENDITURE RELATED TO OUT-OF-POCKET PAYMENT AT THE POINT OF SERVICE" (WHO AND LERBERGHE, 2008, P. 24)

FIGURE 5: "NUMBER OF HOUSEHOLDS IMPOVERISHED BY OUT-OF-POCKET PAYMENT FOR HEALTH SERVICES IN THAILAND" (1996–2010) (WHO, 2014, P. 33)

FIGURE 6: "BIRTHS ATTENDED BY MEDICALLY TRAINED PERSONNEL (PERCENTAGE), BY INCOME GROUP" (WHO AND LERBERGHE, 2008, P. 28)

FIGURE 7: "IMPACT OF ABOLISHING USER FEES ON OUTPATIENT ATTENDANCE IN KISORO DISTRICT, UGANDA: OUTPATIENT ATTENDANCE 1998–2002" (WHO AND LERBERGHE, 2008, P. 27)

FIGURE 8: "SOCIOECONOMIC INEQUALITIES IN COVERAGE RATES IN THREE COUNTRIES", DATA FOR ETHIOPIA FROM 2011, FOR INDIA AND COLUMBIA FROM 2014 (WHO, 2014, P. 25)

FIGURE 9: "OUT-OF-POCKET HEALTH EXPENDITURE (% OF TOTAL EXPENDITURE ON HEALTH) IN CHINA" (WORLD BANK, 2014)

FIGURE 10: "OVERALL ADMINISTRATIVE STRUCTURE OF HEALTH SECTOR" (LIU AND YI 2004, P. 14)

FIGURE 11: "TOP 10 CAUSES OF DEATH IN HIGH INCOME COUNTRIES, 2012" (WHO 2014A)

FIGURE 12: "TOP 10 CAUSES OF DEATH IN LOWER-MIDDLE INCOME COUNTRIES, 2012" (WHO 2014A)

FIGURE 13: "WELFARE COSTS (IN MILLION USD) OF THE 'DEADLY QUARTET' IN CHINA", PER 100,000 INHABITANTS, 1990-2010 DATA, HEALTH DATA FROM IHME (IHME, 2014A), AUTHOR'S CALCULATIONS

FIGURE 14: "WELFARE COSTS (IN MILLION USD) OF THE 'DEADLY QUARTET' IN CHINA", PER 100,000 INHABITANTS, 2005-2010 DATA, HEALTH DATA FROM IHME (IHME, 2014A), AUTHOR'S CALCULATIONS

FIGURE 15: "SURVIVAL FROM AGE 35 FOR CONTINUING CIGARETTE SMOKERS AND LIFELONG NON-SMOKERS AMONG UK MALE DOCTORS BORN 1900-1930, WITH PERCENTAGES ALIVE AT EACH DECADE OF AGE" (DOLL 2004)

FIGURE 16: "PROPORTION OF PATIENTS WITH DECREASED (I) AND INCREASED (II) VALUES. VARIABLE PERCENTAGE REFERS TO MINIMUM DECREASE (I) OR INCREASE (II) FROM BASELINE TO 3 YEARS. THERE WAS NO STATISTICALLY SIGNIFICANT DIFFERENCE BETWEEN THE STUDY GROUPS. SRA, SELF-REPORTED ALCOHOL CONSUMPTION; CDT, CARBOHYDRATE-DEFICIENT TRANSFERRIN;GGT, GAMMA-GLUTAMYLTRANSFERASE"(AALTO 2001)

FIGURE 17: "FRAMEWORK FOR INTEGRATING COST-EFFECTIVENESS WITH OTHER CRITERIA WHEN SELECTING SERVICES", COST PER HEALTHY LIFE YEAR AS A MULTIPLE OF GDP PER CAPITA, (WHO 2014C, P. 21)

FIGURE 18: "COST-EFFECTIVENESS OF SERVICES TARGETING HIGH-BURDEN CONDITIONS" (WHO 2014C, P. 14).

FIGURE 19: "INCLUSION OF THE "DEADLY QUARTET" AND ASSOCIATED PHYSIOLOGICAL RISK MARKERS INTO THE FRAMEWORK FOR INTEGRATING COST-EFFECTIVENESS WITH OTHER CRITERIA WHEN SELECTING SERVICES" (WHO 2014C, P. 21), AUTHOR'S ADAPTATION

FIGURE 20: "INCLUSION OF THE 'DEADLY QUARTET' AND ASSOCIATED PHYSIOLOGICAL RISK MARKERS INTO THE RANKING OF COST-EFFECTIVENESS OF SERVICES TARGETING HIGH-BURDEN CONDITIONS" (WHO 2014C, P. 14), AUTHOR'S ADAPTATIONS

