Improving equity in health care financing in China during the progression towards Universal Health Coverage

Background: China is reforming the way it finances health care as it moves towards Universal Health Coverage (UHC) after the failure of market-oriented mechanisms for health care. Improving financing equity is a major policy goal of health care system during the progression towards universal coverage. Methods: We used progressivity analysis and dominance test to evaluate the financing channels of general taxation, pubic health insurance, and out-of-pocket (OOP) payments. In 2012 a survey of 8854 individuals in 3008 households recorded the socioeconomic and demographic status, and health care payments of those households. Results: The overall Kakwani index (KI) of China's health care financing system is 0.0444. For general tax KI was -0.0241 (95% confidence interval (CI): -0.0315 to -0.0166). The indices for public health schemes (Urban Employee Basic Medical Insurance, Urban Resident's Basic Medical Insurance, New Rural Cooperative Medical Scheme) were respectively 0.1301 (95% CI: 0.1008 to 0.1594), -0.1737 (95% CI: -0.2166 to -0.1308), and -0.5598 (95% CI: -0.5830 to -0.5365); and for OOP payments KI was 0.0896 (95%CI: 0.0345 to 0.1447). OOP payments are still the dominant part of China's health care finance system. Conclusion: China's health care financing system is not really equitable. Reducing the proportion of indirect taxes would considerably improve health care financing equity. The flat-rate contribution mechanism is not recommended for use in public health insurance schemes, and more attention should be given to optimizing benefit packages during China's progression towards UHC.