China's future healthcare system: What is the role for private production and financing?

Abstract

In China, the private sector may make healthcare markets more competitive, thereby improving affordability, increasing the supply and quality of healthcare services and improving the accessibility to healthcare. It can also improve financial coverage via private health insurance, as a substitute or complement to government plans. However, strict regulation, insurance designation bias against private hospitals, insufficient risk-management capacity and crowding out by social health insurance have hampered private sector involvement in health services production and insurance. We argue that the best option at China's current state of development may be a compromise model in which competing private providers are given an important role, but in which the government intervenes in such a way as to attain both a high degree of equity of access to healthcare, and to avoid the most significant forms of 'market failure' in an unregulated private system.