FIGURE 21: "INSURANCE STATUS INCLUDING MIGRANT WORKERS." AUTHOR'S INVESTIGATION

FIGURE 22: "POPULATION DEVELOPMENT IN CHINA 1980-2050" (WORLD BANK 2014)

FIGURE 23: "URBAN INSURANCE STATUS INCLUDING MIGRANT WORKERS.", AUTHOR'S INVESTIGATION

FIGURE 24: TOP 50 CROSS-PROVINCIAL POPULATION MIGRATION PATHS IN CHINA, BASED ON POPULATION CENSES IN 1990 AND 2000, AND THE 1% POPULATION SAMPLING SURVEY IN 1985, 1995 AND 2005.3 BACKGROUND SHADING REPRESENTS THE TOTAL IMMIGRATION TO EACH PROVINCE DURING THE INTERVAL. PATH COLORS INDICATE THE TOTAL NUMBER OF CROSS-PROVINCIAL MIGRANTS MOVING BETWEEN PROVINCES IN DIRECTION OF ARROW DURING THE TIME PERIOD. THE PATHS SHOWN ACCOUNTED FOR 31%, 50%, 66% AND 67% OF THE TOTAL MIGRATION THAT OCCURRED IN THE FOUR TIME PERIODS, RESPECTIVELY. DATA FROM WANG, LI ET AL. 2011 (GONG ET AL., 2012B)

FIGURE 25: ECONOMIC VALUATION OF TOTAL HEALTH COSTS BY COI AND WTP (WHO, 2008C, P. 25)

FIGURE 26: WELFARE COSTS (IN MILLION US$) OF TOBACCO AND ALCOHOL USE 1990-2010, HEALTH DATA FROM IHME(IHME, 2014B), AUTHOR'S CALCULATIONS

FIGURE 27: WELFARE COSTS (IN MILLION US$) OF DIETARY RISKS 1990-2010, HEALTH DATA FROM IHME (IHME, 2014B), AUTHOR'S CALCULATIONS

FIGURE 28: WELFARE COSTS (IN MILLION US$) OF TOBACCO AND ALCOHOL USE 2005-2010, HEALTH DATA FROM IHME (IHME, 2014B), AUTHOR'S CALCULATIONS

FIGURE 29: WELFARE COSTS (IN MILLION US$) OF DIETARY RISKS AND PHYSICAL INACTIVITY 2005-2010, HEALTH DATA FROM IHME (IHME, 2014B), AUTHOR'S CALCULATIONS

List of Tables

TABLE 1: "CRITICAL DIMENSIONS AND CHOICES ON THE PATH TO UNIVERSAL HEALTH COVERAGE" (WHO, 2014A, P. 5)

TABLE 2: "OUT-OF-POCKET HEALTH EXPENDITURE (% OF TOTAL EXPENDITURE ON HEALTH) IN SIX COUNTRIES" (WORLD BANK, 2014)

TABLE 3: "ASPECTS OF EQUITY", AUTHOR'S INVESTIGATION

TABLE 4: "OUT-OF-POCKET HEALTH EXPENDITURE (% OF TOTAL EXPENDITURE ON HEALTH) IN CHINA" (WORLD BANK, 2014)

TABLE 5: "INPATIENT REIMBURSEMENT IN THE THREE SOCIAL HEALTH INSURANCE PROGRAMS, 2008 AND 2010", NUMBERS FROM YIP ET AL., 2012, P. 835, AUTHOR'S INVESTIGATION

TABLE 6: "INPATIENT REIMBURSEMENT IN THE THREE REGIONS, 2008 AND 2011", NUMBERS FROM MENG ET AL. 2012B: 809, AUTHOR'S INVESTIGATION

TABLE 7: "RATIOS OF INPATIENT REIMBURSEMENT RATES BETWEEN LESS ADVANTAGED AND MORE ADVANTAGED COMPARISON GROUPS, 2008 AND 2011", NUMBERS FROM MENG ET AL. 2012B, P. 810, AUTHOR'S INVESTIGATION

TABLE 8: "SUMMARY OF THREE SOCIAL HEALTH INSURANCE PROGRAMS" (YIP ET AL. 2012, P. 835)

TABLE 9: "INDIVIDUAL CONTRIBUTION IN THE THREE SOCIAL HEALTH INSURANCE PROGRAMS, 2010", NUMBERS FROM YIP ET AL. 2012P. 835, AUTHOR'S INVESTIGATION

TABLE 10: " THE 10 LEADING RISK FACTORS FOR DEATH IN MIDDLE INCOME COUNTRIES", 2004 DATA (NARAYAN ET AL. 2010, P. 1197)

