Designing Effective Healthcare: Matching Policy Tools to Problems in China

AuthorM Ramesh,Azad Singh Bali
Date01 February 2017
Published date01 February 2017
Murdoch University
National University of Singapore, Singapore
Healthcare reforms often result in disappointing failures due to the misguided goals they pursue and the f‌lawed means they
employ. The paper proposes that effectivenessdef‌ined as universal access to essential healthcare at a cost affordable to
societyis a worthwhile and achievable objective. But to realize effectiveness, reformers need to discard their a priori
preferences for markets or governments and instead select a range of policy tools targeting different problems. The paper
will argue that a concerted use of regulatory, f‌iscal, informational and organizational tools shaping the behaviour of
healthcare providers, insurers and users can achieve effective healthcare. The paper will highlight the use and misuse as well
as non-use of these tools in China to shed light on toolsˈapproach to health policy reforms. Lessons from China are highly
relevant to developing countries around the world trying to reform their health sector. Copyright © 2017 John Wiley &
Sons, Ltd.
key wordspolicy tools; policy design; health policy; China; policy effectiveness
Achieving universal health coverage at a f‌iscally sustainable cost has been a key goal of governments in the
developing world in recent decades (Bonilla-Chacin and Aguilera 2013; Hanvoravongchai 2013; Somanathan
et al. 2013; Marten et al. 2014; Harimurti et al. 2013; Bali and Ramesh 2015a). Despite their efforts in the form
of increased expenditures and new programmes, a large share of total healthcare expenditure in developing
countries continues to be f‌inanced by out-of-pocket payments (OOPs), for example, about 50 per cent of total
health expenditure in China, India, Indonesia, Philippines and Vietnam (WHO 2016). Such large expenditure
f‌inanced without risk pooling poses severe challenges for households, pushing many into lifetime of poverty and
indebtedness (Van Doorslaer et al. 2007). Governments in Asia are aware of the severity of the problem and have
taken measures to address them but have had only limited success.
A critical diff‌iculty in achieving universal healthcare at sustainable costs is due to inadequate attention to design
features of health systems and the specif‌ic policy tools used to achieve goals (Liu 2003; Roberts et al. 2008;
Paolucci 2011). These vital issues are often blind-sided by efforts to identify modelsof organizing health systems
and codifying them to promote improved outcomes through mimetic isomorphism: the Japanese social insurance
model, the American private insurance model, the British tax-f‌inanced model, the Dutch managed-competition
model, Singaporeˈs individual-savings model and so on. This is not a useful exercise, as healthcare does not lend
itself to policy mimesis due to the sectorˈs immense complexities. The modelsgrossly oversimplify or neglect key
design parameters and nuanced institutional features that shape performance (Marmor et al. 2005). Such efforts fuel
misguided reform, such as implementing diagnostic-related groupswhen conditions for their deployment do not
exist (Langenbrunner et al. 2009; Preker and Langenbrunner 2005;). Similarly, increased public funding of
*Correspondence to: Azad Bali, Murdoch University, 390 Havelock Road, 0606, Singapore 169662. Email:
public administration and development
Public Admin. Dev. 37,4050 (2017)
Published online in Wiley Online Library
( DOI: 10.1002/pad.1781
Copyright © 2017 John Wiley & Sons, Ltd.

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