China to spend $124 billion on medical reforms

China will pump 850 billion yuan ($124 billion) into its creaking health care system over the next three years to fill a big hole in the country's social safety net.

The plans announced Wednesday by the State Council, or Cabinet, also include a revamp of public hospitals often criticized for their lack of access, huge fees and poor services.

China changed its health care system in the early 1990s, scrapping a system under which the government covered more than 90 percent of medical expenses to where they now cover about 17 percent, according to state media.

"Growing public criticism of soaring medical fees, a lack of access to affordable medical services, poor doctor-patient relationship and low medical insurance coverage compelled the government to launch the new round of reforms," the official Xinhua News Agency said Thursday.

By 2011, the country must improve its basic medical insurance system, the service level of hospitals and reduce the cost of health care for the public, the Cabinet said in a statement on its Web site.

"According to estimates, all levels of government will spend around 850 billion yuan over the next three years," it said.

By then 90 percent of China's 1.3 billion people should be covered by a basic medical insurance system, the statement said. It did not give a figure for the current participation rate.

The lack of a health care system and erratic medical care are sources of widespread unhappiness among the Chinese public. They are also seen as a damper on domestic consumption because families have to put aside savings in case of an illness.

China has said it wants to boost domestic consumption as part of a massive stimulus plan to boost its slowing economy hit by a sharp drop in overseas demand for Chinese goods.

The Cabinet said the reforms will be rolled out in some public hospitals as part of a three-year pilot program aimed at changing the way hospitals make profits, strengthening inspections of facilities and improving services.

The statement did not provide details on the changes, but Health Minister Chen Zhu said earlier this month that the government aimed to cut hospitals' involvement with drug sales, which he said would help lower the prices of medicines and physical checkup fees.

Public hospitals currently rely on profits from medical services and drug prescriptions for their operating expenses, which health officials say creates a heavy burden on patients and a waste of medical resources.

The plan also calls for improved services in remote villages and in less developed cities. Health care in some rural areas is far beyond what is available in China's bigger cities.

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