TABLE 11: "THE 'DEADLY QUARTET' IN CHINA", 2010 DATA (IHME 2014A), AUTHOR'S CONTRIBUTION

TABLE 12: "WELFARE COSTS OF THE "DEADLY QUARTET" IN CHINA (PER 100,000 INHABITANTS)", 1990-2010 DATA, IN 2010 MILLION USD, HEALTH DATA FROM IHME (IHME 2014A), AUTHOR'S CALCULATIONS

TABLE 13: "WELFARE COSTS OF THE 'DEADLY QUARTET' IN CHINA", 2010 DATA, TOTAL POPULATION, IN 2010 MILLION USD, HEALTH DATA FROM IHME (IHME 2014A), AUTHOR'S CALCULATIONS

TABLE 14: "WELFARE COSTS OF THE "DEADLY QUARTET" AND THE PHYSIOLOGICAL RISK MARKERS IN CHINA", 2010 DATA, TOTAL POPULATION, IN 2010 MILLION USD, HEALTH DATA FROM IHME (IHME 2014A), AUTHOR'S CALCULATIONS

TABLE 15: "SUMMARY OF INTERVENTIONS INCLUDED IN THE CORE SCALING-UP COSTING SCENARIO" (CHISHOLM ET AL., 2011, P. 12)

TABLE 16: "DISTRIBUTION OF BODY MASS INDEX (BMI) IN CHINA", 2000 DATA, ADAPTED TO A 10 KG REDUCTION SCENARIO, DATA OF THE FIRST THREE ROWS FROM ERDMANN ET AL. (ERDMANN ET AL. 2008), FURTHER DATA ENTRIES ARE AUTHOR'S CALCULATIONS

TABLE 17: "SUMMARY OF HEALTH RESULTS OF MEDICAL INTERVENTIONS TO REDUCE THE IMPACT OF THE 'DEADLY QUARTET' IN CHINA", AUTHOR'S INVESTIGATION

TABLE 18: "NEED FOR INTERVENTIONS AND ACTUAL DEATH RATE OF THE 'DEADLY QUARTET' AND THE PHYSIOLOGICAL RISK MARKERS IN CHINA", 2010 DATA, AUTHOR'S INVESTIGATION

TABLE 19: "NEED FOR INTERVENTIONS (TOTAL AND WILLING TO CHANGE GROUP) TO MANAGE THE 'DEADLY QUARTET' AND THE PHYSIOLOGICAL RISK MARKERS IN CHINA", 2010 DATA, AUTHOR'S INVESTIGATION

TABLE 20: "COSTS PER PERSON FOR THE MEDICAL INTERVENTIONS TO REDUCE THE IMPACT OF THE 'DEADLY QUARTET' IN CHINA", IN 2010 USD, AUTHOR'S INVESTIGATION

TABLE 21: "TOTAL COSTS FOR THE MEDICAL INTERVENTIONS TO REDUCE THE IMPACT OF THE 'DEADLY QUARTET' IN CHINA", IN 2010 USD, AUTHOR'S INVESTIGATION

TABLE 23B: "BENEFITS IN DALYSFOR REDUCING THE RISK FROM UNHEALTHY DIETS, PHYSICAL INACTIVITY AND ASSOCIATED PHYSIOLOGICAL RISK MARKERS IN CHINA", TOTAL POPULATION, IN 2010 USD, HEALTH DATA FROM IHME(IHME 2014A), AUTHOR'S CALCULATIONS

TABLE 23A: "BENEFITS IN DALYS FOR REDUCING THE RISK FROM THE 'DEADLY QUARTET' IN CHINA", TOTAL POPULATION, IN 2010 USD, HEALTH DATA FROM IHME (IHME 2014A), AUTHOR'S CALCULATIONS

TABLE 24: "COUNTRY-SPECIFIC VSLS: EXPLANATION OF ADJUSTMENT FACTORS", CONTENT FROM (OECD, 2014A, PP. 54-55), SLIGHTLY MODIFIED BY THE AUTHOR

TABLE 25: "BENEFITS FROM REDUCING THE WELFARE COSTS OF THE 'DEADLY QUARTET' IN CHINA", TOTAL POPULATION, IN 2010 MILLION USD, HEALTH DATA FROM IHME (IHME 2014A), AUTHOR'S CALCULATIONS.

