In China, the central government has overall responsibility for national health legislation, policy, and administration. It is guided by the principle that every citizen is entitled to receive basic health care services, with local governments—provinces, prefectures, cities, counties, and towns—responsible for providing them, with variations for local circumstances. Health authorities include the National Health and Family Planning Commission and the local Health and Family Planning Commissions, which have primary responsibility for organizing and delivering health care and supervising providers (mainly hospitals). Health authorities at the prefecture, county, and town levels have limited flexibility in carrying out provincial health policies.

Services: Publicly financed insurance covers primary, specialist, emergency department, hospital, and mental health care, as well as prescription drugs and traditional medicine. A few dental services (e.g., tooth extraction, but not cleaning) and optometry services are covered, but mostly such services are paid for completely out-of-pocket. Home care and hospice care are often not included either. Local health authorities define the benefit packages. Preventive services such as immunization and disease screening are included in a separate public-health benefit package funded by central and local governments; every resident is entitled to these without copayments or deductibles. Coverage is person-specific; there are no family or household benefit arrangements.

Cost-sharing and out-of-pocket spending: Inpatient and outpatient care, including prescription drugs, is subject to different deductibles, copayments, and reimbursement ceilings. There are no annual caps on out-of-pocket spending. In 2014, out-of-pocket spending per capita was CNY1,306 (USD367) and CNY754 (USD212) in urban and rural areas, respectively—representing about 32 percent of total health expenditures.

Most out-of-pocket spending is for prescription drugs. Reimbursement ceilings are significantly lower for outpatient care than for inpatient care. For example, in 2016, ceilings were CNY3,000 (USD843) for outpatient care in primary care facilities, CNY10,000 (USD2,809) for outpatient care in secondary/tertiary hospitals, and CNY180,000 (USD50,562) for outpatient care in the rural new cooperative medical scheme in Beijing.

Provider networks are specific to the insurance scheme, normally at the prefecture level for urban employment-based basic health insurance and urban resident basic health insurance (which may share the same network, but with different benefits) and at the county level for the new cooperative medical scheme. People can use out-of-network health services (even across provinces), but these have higher copayments. There are no universal cost-sharing arrangements, and each risk-pooling unit (network) has its own policies. Cost-sharing in primary care facilities (village clinics, rural township hospitals, and urban community hospitals) is also different from that in secondary or tertiary hospitals, with the lowest copayments in the former. Secondary and tertiary hospitals are accredited by the local health authorities based on their qualifications, and both provide primary care, outpatient specialists, and inpatient hospital care. Migrant populations face much higher cost-sharing and out-of-pocket spending, since they often use out-of-network care. Fee schedules for primary and secondary care are regulated by the local health authorities and the Bureaus of Commodity Prices, and it is unlawful for public clinics and hospitals to charge patients above the fee schedules. To encourage nongovernmental investment in health care, in 2014 China began allowing private clinics and hospitals to charge more.

Safety net: For individuals who are not able to afford individual premiums for publicly financed health insurance or who cannot cover out-of-pocket spending (which is not capped), a medical financial assistance program, funded by local governments and social donations, serves as a safety net in both urban and rural areas. In Beijing, individual poverty-level income in 2016 was defined as CNY800 (USD225) per month in both rural and urban areas; poverty levels for other provinces may be lower than in Beijing. Medical financial assistance programs prioritize inpatient care expenses. Funds are used mainly to pay for individual deductibles, copayments, and medical spending exceeding annual caps, as well as individual premiums for publicly financed health insurance. In 2014, 67.2 million people (approximately 5% of the Chinese population) received such assistance for health insurance enrollment, and 24.0 million people (1.8% of the population) received funds for direct health expenses.

There are other financial assistance programs to help with unreimbursed emergency department and other health expenses.

These are funded mostly by local governments.

Primary care: Primary care is delivered mainly through village doctors and health workers in rural clinics, general practitioners (GPs) in rural township and urban community hospitals, and medical professionals in secondary and tertiary hospitals. Village doctors, who are not licensed GPs, can work only in village clinics. In 2014, there were 1.06 million village doctors and health workers. Although rural patients are encouraged to seek care in village clinics or township hospitals and urban patients in community hospitals—as such providers are associated with lower cost-sharing rates—residents can also see any GP in upper-level hospitals directly.

