China. Per-capita Health Spending Expected to Rise by More Than 18% in 2015

China's per-capita healthcare costs are forecast to grow by as much as 18% in 2015, according to a study by Fudan University's Center for Collaborative Governance Research, Xinhua Daily reports. The forecast range of 14.3–18.2% is also significantly higher than China's GDP growth rate of 8.97% in 2013. This compares to an average annual growth rate of per-capita healthcare spending of approximately 17.5% over the last two decades, according to the source.

Under existing healthcare policies, the uptrend in per-capita health spending is likely to continue, according to Fudan University researcher Professor Wang Yingfu. In 2015, per-capita healthcare costs are expected to rise by a factor of 45.5–52.7 compared to 1991 levels, and by 1.8–2.3 by 2020.

These data beg two important questions, according to the source: firstly, how can it be that China's per-capita income grows each year, but that doctors are coming under increasing financial strain; and secondly, if China has extended universal healthcare coverage to 95% in recent years, then why do citizens still pay such high medical fees even after their costs have been partially reimbursed?

In the meantime, Chinese public hospitals are far more interested in profiting from drug sales than helping patients, the report argues. This means that the government's latest efforts to separate hospital drug sales from revenue and abolish mark-ups on drug prices has created a disincentive for certain drugs, often leading to a lack of supply.

Outlook and implications

Per-capita healthcare costs are soaring in China as the population ages but drug prices remain stubbornly high, despite years of attempted reforms to lower costs. A significant contributor to high treatment prices are China's public hospitals, which have long been driven by profit and added mark-ups to drug prices as a source of revenue. Although public hospitals have effectively operated as self-governing entities during decades of insufficient public funding, they are now coming under increasing central regulation. China's healthcare reforms are aimed largely at forcing hospitals to abandon price mark-ups and standardise procurement processes, although this is proving a challenging process (see China: 4 March 2015: China releases guidelines on drug procurement at public hospitals and China: 12 January 2015: China considers introducing Diagnosis Related Groups pricing system).

Another contributing factor is hospitals' over-rapid expansion and purchasing of costly medical equipment, leading to surging medical cost inflation (see China: 14 October 2014: Chinese public hospitals told to slow down expansion to curb medical costs). This trend is unlikely to slow, as public hospitals try to make up for the loss of revenue from drug mark-ups by raising medical fees.

Source: IHS