TABLE 26: "BENEFITS FROM REDUCING THE WELFARE COSTS OF THE 'DEADLY QUARTET' AND ASSOCIATED PHYSIOLOGICAL RISK MARKERS IN CHINA", TOTAL POPULATION, IN 2010, MILLION USD, HEALTH DATA FROM IHME (IHME 2014A), AUTHOR'S CALCULATIONS

TABLE 27: "CBA RESULTS FOR REDUCING THE RISK FROM THE 'DEADLY QUARTET' IN CHINA", TOTAL POPULATION, IN 2010 USD, HEALTH DATA FROM IHME (IHME 2014A), AUTHOR'S CALCULATIONS

TABLE 28: "CBA RESULTS FOR REDUCING THE RISK FROM PHYSIOLOGICAL RISK MARKERS IN CHINA", TOTAL POPULATION, IN 2010 USD, HEALTH DATA FROM IHME (IHME 2014A), AUTHOR'S CALCULATIONS

TABLE 29: "INSURANCE STATUS 2020 INCLUDING MIGRANT WORKERS.", DATA FROM THE NATIONAL BUREAU OF STATISTICS OF CHINA (NBSC 2012) AND THE WORLD BANK (WORLD BANK 2014), AUTHOR'S INVESTIGATION

TABLE 30 "INSURANCE STATUS 2011 INCLUDING MIGRANT WORKERS.", DATA FROM THE NATIONAL BUREAU OF STATISTICS OF CHINA (NBSC 2012), AUTHOR'S INVESTIGATION

TABLE 31: "NUMBER OF DE JURE (IP) AND DE FACTO (IPMW) INSURED PEOPLE IN THE PRC IN 2011", DATA FROM THE NATIONAL BUREAU OF STATISTICS OF CHINA (NBSC 2012), AUTHOR'S INVESTIGATION

TABLE 32: "NUMBER OF DE JURE (IP) AND DE FACTO (IPMW) INSURED PEOPLE IN THE PRC IN 2020.", DATA FROM THE NATIONAL BUREAU OF STATISTICS OF CHINA (NBSC 2012) AND THE WORLD BANK (WORLD BANK 2014), AUTHOR'S INVESTIGATION

TABLE 33: "INCREASE OF UNINSURED CHINESE CITIZENS 2011-2020.", DATA FROM THE NATIONAL BUREAU OF STATISTICS OF CHINA (NBSC 2012) AND THE WORLD BANK (WORLD BANK 2014), AUTHOR'S INVESTIGATION

TABLE 34: "GAPS TO REACHING THE 90% AND 100% GOAL IN 2011 AND 2020.", DATA FROM THE NATIONAL BUREAU OF STATISTICS OF CHINA (NBSC 2012) AND THE WORLD BANK (WORLD BANK 2014), AUTHOR'S INVESTIGATION

TABLE 35: "NUMBER OF DE JURE (IP) AND DE FACTO (IPMW) INSURED URBAN CITIZENS IN 2011.", DATA FROM THE NATIONAL BUREAU OF STATISTICS OF CHINA (NBSC 2012) AND THE WORLD BANK (WORLD BANK 2014), AUTHOR'S INVESTIGATION

TABLE 36: "COMPARISON OF UNINSURED MIGRANT WORKERS IN CITIES (UM) AND UNINSURED URBAN RESIDENTS (UU)", AUTHOR'S INVESTIGATION

TABLE 37: "NUMBER OF DE JURE (IP) AND DE FACTO (IPMW) INSURED URBAN CITIZENS IN 2020.", DATA FROM THE NATIONAL BUREAU OF STATISTICS OF CHINA (NBSC 2012) AND THE WORLD BANK (WORLD BANK 2014), AUTHOR'S INVESTIGATION

TABLE 38: "GAPS TO REACHING THE 90% AND 100% GOAL IN 2011 AND 2020 IN URBAN AREAS.", DATA FROM THE NATIONAL BUREAU OF STATISTICS OF CHINA (NBSC 2012) AND THE WORLD BANK (WORLD BANK 2014), AUTHOR'S INVESTIGATION

TABLE 39: "GAPS TO REACHING THE 90% AND 100% GOAL IN 2011 AND 2020 AS A COMPARISON OF THE TOTAL AND THE URBAN AREA.", DATA FROM THE NATIONAL BUREAU OF STATISTICS OF CHINA (NBSC 2012) AND THE WORLD BANK (WORLD BANK 2014), AUTHOR'S INVESTIGATION

TABLE 40: "SUMMARY OF BENEFIT RELATED EQUITY ISSUES IN THE CHINESE HEALTH INSURANCE SYSTEM", AUTHOR'S INVESTIGATION

TABLE 41: "SUMMARY OF PAYMENT RELATED EQUITY ISSUES IN THE CHINESE HEALTH INSURANCE SYSTEM", AUTHOR'S INVESTIGATION

TABLE 42: "HOUSING CHOICES FOR TEMPORARY MIGRANTS", (WU, 2002, P. 105)

TABLE 43: "HOUSING CONDITIONS OF TEMPORARY MIGRANTS COMPARE VERY UNFAVORABLY AGAINST THOSE OF LOCAL RESIDENTS ACROSS GEOGRAPHICAL LOCATION (IN PERCENTAGE)" (WU, 2002, P. 107)