Registration with a GP is not required and, except for the very few areas that use GPs as gatekeepers, referrals are generally not necessary to see outpatient specialists. In 2014, China had some 173,000 licensed and assistant GPs, representing 6.0 percent of all licensed physicians and assistant physicians. Unlike village doctors and health workers in the village clinics, GPs rarely practice solo or through partnership but instead work in a hospital with nurses and nonphysician clinicians. Village clinics in rural areas receive technical support from township hospitals.

Fee schedules for primary care in government-funded health institutions are regulated by local health authorities and the Bureaus of Commodity Prices. Village doctors and health workers in the village clinics receive income through reimbursement of public health services (e.g., immunizations and chronic disease screening) and clinical services, as well as through markups on prescription drugs and government subsidies. Incomes vary substantially by region.

GPs at hospitals receive a base salary along with activity-based payments (e.g., patient registration fees, surgeries performed). With fee-for-service still the dominant payment mechanism for hospitals (see below), hospital-based physicians have strong financial incentives to induce demand. It is estimated that wages constitute only one-quarter of physician incomes; the rest is thought to be derived from practice activities.

In 2014, 47 percent of outpatient revenues and 38 percent of inpatient revenues were from prescription drugs provided to patients in tertiary hospitals. Care coordination is generally not incentivized, although it is always encouraged by health authorities. Outpatient specialist care: Outpatient specialists are employed by and usually work in hospitals, through which they obtain their practice licenses. Although practicing in multiple settings is being introduced and encouraged in China, most specialists practice in one hospital only. They receive compensation in the form of a base salary plus activity-based payments. Patients can usually see outpatient specialists without GP referral and have a choice of specialist through their hospital.

Administrative mechanisms for direct patient payments to providers: Patients pay deductibles and copayments to hospitals at the point of service. Hospitals directly bill insurers for the covered payment at the same time if the payment mechanism is fee-for-service or a diagnosis-related group (DRG) system. Hospitals receive annual lump-sum payments under global budgets or capitation.

After-hours care: Because village doctors and health workers often live in the same community as patients, they voluntarily provide some after-hours care when needed. Rural township hospitals and urban secondary and tertiary hospitals have emergency rooms or departments (EDs) where both primary care doctors and specialists are available, minimizing the need for walk-in after-hours care centers. In EDs, nurse triage is not required and there are few other restrictions, so people can simply walk in and register for care at any time. (Urban community hospitals often do not provide after-hours care, given the availability of secondary and tertiary hospitals.) ED use is not substantially more expensive than usual care for patients. Information on patients’ emergency visits is not routinely sent to their primary care doctors.

Hospitals: Hospitals can be public or private, nonprofit or for-profit. Most township hospitals and community hospitals are public, but both public and private secondary and tertiary hospitals exist in urban areas. Rural township hospitals and urban community hospitals are often regarded as primary care facilities—closer to village clinics than “true” hospitals. In 2014, there were 13,314 public hospitals and 12,546 private hospitals (excluding township hospitals and community hospitals), of which 17,705 were nonprofit and 8,155 were for-profit.14 In 2014, there were 491,885 public primary care facilities and 425,450 private village clinics.

Hospitals are paid through a combination of out-of-pocket payments, health insurance compensation, and, in the case of public hospitals, government subsidies—the last of these representing 13.2 percent of total revenue in 2014.15 A significant number of patients pay 100 percent out-of-pocket, because they receive out-of-network services. Although fee-for-service is dominant, DRGs, capitation, and global budgets are becoming more popular in selected areas. Local health authorities set fee schedules, and doctors’ salaries and other payments are included in hospital reimbursement.

Mental health care: Mental health care, including disease diagnosis, treatment, and rehabilitation services, is provided in special psychiatric hospitals and in the psychology departments of tertiary hospitals. Patients with mild illness are often treated at home or in the community; only severely mentally ill patients are treated in psychiatric hospitals. Both outpatient and inpatient mental health services are covered by insurance, with benefits subject to lower copayment rates. In 2014, there were 34 million mental health patient visits to special psychiatric hospitals, and on average one psychiatrist treated 4.8 patients per day.16 Mental health care is not integrated with primary care.

