Reform of how health care is paid for in China: challenges and opportunities

China’s current strategy to improve payment for health services is headed in the right direction, but much more remains to be done. The problems are substantial: high levels of out-of-pocket payments and cost escalation; stalled progress in providing adequate health insurance for all; widespread inefficiencies in health facilities; uneven quality; extensive inequality; and perverse incentives for hospitals and doctors. This paper presents Chinese actions to accelerate improvement, including increasing government spending on health and committing to reaching 100 per cent insurance coverage by 2010. According to the paper, China’s prospects of completing this transformation in the financing of its health care services successfully in the next two decades are good, although success is not guaranteed. The real test will come when tougher reforms have to be introduced.