TABLE 44: "GDP AND VSL CORRELATION", AUTHOR'S CALCULATIONS

TABLE 45: "WELFARE COSTS OF THE 'DEADLY QUARTET', 1990-2010", PER 100.000 INHABITANTS, IN 2010 MILLION US$, HEALTH DATA FROM IHME (IHME, 2014B), AUTHOR'S CALCULATIONS

TABLE 46: "DATASET: GROSS DOMESTIC PRODUCT (GDP) AND VALUE OF STATISTICAL LIFE (VSL) VALUES", (OECD, 2014B, 2014C) AND AUTHOR'S CALCULATIONS

TABLE 47: "EXPLANATION OF ECONOMIC VALUES USED FOR CALCULATIONS.", (OECD, 2014A; WHO AND OECD, 2015), AUTHORS'ADJUSTMENTS

List of Abbreviations

B

benefits

C

costs

CBA

cost-benefit analysis

CEA

cost-effectiveness analyses

CMS

Cooperative Medical Scheme

COI

cost of illness

CPI

consumer price index

CULS

China Urban Labor Survey

DALY

disability adjusted life year

GBD

Global Burden of Disease

GDP

Gross Domestic Product

GP

general practitioner

GIS

Government Insurance System

HED

Heavy Episodic Drinking

LIS

Labor Insurance System

MAP

Medical Assistance Program

MOHRSS

Chinese Ministry of Human Resources and Social Security

NB

net benefit

NCD

non-communicable disease

NCMS

New Rural Cooperative Medical Scheme

NHSS

National Health Services Survey

OOP

out of pocket payments

PPP

purchasing power parity

PRC

People's Republic of China

R

ratio

RAND HIE

RAND Health Insurance Experiment

SHI

social health insurance

TEV

total economic value

UEBMI

Urban Employee Basic Medical Insurance

UHC

universal health coverage

UN

United Nations

URBMI

Urban Resident Basic Medical Insurance

URS

Urban Resident Scheme

USD

United States Dollar

VSL

value of a statistical life

WHA

World Health Assembly

WHO

World Health Organization

Health economic theory section (2.2.1)

M, iM, aM

medical care, inappropriate medical care, appropriate medical care

U

iM,

U

aM

utility from inappropriate and appropriate medical care

EU

expected utility

π

u

, π

i

probability for health care consumption for uninsured and insured

C

M

cost of medical care

w, W

disposable wealth and gross wealth

P

insurance premium

I

insurance payoff

Health insurance coverage section (3.3.2)

tp

total Chinese population

ud, ud

mw

total urban dwellers (excluding and including migrant workers)

mw, mw

up

, mw

ip

migrant workers (within the

de jure

uninsured and insured group)

up, ip

de jure

uninsured and insured people

uu, iu

de jure

uninsured and insured urban residence holder

um, im

de jure

uninsured and insured migrant workers

iP

mw

de facto

insured citizens

UU

mw

, iU

mw

de facto

uninsured and insured urbans

um

up

, um

ip

de facto

uninsured migrants (within

de jure

uninsured and insured)

im

up

, im

ip

de facto

insured migrants (within the

de jure

uninsured and insured)

1 Introduction

1.1 Historical background

It has long been known that social security and health status are closely linked. Already during the Middle Ages, when craftsmen were working independently and self-employed, insurance systems were set up against the consequences of sickness. In the 16th and 17th century, it was the guilds that collected a certain contribution from their members to protect the sick from medical payments and loss of income. These supporting networks had come to an end by the 18th and 19th century, after the industrial revolution had taken place and workers were no longer organized in guilds but became employed at factories. In this working environment, sickness caused a double hardship for the individual. On the one hand medical services had to be financed and on the other hand wages were terminated. As it was well understood that the event of sickness cannot be predicted for an individual but only for large groups, hundreds of sickness funds were developed in Germany to pool the health risks of their members. Already in 1854, one of the 30 German member states (Prussia) enacted a law that forced low-wage workers to contribute a certain percentage of their income to a health insurance system – an equal sum had to be paid by the employer. This system, where employer and employee pay the same amount to the sickness fund, was taken up again in the 1880s after the German chancellor Bismarck unified the formerly warring German states. After a long lasting political discussion, a bill was finally passed in 1883 that required employers with low income to join one of the numerous sickness funds. Contributions were shared between employers (2/3) and employees (1/3). The benefits included partial wage payment (about 50%) and covered medical care (usually general practitioners and drugs), maternity benefits and funeral costs (Roemer, 1993, p. 91). Although the definition of universal health coverage (UHC)1 is ambiguous, most scholars see the reforms described above as the first achievement of UHC (e.g. Stuckler et al., 2010).

