Purchasing health care in China: competing or non-competing third-party purchasers?

China's government has decided to increase government funding by 1-1.5% of the Gross Domestic Products in the health care sector. However, it is still a question how to turn the new funding into efficient health care.

To help to answer this question we analyze three prototype models of organizing the health care system that may be relevant for China, namely the "Government provision model", the "regulated market with non-competing third-party purchasers", and the "regulated market with competing third-party purchasers". The pre- and post-reform English health care system and the present Dutch health care system are used as examples of the three models. During the last 20 years these countries had, just as China, major health care reforms from a national centrally planned system to a market-based system. Based on the experiences in these countries we analyze the advantages and disadvantages of these three prototype models and discuss their relevance for China.

We conclude that the creation of prudent third-party purchasers, who have the incentive and ability to act on behalf of individual consumers, is a critical success factor, whatever model China chooses to implement.