LIU Xiao-xi, BI Kai-shun

(School of Business Administration, Shenyang Pharmaceutical University, Shenyang 110016, China)

Sino-British Comparative Study of Healthcare System

LIU Xiao-xi, BI Kai-shun

(School of Business Administration, Shenyang Pharmaceutical University, Shenyang 110016, China)

Objective To improve healthcare system framework in China by learning from British experiences. Methods Three aspects were compared and analyzed, including healthcare insurance coverage, fund-raising mode and healthcare payment methods, and enlightenment was given. Results and Conclusion It is suggested that the government should play the leading role in healthcare reform, raise healthcare reimbursement, increase government’s allowance and reform the payment methods.

healthcare system; healthcare insurance coverage; fund-raising mode; payment method

Social healthcare system is one of the most important social public systems which ensure the citizens have appropriate health and medical treatment, the establishment and improvement of the healthcare system play a key role to sustain reform, development and social stability. As a country with such a large population, Chinese healthcare system must be established according to its national conditions, but at the same time, learning from the experiences of developed countries is like standing on the shoulders of giants, which can shorten the strategy reform and improve healthcare practice reform in China.

Among healthcare system patterns of foreign countries, they can be categorized to four types: the social healthcare insurance model represented by Germany, the national healthcare model represented by United Kingdom, the saving healthcare insurance model represented by Singapore and the commercial healthcare insurance model represented by the US. In 1998, by learning the social healthcare insurance system from Germany and the saving healthcare insurance system from Singapore as the template, China began to experiment the urban employee medical insurance and new rural medical system, and gradually implemented the system throughout the country. It can be said that we have learned and mastered the essence of those two kinds of healthcare insurance system. Moreover, during the comparative study of British and American healthcare system, the data showed that the total health expenditure per capita is $3495 in 2010 in UK, less than half of the USA (USA $8233)[1], but the British achieved better success than USA in social health system. National Health Service of UK (referred as NHS) is widely recognized for outstanding fairness and hailed as “one of the best healthcare organizations in the world” by WHO. After twenty years of development and reform in China, the medical and health service system is still lack of fairness and welfare in service. So this paper selects the British NHS as the reference object, studying through the comparison of the medical security system framework and analyzing of the differences between two countries, in order to propose the fundamental solution to tackle “the difficulty of getting medical service due to high cost” problem for public in China.

1 Comparative study between Britain and China in terms of healthcare system coverage

1.1 NHS coverage in UK

NHS object: all British citizens and foreign nationals holding legal residence. Foreign students is entitled to free medical services equal to British citizens as long as their courses are registered over six months in UK.

NHS content: every citizen should register at local community clinics, where a general practitioner is recommended. Citizens get free medical treatment from their exclusive GP in the local community clinics, since the separation of treatment and prescription is regulated in UK, the community clinics is not responsible for prescribing drugs, patients shall prescribe any buy medicine in pharmacy, paying prescription fee for only 6.5 pounds,while the remaining costs are paid to pharmacies by the NHS. British children, students under 18 years old, fulltime college students, aged 60 or older, low-income families entitle total free medicines[2]. NHS offers additional benefits to pregnant who entitle full free medical care when she is in the stage of 3 months of pregnancy till give birth to babies as well as 12 months postpartum maternal, additionally, the whole pregnancy check-ups and production process is also free of charge . Although NHS provides free medical services to British citizens, part of medical treatment is still at their own experience in real practice according to the basic directory of the British medical payment.

1.2 Basic healthcare coverage in China

China’s basic healthcare object: all citizens who participate in social health insurance. China’s current social basic medical security system consists of three parts: medical insurance for urban employees, medical insurance for urban residents and the new rural cooperative medical care. The scope of protection covers employees from urban enterprises, bureaus, institutions and private enterprise; urban non-employees, including children, premier, middle, high school and college students; all rural areas residents.

China’s basic healthcare content: according to “the Decision of the State Council on the Establishment of the Basic Medical Insurance System for Urban Employees”(state issue [1998] No. 44) in the three “between the minimum and maximum payment of the medical expenses”are mainly paid by pooling funds while the individual pays a certain percentage of the total expense provisions[3]expenses below the minimum payment limit and over the maximum payment limit will be paid by individuals, while the interval between those two limits will be reimbursed by Medicare Center. But most part of medical expenses in outpatient clinics is below the minimum payment, so it is comparatively money-consuming for most of the individuals to see a doctor.