Long-term care and social supports: In accordance with Chinese tradition, long-term care is provided mainly by family members at home. There are very few formal long-term care providers. Family caregivers are not entitled to financial support or tax benefits, and long-term care insurance is virtually nonexistent; expenses for care in long-term care facilities are paid almost entirely out-of-pocket. Local governments often provide some subsidies to long-term care facilities.

On average, conditions in long-term care facilities are poor, and there are long waiting lists for enrollment in high-end facilities. Formal long-term care facilities usually provide only housekeeping, meals, and basic services such as transportation, with very few health care services. Some, however, may coordinate health care with local township or community hospitals.

Governments encourage integration of long-term care and health care services, particularly those funded by private investment. There were 3.9 million beds for aged and disabled people in 2014.17 Some hospice care is available, but it is normally not covered by health insurance.

Primary care: Primary care is delivered mainly through village doctors and health workers in rural clinics, general practitioners (GPs) in rural township and urban community hospitals, and medical professionals in secondary and tertiary hospitals. Village doctors, who are not licensed GPs, can work only in village clinics. In 2014, there were 1.06 million village doctors and health workers. Although rural patients are encouraged to seek care in village clinics or township hospitals and urban patients in community hospitals—as such providers are associated with lower cost-sharing rates—residents can also see any GP in upper-level hospitals directly.

Registration with a GP is not required and, except for the very few areas that use GPs as gatekeepers, referrals are generally not necessary to see outpatient specialists. In 2014, China had some 173,000 licensed and assistant GPs, representing 6.0 percent of all licensed physicians and assistant physicians. Unlike village doctors and health workers in the village clinics, GPs rarely practice solo or through partnership but instead work in a hospital with nurses and nonphysician clinicians. Village clinics in rural areas receive technical support from township hospitals.

Fee schedules for primary care in government-funded health institutions are regulated by local health authorities and the Bureaus of Commodity Prices. Village doctors and health workers in the village clinics receive income through reimbursement of public health services (e.g., immunizations and chronic disease screening) and clinical services, as well as through markups on prescription drugs and government subsidies. Incomes vary substantially by region.

GPs at hospitals receive a base salary along with activity-based payments (e.g., patient registration fees, surgeries performed). With fee-for-service still the dominant payment mechanism for hospitals (see below), hospital-based physicians have strong financial incentives to induce demand. It is estimated that wages constitute only one-quarter of physician incomes; the rest is thought to be derived from practice activities.

In 2014, 47 percent of outpatient revenues and 38 percent of inpatient revenues were from prescription drugs provided to patients in tertiary hospitals. Care coordination is generally not incentivized, although it is always encouraged by health authorities. Outpatient specialist care: Outpatient specialists are employed by and usually work in hospitals, through which they obtain their practice licenses. Although practicing in multiple settings is being introduced and encouraged in China, most specialists practice in one hospital only. They receive compensation in the form of a base salary plus activity-based payments. Patients can usually see outpatient specialists without GP referral and have a choice of specialist through their hospital.

Administrative mechanisms for direct patient payments to providers: Patients pay deductibles and copayments to hospitals at the point of service. Hospitals directly bill insurers for the covered payment at the same time if the payment mechanism is fee-for-service or a diagnosis-related group (DRG) system. Hospitals receive annual lump-sum payments under global budgets or capitation.

After-hours care: Because village doctors and health workers often live in the same community as patients, they voluntarily provide some after-hours care when needed. Rural township hospitals and urban secondary and tertiary hospitals have emergency rooms or departments (EDs) where both primary care doctors and specialists are available, minimizing the need for walk-in after-hours care centers. In EDs, nurse triage is not required and there are few other restrictions, so people can simply walk in and register for care at any time. (Urban community hospitals often do not provide after-hours care, given the availability of secondary and tertiary hospitals.) ED use is not substantially more expensive than usual care for patients. Information on patients’ emergency visits is not routinely sent to their primary care doctors.

