China's Health System and Its Reform : A Review of Recent Studies

This paper provides a survey of the recent empirical research on China's old health system (i.e. prior to the spate of reforms beginning in 2003). It argues that this research has enhanced our understanding of the system prior to 2003, in some cases reinforcing conclusions (e.g., the demand-inducement associated with perverse incentives) while in other cases suggesting a slightly less clear storyline (e.g., the link between insurance and out-of-pocket spending). It also concludes that the research to date points to the importance of careful evaluation of the current reforms, and its potential to modify policies as the rollout proceeds. Finally, it argues that the research on the pre-2003 system suggests that while the recently announced further reforms are a step in the right direction, the hoped-for improvements in China's health system will far more likely occur if the reforms become less timid in certain key areas, namely provider payments and intergovernmental fiscal relations.