China Spends $124 Billion to Improve Health Care System

China's Cabinet said Wednesday the country will spend $124 billion on improving the health care system over the next three years, including a makeover of public hospitals often criticized for their high fees, lack of access and poor doctor services.

The goals include increasing participation in the basic medical insurance system to 90 percent for both urban and rural Chinese, the State Council said in a statement. It did not give a figure for the current participation rate.

The move can be seen as another way to nudge Chinese into spending more to help boost the country's slowing economy. With a health system that requires payment before treatment and with many citizens without health insurance, most people remain frugal to save money for medical care.

The government once paid for more than 90 percent of medical expenses but cut back in the early 1990s. Now, it covers only about 17 percent, according to state media.

In a November report, the U.N. Development Program said China should move quickly to provide rural areas with better health services to sustain the country's economic growth during the global slowdown. The agency said construction of a basic social security system, including health insurance, is still focused on urban areas.

The State Council said Wednesday that between now and 2011, China must improve its basic medical insurance system, the service level of hospitals and reduce the cost of health care for the public.

The council said reforms will be rolled out in some public hospitals as part of a three-year pilot program aimed at changing the way hospitals make profits, strengthening inspections of facilities and improving services.

The statement did not provide details, but Health Minister Chen Zhu said earlier this month that the government planned to cut hospitals' involvement with drug sales, which he said would help lower the price for medicines and physical checkup fees.

Public hospitals currently rely on profits from medical services and drug prescriptions to defray their operating expenses, which health officials say creates a heavy burden on patients and a waste of medical resources.