1.3 Comparative analysis of basic healthcare coverage between UK and China

Both two governments provide people equal access to health security as a basic human rights, both two countries have the basic healthcare system which aims at providing basic medical security services to covering all citizens, however, there are differences between the two countries in terms of political systems and levels of economic development etc. First of all, the two health security systems are in a different stage of development. NHS has already entered a mature stage of perfection since 70 years of progress and implementation; while China’s social basic health security system has been in place for only few decades since first establishment and still in the stage of improvement and construction. Secondly, the two countries have different national conditions, according to the World Population Statistics in 2012, British population is about 63 million, while there is over 1.3 billion people in China, the country’s total population is so vast, it will bring state and government overwhelming fiscal pressures and undermine development sustainability if China is to adapt the Britishstyle universal free medical care system. However, by learning from NHS, the government and the state of China should take measures as followed: to begin with, give more attention to vulnerable groups in healthcare system, raise the percentage of medical reimbursement for students, pregnant women and the elderly people; secondly, add outpatient reimbursement and reduce the minimum payment; thirdly, since the main function of medical insurance is to undermine the risk of large medical expenses for disease, set top line might weaken the medical insurance protection function. Therefore, we should remove the highest pay limitation of pooling funds, but to set up installment payment method to cover such large medical expenses.

2 Comparative studies between UK and China in terms of financing

2.1 NHS financing in UK

NHS is primarily funded from national fiscal budget, which is partially allocated by individual’s (National Insurance Contributions, NICs) taxes founded. British NICs began the collection in 1905, accounting for about 18% of the proportion of total tax revenue, which is the main source of the NHS funding. According to the British NHS Alliance fiscal report released in 2012-2013, the budgetary allocation for the NHS reached ￡ 108,890 million. NHS healthcare funding comes mainly from three sources: (1) government financial allocation, WHO World Health Report version 2013 shows that the British government contributed 83.2% of the total health expenditure in 2010[4]. (2) NHS charged services contributed approximately 15% of NHS total income. (3) Cash paid by patients, which comes mainly from prescription, accounted for only 2.8% of the total NHS income in 2010.

2.2 Healthcare system financing in China

Chinese healthcare system financing is diverse: (1)The medical insurance fund for urban employee is combined with social pooling and individual accounts, the employer or company is paying 6% of the total annual salary to cover the health insurance premiums in which 70% of the expense goes into the social pooling while the other 30% into personal accounts; individuals pay health insurance premiums base on 2% of their salary which all goes to their personal account[5]. (2) The premiums of health insurance for urban residents are different based on regional level of economic development and fiscal affordability of local government. But the premiums are not linked up with the residents’ income and economic abilities, but the annual fixed charge added by the government subsidies. (3) The health insurance for new rural cooperative healthcare is resembled to that for urban residents. Take Liaoning Province as an example, rural residents are paying 60 RMB per year individually for their health insurance in 2014, while 280 RMB was subsidized by the government, which would be raised up to 360 RMB in the year of 2015.

2.3 Comparative analysis of healthcare financing between UK and China

The financial allocation from UK government to the NHS ensures the smooth running of the national healthcare service with best efforts, protects the fairness of the individual medical treatment; while the Chinese government has continued to increase investment in basic medical and health services, invested social reform dividends to the people’s livelihood. According to the data from “China Health Yearbook 2013”, Chinese general government expenditure on health was 836.59million RMB in 2013[6], which contributed to 30% of total expenditure on health in China; while private expenditure on health was 956.46million RMB, which contributed to 34% of total expenditure on health. It was indicated that there is a big gap between China and UK in proportion of financial investment to healthcare system, although the British government has tightened the NHS budget over recent years. Learning from UK, our government shall play the leading role in increasing funding healthcare system, in order to provide social welfare as a public good and solve our “expensive medical treatment” issue fundamentally.

3 Comparative studies of medical payment methods between UK and China

Medical payment are related to two aspects, one is the individual patient as the demander pays the hospital or physician (medical supplier); the other is the medical funding providers such as health insurance agencies or government pays the medical treatment.

3.1 NHS payment methods in UK

3.1.1 Payment method of demander in UK

British patients and health service providers only have very limited financial relations. In the aspect of health services , school-age children, over 60-year-old elderly people, unemployed, low-income and pregnant women, are all entitled to fully free treatment at GPs and community clinics while the prescription fees are paid by NHS; others need to pay prescription charges about 6.5 pounds. Dental and ophthalmology patients have to pay a fee. If a referral to a specialist hospital is needed, the patient is not liable for any costs personally as long as the referral is handled by a general practitioner. In the aspect of pharmaceutical services, due to the UK implementation of “the separation of medical services and prescriptions” system, patients can go to any pharmacy to buy drugs as long as a doctor’s prescription is available. NHS has clearly identified the drugs that cannot be reimbursed or can be limited reimbursed, including painkillers, sedatives, health care products and other drugs proves to be poor health economical efficient, as well as the price is too high to accept by NHS.

