BEIJING: China announced Wednesday that it intended to spend $123 billion by 2011 to establish universal health care for the country's 1.3 billion people.
The plan was passed Wednesday at a session of the State Council, the Chinese cabinet. Prime Minister Wen Jiabao presided.
Xinhua, the state news agency, said the authorities would "take measures within three years to provide basic medical security to all Chinese in urban and rural areas, improve the quality of medical services and make medical services more accessible and affordable for ordinary people."
Providing universal health care is seen by some economists as a way to stimulate domestic spending during the current economic downturn. The Chinese have a high savings rate, and one of the reasons usually cited is their worry about possible medical expenses because China lacks a social safety net, including affordable health care.
Bai Zhongen, chairman of the economics department at Tsinghua University's School of Economics and Management in Beijing, said that establishing universal health care with government-financed insurance would increase general consumer spending. He said the school did a survey in 2007 about the effect of rural health insurance on consumer behavior and "found that in government-sponsored health insurance areas, people are spending more."
The government already gives many people a small subsidy to help pay for health care, but more government financing for individual health care would strengthen the economy, Bai said.
Xinhua reported that the plan approved Wednesday would aim to provide some form of medical insurance for 90 percent of the population by 2011. Each person covered by the system would receive an annual subsidy of more than $17 starting in 2010. Medicine would also be covered by the insurance, and the government would begin a system of producing and distributing necessary drugs this year.
The plan also aims to improve health centers in rural and remote areas as well as equalize health services between urban and rural areas, Xinhua reported. Furthermore, the government would begin this year to reform the operations of public hospitals.
"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," Xinhua reported.