Assessing government health expenditure in China

Assessing Government Health Expenditure in China Final draft, October 2005 This paper was prepared by the China National Health Economics Institute as a background paper for the World Bank China Rural Health Study (the work was led be Ms. Zhao Yuxin). The findings, interpretations and conclusions expressed in this paper are entirely those of the authors, and do not necessarily represent the views of the World Bank, its Executive Directors, or the countries they represent. 1  Budget Management Scheme and Subsidy Mode of Government Health expenditure Government health expenditure is the fiscal budget appropriation for health from governments at each level. Based on the economic purpose, it can be classified into 2 categories: subsidy for provider and subsidy for consumer. Government subsidy for provider includes recurrent expenses on health, recurrent expenses on traditional medicine, recurrent expenses on family planning, expenses for food and drug administration, intra-budget capital investment, expenses for medical research and expenses for health administration; the subsidy for consumer mainly includes government appropriation for Government Medical Insurance Scheme (GIS), Basic Medical Insurance System (BMIS), New Cooperative Medical System (NCMS) and Medical Assistance Scheme (MAS). Subsidy for provider In the planned economy period, the government executed highly centralized fiscal management scheme, and the budget preparation method applied was "monopoly control over the income and expenditure". Following this method, all the income of health institutes was delivered to the government and the expenditure of health institutes was subsidized by government budget. Based on the economic characteristic of health institutes, government health subsidy had two kinds of modes: "whole