Norway is said to be the second Nation that implemented UHC (around 1910) (Stuckler et al., 2010, p. 17) and Russia followed in 1937 by joining its system for the working population in cities with its system for the rural population (Roemer, 1993, p. 95) (not shown in Figure 1 below). The first country to cover its entire population thereafter was New Zealand, where the Ministry of Health installed a medical insurance system nearly from scratch in 1939 (Roemer, 1993, p. 95) (also not shown in Figure 1 below). Although neither Russia nor New Zealand are included in Figure 1 below, it can clearly be seen, that only a few countries initiated UHC before the 1950s and the largest share of UHC implementation happened after the Second World War (Stuckler et al., 2010, p. 17; WHO and Lerberghe, 2008, p. 26).

Figure 1: "Year of UHC Legislation and levels of GDP per capita" (Stuckler et al., 2010, p. 17).

In 1948, the United Kingdom installed its National Health Service (MoH UK, 1948), Sweden passed a relevant law in 1946 and put it into practice in 1955 (Glenngård et al., 2005, p. 16), Iceland and Norway followed in 1956,2 Denmark in 1960, Finland in 1963 (Kuhnle and Hort, 2004, p. 7) and Belgium in 1969 (Corens, 2007, p. 17). Outside of Europe, Japan was among the earliest countries to reach UHC (1961) (Rodwin, 1994). Canada passed the crucial law in 1968 (Maioni, 1998, p. 135), Australia followed in 1975 (Hilless and Healy, 2001, p. 15), Korea in 1989 (Bärnighausen and Sauerborn, 2002, p. 1568), Taiwan (NHI, 2012) and Israel in 1995 (Woolf, 2011, p. 5). Quite a large number of European countries only reached UHC in the late 1970s or even in recent years. Among them are: Italy in 1978 (Donatitini, 2013, p. 66), Austria in 1978 (Austrian Information, 2012), Portugal in 1979 (Pedro et al., 2011, pp. xv, 15), Greece in 1983 (WHO, 1996, p. 67), Spain in 1986 (Lopez et al., 2004), Switzerland in 1996 (Camenzind, 2013, p. 119), France in 2000 (Durand-Zaleskiki, 2013, p. 45) and the Netherlands in 2006 (Daley et al., 2013).

1.2 Status quo and recent development

Drawing from experiences of these and other countries, low- and middle-income countries like Costa Rica, Mexico, Thailand and Turkey are moving significantly faster towards UHC than industrialized countries did in the past (WHO and Lerberghe, 2008, pp. 25, 26). According to WHO, the way to UHC requests three steps: 1. raising funds, 2. reducing direct payments, 3. improving efficiency and equity. In all three aspects, countries like Brazil, Chile, China, Mexico, Rwanda and Thailand have been attested remarkable progress (WHO, 2010a, p. xi).

For further investigation of today's situation and future development, the international treaties of the WHO and the UN are most useful as they reflect the consensus of all member states. A central document in this context is the World Health Assembly (WHA) document 58.33. It points out how "Sustainable health financing, universal coverage and social health insurance" (WHO, 2005) can best be managed. In this document, UHC is endorsed as a central goal and it is stated that everyone should be able to access health services and not be subject to financial hardship in doing so (WHO, 2014a, pp. vii, x, 2010a, p. x). Furthermore, the WHA document 64.9, "Sustainable health financing structures and universal coverage" (WHO, 2011a), has strengthened the importance of UHC and was one of the major forces in the process of initiating the report, "Making fair choices on the path to universal health coverage" by the "WHO Consultative Group on Equity and Universal Health Coverage" (WHO, 2014a). In addition, the World Health Report 2013, "Research for Universal Health Coverage", emphasized the need for progress towards UHC and pointed out several means to achieve this goal (WHO, 2014a, p. viii, 2013). Further activities – within the 12th general program of work for the 2014-2019 period and the post–2015 development agenda – have set priority to UHC as a central theme (WHO, 2014a, p. viii). These goals are supported by other UN organizations as can be seen through the adoption of a resolution by the United Nations General Assembly (UN, 2012a, 2012b) which emphasizes the responsibility of governments to increase their efforts to "accelerate the transition towards universal access to affordable and quality health-care services" (WHO, 2014a, p. viii). The documents mentioned above show clearly that UHC enjoys a high priority on the political agenda – not only, but especially regarding health effects.

1.3 Reasons to aim for UHC

Among the reasons to promote UHC are numerous benefits for the individual as well as society. They include an increase of quality of life, economic and social development and peace (Bai and Wu, 2014; Brown et al., 2007; Cheng et al., 2014; Chen and Jin, 2012; Hou et al., 2012; Jung and Liu, 2011; Marten et al., 2014; Moreno-Serra and Smith, 2012; WHO, 2011a, 2010a, 1978). More specifically, benefits can be located in the following five areas: 1. service utilization, 2. affordable access, 3. distributional effects, 4. economic and social development and 5. international law.