Hospitals: Hospitals can be public or private, nonprofit or for-profit. Most township hospitals and community hospitals are public, but both public and private secondary and tertiary hospitals exist in urban areas. Rural township hospitals and urban community hospitals are often regarded as primary care facilities—closer to village clinics than “true” hospitals. In 2014, there were 13,314 public hospitals and 12,546 private hospitals (excluding township hospitals and community hospitals), of which 17,705 were nonprofit and 8,155 were for-profit.14 In 2014, there were 491,885 public primary care facilities and 425,450 private village clinics.

Hospitals are paid through a combination of out-of-pocket payments, health insurance compensation, and, in the case of public hospitals, government subsidies—the last of these representing 13.2 percent of total revenue in 2014.15 A significant number of patients pay 100 percent out-of-pocket, because they receive out-of-network services. Although fee-for-service is dominant, DRGs, capitation, and global budgets are becoming more popular in selected areas. Local health authorities set fee schedules, and doctors’ salaries and other payments are included in hospital reimbursement.

Mental health care: Mental health care, including disease diagnosis, treatment, and rehabilitation services, is provided in special psychiatric hospitals and in the psychology departments of tertiary hospitals. Patients with mild illness are often treated at home or in the community; only severely mentally ill patients are treated in psychiatric hospitals. Both outpatient and inpatient mental health services are covered by insurance, with benefits subject to lower copayment rates. In 2014, there were 34 million mental health patient visits to special psychiatric hospitals, and on average one psychiatrist treated 4.8 patients per day.16 Mental health care is not integrated with primary care.

Long-term care and social supports: In accordance with Chinese tradition, long-term care is provided mainly by family members at home. There are very few formal long-term care providers. Family caregivers are not entitled to financial support or tax benefits, and long-term care insurance is virtually nonexistent; expenses for care in long-term care facilities are paid almost entirely out-of-pocket. Local governments often provide some subsidies to long-term care facilities.

On average, conditions in long-term care facilities are poor, and there are long waiting lists for enrollment in high-end facilities. Formal long-term care facilities usually provide only housekeeping, meals, and basic services such as transportation, with very few health care services. Some, however, may coordinate health care with local township or community hospitals.

Governments encourage integration of long-term care and health care services, particularly those funded by private investment. There were 3.9 million beds for aged and disabled people in 2014.17 Some hospice care is available, but it is normally not covered by health insurance.

In 2013, the Ministry of Health and the National Population and Family Planning Commission were merged into the National Health and Family Planning Commission as the main agency for health controlled by the State Council. The State Administration of Traditional Chinese Medicine is affiliated with the new agency. The National People’s Congress is responsible for health legislation. However, major health policies and reforms may be initiated by the State Council and the Central Committee of the Communist Party as well, and these are also regarded as law.

The National Development and Reform Commission, which has been heavily involved in the recent health care system reform, oversees health infrastructure plans and competition among health care providers. The Ministry of Finance provides funding for government health subsidies, health insurance contributions, and health system infrastructure. The Ministry of Human Resources and Social Security runs urban employment-based basic insurance and urban resident basic insurance. The China Food and Drug Administration is responsible for drug approvals and licenses, but assessment of health technology and cost-effectiveness has not played a significant role yet. The China Center for Disease Control and Prevention is administrated by the National Health and Family Planning Commission, although it is not a government agency. The Chinese Academy of Medical Science, under the National Health and Family Planning Commission, is the national center for health research.

The National Health and Family Planning Commission directly owns some hospitals in Beijing, and national universities directly administrated by the Ministry of Education also own affiliated hospitals. Local government health agencies, usually the Bureau of Health or the Health and Family Planning Commission in each province, may have a similar structure and often own provincial hospitals. Local governments (of prefectures, counties, and towns) may have departments of health and own hospitals directly. Centers for disease control and prevention also exist in local areas and are administered by the local bureaus or departments of health. At the national level, the China Center for Disease Control and Prevention provides only technical support to the local centers.

Both the national and local Health and Family Planning Commissions have comprehensive responsibilities for health quality and safety, cost control, provider fee schedules, health information technology, and clinical guidelines.