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The government's new medicare reform plan should be improved, says a commentary in Southern Metropolis Daily. An excerpt follows:

In the 2007 National Health Work Meeting, Minister of Health Gao Qiang said the government will play a major role in establishing a basic health care system covering urban and rural residents, a national basic drug system, and a multi-layer medical insurance system. These form the framework of the new medicare reforms.

The good aspect is that the future medicare system will cover everyone. The medicare system created under the planned economy only covered government and State-owned enterprise employees, which was definitely unfair. The old welfare system has enlarged the income gap among different social groups. The new system will cover all people, which is a correct step forward.

But there are many provisions that are open to question.

First, will the government provide free public health service to all? That may lead to a waste of resources by high-income groups.

Second, the ministry hopes that all these basic services will be provided by government institutions, with the public only paying basic costs. The government is to shoulder all the expenses of these public health organizations.

This new system is like going back to the old one of the planned economy except that it will cover more people. Then the lessens of the old days should be learned: Low efficiency wasted resources and the government finally found it difficult to shoulder the operational costs.

Of course, as the ministry has planned, the new system will only provide basic medical services while the risks of serious diseases will be shouldered by the multi-layered medical insurance system. This will surely help control government spending. But then how big a role can the government-funded basic medicare system play?

(China Daily January 12, 2007)