Benefits from "service utilization" are gained through the consumption of health services and the possibility to access them. An underlying assumption is that the possibility to access medical services leads to higher health levels of the population. The importance that is given to UHC in this context becomes obvious as universal coverage is "one of the four key pillars of primary health care and services through patient centered care, inclusive leadership and health in all policies" (WHO, 2011a, p. 1). Achieving health is also seen as valuable in itself, especially due to its importance for overall well-being and the capabilities and opportunities that arise from it (WHO, 2014a, p. 2).

"Affordable access" refers to the personal financial situation of the health care consumer. A health care system that includes large out-of-pocket payments (OOP) for medical services often suffers from several negative effects: (i) The well-being of people is severely limited. (ii) In case of financial problems, psychological pressure can affect people's health. (iii). Economic opportunities are limited through enforced or anticipated health costs. All of these problems do not only affect the individual patient but also his or her family that might have to support the ill person financially. As affordable access to medical treatments therefore leads to financial protection, it overlaps with the following points "distributional effects" and "economic and social development".

"Distributional effects" can be observed, if health-financing systems include a mode for prepayment of health costs and a risk pooling mechanism that disconnects the need for health care from the ability to pay for it. As a result, the individual risk is shared among the population and catastrophic health expenditure

3

and impoverishment of individuals can be avoided (Kieny and Evans, 2013). As low health insurance coverage mostly excludes the poorest people of a society from medical care, UHC can promote a fairer distribution of health and well-being by improving coverage for the underprivileged (WHO, 2014a, p. 2).

The "economic and social development" of a country can be affected in a direct as well as in an indirect way. Directly, a higher health status of the population leads to a better working and learning capacity and thereby improves the general economic situation. This aspect can be captured in the statement: "Healthy children are better able to learn and a healthy population facilitates economic growth" (WHO, 2014a, p. 2). Indirectly, a higher level of education empowers people to protect their own health. This includes the use of preventive services before a possible disease manifests. In the case of illness, they might choose the right health service at the right time (Kieny and Evans, 2013, p. 305). Consuming the right services at the right time and consuming preventive care both make health systems more cost-effective and therefore have a positive effect on the economy and the social development opportunities of a nation (Kieny and Evans, 2013, p. 305; WHO, 2014a, p. 2).

"International laws" are important in so far as every country has ratified at least one treaty which specifies obligations to meet the right to health. Among those treaties is the Universal Declaration of Human Rights which supports "the enjoyment of the highest attainable standard of physical and mental health" (WHO, 2014a, p. 2) or more specific, in article 25.1, "the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control" (WHO, 2011a, p. 1). Furthermore, a large number of the WHO treaties make a strong statement for the importance of health being a social value, such as the WHO constitution which proclaims that the "enjoyment of the highest attainable standard of health is one of the fundamental rights of every human being without distinction of race, religion, political belief, economic or social condition" (WHO, 2006, p. 1). It is clear that UHC by itself is insufficient to ensure all the aims formulated within these and other international treaties, but reaching UHC in a country is evidently an important part of this strategy. Overall, the international community agrees about providing UHC being one of the core obligations of any government that strives to develop a modern society (WHO and Lerberghe, 2008, p. 25).

As mentioned above, implementing UHC is associated with many positive effects for society. Among them are the just presented five specific points, but also broader benefits such as increase of quality of life, economic and social development as well as peace (Bai and Wu, 2014; Brown et al., 2007; Cheng et al., 2014; Chen and Jin, 2012; Hou et al., 2012; Jung and Liu, 2011; Marten et al., 2014; Moreno-Serra and Smith, 2012; WHO, 2011a, 2010a, 1978). It is hence not surprising that people in most countries rate health as one of their highest priorities, even higher than economic concerns such as employment status, wage levels and cost of living standards (WHO, 2010a, p. ix). Against this background it is most interesting for this study to understand the specific situation in the People's Republic of China before the detailed analysis is undertaken.

1.4 Status quo of health insurance coverage in China

The Chinese health insurance system was established in the 1950s and, at this point, included three different schemes: firstly, the Cooperative Medical Scheme (CMS) for the rural population; secondly, the Labor Insurance System (LIS) for urban employees and their dependents of state-owned enterprises and collectively-owned enterprises; thirdly, the Government Insurance System (GIS) for Government staff, retired government staff and university students. This structure, which offered a somewhat universal coverage, collapsed between 1978 and 1998, when only 12.7% of rural residents and 55.9% of urban citizens still enjoyed health coverage (Liu and Yi, 2004; Meng et al., 2012a, pp. 7–8). In the course of the 2000s this development was targeted by introducing the New Rural Cooperative Medical Scheme (NCMS), the Urban Employee Basic Medical Insurance (UEBMI) and the Urban Resident Basic Medical Insurance (URBMI). As a result, the recent Chinese coverage rate is regarded to be 97.4% for the rural and 90.9% for the urban population (numbers for 2011, compare Figure 2 below) (Meng et al., 2012a).

