Health Care Regime Change in Urban China: Unmanaged Marketization and Reluctant Privatization

Abstract

has experienced a dramatic transition from a planned to a market economy since 1979. Within this context, the health care regime in urban China is now rapidly moving towards marketization. As in other economic areas, health care reforms have proceeded in a gradual manner, and the legacies of the old regime still mark the new regime. Sluggish and incomplete institutional changes have produced a distorted new system. While most types of health care provision have now been marketized, the government still follows the old manner of administrative control over the sector rather than adopting new ways of regulation. During the pre-reform era, the health care sector in urban China was an integral part of the planned economy, manifesting many characteristics of what Kornai calls classical socialism1 while displaying Chinese characteristics in other aspects. In urban areas, the pre-reform Chinese health care regime was very similar to those found in the former socialist countries of Eastern Europe and in the Soviet Union. Almost all health care providers were owned and operated by the state, all health care professionals were state employees, and most Chinese urban residents enjoyed free health care services. The only difference was that the provision of these services, unlike in Eastern Europe, was delivered through the workplace rather than the state.2 Each workplace unit operated as a small-scale welfare state, and free health care services were one of many non-wage benefits offered to unit members.3

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