The government will phase out the approach of drug sales sustaining the health service as part of healthcare reform, a top official said yesterday.

The high cost of medicines has long been blamed for making medical services unaffordable for common people and triggered mounting complaints from the public.

"The reform will try to resolve the problem of relying on profits from selling drugs to support medical institutions," Minister of Health Chen Zhu told a press conference organized by the State Council Information Office.

It is the first time the top health official has talked about the blueprint guiding China's health reform.

The State Council, the Cabinet, has set up a team of representatives from 16 ministries to hammer out every detail of the blueprint, whose release date was not announced by Chen.

So far, eight proposals from domestic and international research and health organizations have been submitted to the authorities.

The government will increase funding to the healthcare sector and work out a proper pricing mechanism which better reflects the value of medical services, Chen said.

Drug costs currently make up for 44 percent of total medical expenditure, far higher than the global average of no more than 20 percent. Worse, hospitals rely heavily on user fees, which threaten to turn patients into cash cows, experts warn.

Chen also revealed that the health authorities are working to vaccinate people against 15 epidemics, up from seven now.

"National immunization projects will cover most of the epidemics in the world," Chen said.

Rural medical insurance

Regarding the rural cooperative medical insurance system - initiated in 2003 to provide basic medical care and so far covering nearly 83 percent of the rural population or 720 million - Chen forecast universal coverage by next year.

Under the program, each participant pays 10 yuan (US$1.3) a year, while the central, provincial, municipal and county governments provide another 40 yuan (US$5.2) to the fund.

When rural residents fall seriously ill, a proportion of hospital expenses is covered from the pooled fund.

The rate of reimbursement varies according to illness and the actual cost of medical expenses incurred. But many rural residents still complain that the percentage of medical costs covered by the insurance scheme is inadequate.

At present, the reimbursement rate for hospitalization is on average 20 percent nationwide, official statistics suggest.

"As a new policy, the benefit level, we have to admit, is still low. Gradually, with more funding support from the government, the scheme will expand to cover outpatient costs," Chen said.

(China Daily September 6, 2007)