Figure 2: "Rural and urban health insurance coverage in China, by program, 1993-2011" (Meng et al. 2012a).

In addition to this positive tendency, the relevant Five-Year Plan for this study (2011-2015) marks another important step of the development of the Chinese health care reform. Contrary to the previous Five-Year Plans, this one does not merely emphasize economic growth but also the improvement of overall welfare of society (Casey and Koleski, 2011, p. 2).

Among other sectors of health reform, the development of a comprehensive insurance system is a major task of the 12th Five-Year Plan. Subordinate to this objective is the achievement of medical insurance for the whole population, the increase of the coverage rate, more financial support for medical expenses as well as the improvement of the payment and the reimbursement system (Dong, 2011, p. 3). For the first time in the history of Chinese Five-Year Plans, the 2011-2015 plan explicitly targets the wellbeing of individuals: It is planned to increase the average life expectancy of the Chinese people by one year between 2011 and the end of 2015 (Casey and Koleski, 2011, p. 4). Overall it can be stated that this Five-Year Plan is aiming towards a fairer income distribution (Chinese Embassy, 2011), a greater insurance level of the people (Dong, 2011, p. 3) and the increase of the well-being of society (Casey and Koleski, 2011, p. 4).

Also with regard to positioning, the described content is highlighted due to the impact of the Five-Year Plan on Chinese politics. Achieving the goals of the Five-Year Plan is an important precondition for the career of provincial politicians: "Meeting targets for a city, region or province, for example, is the path to advancement for officials in the Party. Those who do a superlative job get chosen for prime leadership positions. Those who fail to meet those targets get sidetracked. So the motivation is really quite powerful" (Shih, 2011).

Given the positive development since the 2000s and the current political will of the Chinese Communist Party to further reform the health insurance system, expectations for the implementation of UHC in China are set high. It is on this high level of expectations that this study will analyze the universal health coverage in China from a health economic perspective.

1 UHC is sometimes called universal coverage (Kieny and Evans, 2013, p. 305; WHO, 2010a, p. ix). Universal access and universal health care are components of UHC (WHO, 2014a, p. 1).

2 As this section aims to give a brought overview on the development of UHC, the different classifications made by different authors are not investigated further.

3 Catastrophic health (also "catastrophic out-of-pocket expenditures/payments") are defined by WHO as health expenditures that surpass a threshold share of 40 percent of nonfood household expenditure (WHO, 2014a, p. 31).

1.5 Contributions to the scientific literature and structure of this thesis

This thesis first and foremost contributes to the scientific literature in three ways. As a whole, this thesis offers a first of its kind analysis of the Chinese health insurance system that focusses at the three dimensions of UHC which are identified by WHO as the main characteristics. The unique points within this investigation are the exploration of the large pool of existing literature about health insurance in China, its development of a framework that is capable to give the reader an understanding of the interlinkage between different aspects, as well as an understanding of the overall picture (the conceptual framework is described in chapter 2).

In addition to the value that this thesis adds as a complete work, several aspects within the analyses contribute new insights to the existing scientific literature. To the knowledge of the author, health economic theory has so far not investigated and modeled the appropriateness of health care. This has far reaching consequences. It is for example intuitive to regard "moral hazard" as a negative issue. However, following the definition used in health economic theory – where moral hazard is defined as increased health service usage due to lower marginal cost of care (Pauly, 1968, p. 535) – this study shows that "moral hazard" is not only the source of welfare loss, but also of welfare gain. Simply speaking, the neglected positive aspect of "moral hazard" shows when the increase of health service usage happens in appropriate medical care. Then, people are able to receive additional positive services and their utility increases. On the other hand, "access to health services" is generally seen as a positive issue. Once again, this study is able to show that the final appraisal highly depends on the appropriateness of the service that access is offered to. Only if access to appropriate medical care is granted, will the utility of the people rise and society achieve welfare gains. A last new aspect that the new appropriateness approach can offer is the inclusion of preventive care. In the new approach, the utility of the people is not modeled following the individual's state of health (sick-healthy polarity), but the appropriateness of delivered care. It is therefore possible to value the delivery of health services as positive even if they are given to healthy people. In the appropriateness approach, preventive interventions to healthy people (primary prevention) can be interpreted as an increase of utility, if provided care is appropriate (e.g. consultancy, vaccination, screening) (compare chapter 2.1 for details of the appropriateness approach). The appropriateness approach is therefore hoped to give impulses to the scientific community to focus more on the character of services and move away from merely taking into account the amount of services. A first attempt to investigate the inclusion of appropriate health services into the Chinese catalogue of benefits can be found in chapter 3.2.1