Opinion: Cost Controls Offer First Step in Unlocking Health Care Reform’s Potential
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Public health care insurance (PHI) directly impacts the well-being of citizens and thus receives widespread attention. A recent national PHI meeting in Beijing laid out a framework for 2025, focusing on strengthening fund management to ensure fiscal safety. The guiding principle is balancing revenues and expenditures, with modest surpluses, through stringent oversight. Yet, cost control is a means to an end, not the ultimate goal. A sustainable PHI fund requires optimizing institutional arrangements that protect patients' autonomy in drug selection while balancing the interests of stakeholders — patients, hospitals, doctors and drug companies alike.
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- China's public health care insurance is focused on fiscal stability by balancing revenues and expenses, emphasizing cost control, and optimizing fund management to ensure patient autonomy and stakeholder interests.
- Participation in resident insurance is declining, with a drop of 20.5 million participants in 2023, leading to a 66.3-billion-yuan reduction in surplus; cost-control measures like centralized procurement are in place.
- Reforms aim to ensure access to essential care by balancing cost-saving and innovation, broadening drug coverage under basic insurance, and exploring commercial insurance mechanisms for innovative treatments.
- Pharmaceutical Companies
- Pharmaceutical companies face challenges as the PHI emphasizes cost control, leading to lower-priced generics replacing branded drugs. This shift pressures multinationals to retreat from the market and focus on innovation. There's concern that reduced prices might stifle innovation and compromise drug quality and efficacy. Balancing cost savings with preserving incentives for pharmaceutical innovation is crucial, while ensuring patients' access to necessary branded medications.
- Before 2024：
- Previous rounds of centralized drug procurement yield average price reductions of over 53% for drugs and 82% for medical consumables
- 2022：
- PHI fund experiences a 66.3 billion yuan decline in surplus
- 2023：
- Resident participation in PHI falls by 20.5 million to 962.9 million, marking a fifth consecutive year of decline
- 2023：
- Expenditures in the PHI fund outpace revenues due to rising hospitalization rates and medical costs driven by aging demographics
- 2024：
- Authorities intensify cost-control measures through centralized procurement and national price negotiations. The 10th round of centralized drug procurement and the fifth round for high-value medical consumables are conducted
- 2024：
- PHI negotiations add 121 drugs to the reimbursable list with an average price drop of 63%
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