3.1.2 Payment method of supplier in UK

The supply party payment splits to the payment for medical institutions and for doctors. National Treasury will financed by tax revenue each year and based on budget limit the health expenses to the Ministry of Health, Ministry of Health are allocated, then to the local NHS Committee according to the actual circumstances of health services in the area (including the number of population, health status, quality of health services, etc). NHS measures the payment for primary health services by “pay-for-quality”, in which the cost of basic services accounted for 70% of total expenses, to sustain the costs of essential and additional services[7]. In general, NHS payment method is “Global Sum Payment”; the payment is calculated based on “patientneed-formula” and also committed to guarantee “minimumpractice-investment”. The remaining 30% is paid according to the “quality-and-outcome-framework”. The payment method for secondary health services is “pay-by-results”and “diagnosis-related-groups-system” (DRGs), which means the health service fee is paid in a fixed premium to the hospital for a pre-agreed standard disease.

NHS pays the specialists by adopting the remunerationsystem, while NHS pays GPs in capitation payment plus medical services allowance. NHS prepays the health services fee to GPs base on the total number of contracts, making calculation of gender, age structure, health status and other information of the patients using the formula of“Carr-hill”. Under the condition of prepaid capitation, the better control of health care costs by GPs, the more surplus will make as well as the doctor’s personal income.

3.2 Basic healthcare payment methods in China

For medical demanders, individuals have to pay by themselves if they are not participating in basic social health insurance, though some might choose commercial health insurance. For those who participate in the social health insurance, will pay the private proportion and the health insurance institution would pay the rest from pooling funds according to Chinese basic national medical insurance regulations.

For medical suppliers in China, the most widely implemented payment method running currently is paid on the basis of medical service, which means the patient need to pay the fee after the diagnosis and the payment is depend on what medical service or treatment did the patient had. Chinese hospitals have three main funding sources, which are government financial allocations, the third-party payment from insurance agencies and the private payment from patients. Salaries of medical staff in public hospitals consist of government balance allocations and personal performance salary, the profits of the patient’s treatment and drugs is the main source of the performance salary.

3.3 Comparative analysis of healthcare payment methods between UK and China

In healthcare service process, different payment methods may lead to different medical practices and economic consequences. British NHS not only controls the total medical budget, but also balances the risks and fairness of healthcare services. Three lessons emerged from NHS payment methods are as followed.

Firstly, the payment procedure of patient paying first and claiming later should be cancelled. Payment of the current medical insurance in China not only increases the re dundancy procedure, but also puts on economic pressure for the patients. Especially for serious illness patients, though the medical insurance can cover their medical expense, since they have difficulty in raising enough money for the operation, they cannot afford the medical treatment in time. Additionally, this payment method defines the relation between doctors and patients in China is the buyer-supplierrelationship[8], which weakens the supervision of medical insurance company as the third party and could not control the excessive induced demand from the medical service suppliers. Secondly, on the basis of three-tiered medical service division, China needs to encourage citizens to have their first diagnosis in the primary care clinic nearby. Moreover, once the residents signed the contract with their designated primary care clinic, they got partial coverage of their medical treatment from the basic medical insurance institution. The next year funding is according to the service quality and patient satisfaction evaluation of this year, in order to promote the designated medical institutions, resulting in lower medical expenditure and higher medical treatment performances. Thirdly, the payment method for secondary medical care and hospitals should choose the DRGs based payment, which is paying with fixed fee according to different categories of diseases. Only in this way, the hospitals and physicians would be stimulated to select better way of treatment rather than higher price service, and it would curb the excessive medical services and physical examinations. The payment reform is one of the most important methods to control the rapid increasing medical cost, as well as the solution to relieve the high expenditure in healthcare of Chinese people.

[1] World Health Organization. Word Health Statistics 2010 [EB/OL]. http://whqlibdoc.who.int/publications/2010/9789245563983_chi. pdf.

[2] The Start of the NHS [EB/OL]. http://www.nhshistory.net.

[3] The Decision of China’s government on the establishment of urban employee basic medical insurance system [EB/OL]. http://www. gov.cn.

[4] World Health Organization. Word Health Statistics 2013 [EB/OL]. http://www.who.int/gho/publications/world_health_statistics/ EN_WHS2013_Full.pdf.

[5] WANG Zhen-ping, WANG Jin-ying. The Study of Basic Medical Insurance System for Urban Residents in China [J]. Chinese Health Service Management Journal, 2007, (10): 677.

[6] The Total Health Expenses of Annual Data. National Bureau of Statistics of China [EB/OL]. http://data.stats.gov.cn/workspace/ind ex;jsessionid=9E4519475216300313E0E2A10EE73198?m=hgnd.

[7] Introduction of NHS [EB/OL]. http://wenku.baidu.com/view/ b5f839addd3383c4bb4cd29b.html.

[8] WU Ri-tu. Reform Ideas for Chinese Medical Service Reform [J]. Chinese Health Service Management Journal, 2004, (9):33-34.

Author’s information: BI Kai-shun, Professor. Major research areas: Pharmaceutical analysis and pharmaceutical administration. Tel: 024-23986012, E-mail: kaishunbi.syphu@gmail.com