Marketization of the Public Health Care in response to the Economic Reforms in China: A decrease in the government’s responsibilities and growing risks and insecurity among individuals?

Abstract: Since 1978, China has experienced a series of economic reforms, transitioning from a centrally planned economy to a liberal market economy. Correspondingly, the economic transformation has left a profound impact on the health care system. Universal free health care provided by state-owned enterprises was gradually replaced by modern social medical insurance schemes. The government dramatically decreased its spending on public health care. Moreover, in response to the economic reform, health care in urban China is fastly moving towards marketization. Public hospitals are endowed with great economic autonomy and thus becoming profit-driven entities. As a result, the proportion of out-of-pocket payments for medical treatment and drugs in total health expenditure becomes incredibly high. This master’s thesis aims to examine the consequences of marketization of the public health care and the reasons why China is unable to provide access to affordable health care treatment and pharmaceutical drugs to its urban citizens even though they have been included in the national medical care schemes. A theoretical framework based on the East Asian model and the mixed economy of welfare is built to offer a deeper understanding of the mechanisms of different sectors in welfare provision. Documentary analysis, a secondary review of official statistics as well as semi-structured interviews are used to answer the research questions. The findings show that with insufficient public-spending and regulation, public hospitals become over commercialized during the marketization process. And high profits are made by offering expensive medical treatment and pharmaceutical products. Meanwhile, the reimbursement level of social medical insurances remains low. As a result, risks of health care in terms of a high proportion of out-of-pocket payments are shouldered by urban citizens and thereby closing access to affordable health care.