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Fight Between Two Ministries Intensifies

06-04 15:32 Caijing
No matter which ministry wins out, experts say the key to reform should be separating "rowing functions from steering functions."

By staff reporters Tian Peng and Zuo Lin, and intern reporter Hu Meng

The Ministry of Human Resources and Social Security (MOHRSS) and the National Health and Family Planning Commission (NHFPC) are fighting to be the sole competent authority of the new integrated healthcare system, which will combine three programs that cover urban workers, urban residents, and the rural population.

China's health insurance system has been fragmented since its establishment, with medical insurance for urban workers and urban residents managed by the MOHRSS and coverage for the rural population managed by the NHFPC.

As part of a new round of institutional reform and transformation of government functions, the State Council announced it would merge the three insurance programs at the end of June and designate management responsibility to one government department.

The fight for rights to manage to new healthcare program is ostensibly a power struggle between two ministries, which is in essence a clash between two kinds of reform - the MOHRSS is inclined to maintain the social security nature of health insurance; while the health ministry advocates the development of insurance toward health security, emphasizing direct government provision of medical services and public health services, which is essentially a callback to the welfare system of providing direct services.

If responsibility for medical insurance is given to the MOHRSS, health insurance funds will be used in accordance with laws of the market to purchase health care services, creating a more market-oriented system; on the other hand, if management authority is given to the NHFPC, health insurance funds will become "compensation" and "funds for internal use" for medical institutions, thereby forming a more planned economic system, said one expert at a meeting organized by the MOHRSS on March 28.

Zhu Junsheng, director of the Labor and Social Security Department at Capital University of Economics and Business, said that regardless of which ministry gets the right to health care management, "government regulation separate from operation" must be implemented in future health insurance agencies. In other words, health insurance institutions should be separated from administrative bodies and transformed into independent nonprofit corporations. The typical centralized government management model of "government designed, managed, controlled, and supervised" should be replaced with a model featuring the integration of government and the private sector as well as public-private partnerships.

Under the current health insurance fund management structure, the MOHRSS and local subordinate departments are responsible for policy-making and industry regulation, and health insurance agencies are usually public institutions under local MOHRSSs. The lack of effective competition causes inefficiency in management of health insurance funds. Monitoring is also difficult without checks and balances, and the insured person's interests cannot be effectively guaranteed.

In August 2012, the National Audit Office published an audit report on social insurance funds. The report stated that a number of "discipline violations" had been committed in urban employment health insurance fund management under the MOHRSS.

Among them, it was found that health insurance funds had been used for funding agencies and other unit working funds. Funds had also been used to help balance budgets at the county level, purchase equipment and other items, and to manage trusts, etc. The audit also found that 94.72 million yuan in healthcare funds had been divested; and some individuals even misappropriated health insurance funds to lend money to or invest in real estate companies.

The audit also found that a total of 192 million yuan had been divested in urban residents health insurance under the MOHRSS's management and rural population health insurance under the NHFPC's management, though the two programs are much smaller in scale compared to the urban workers program.

"Super-ministry reform is about decentralizing and transferring power to lower levels, as opposed to retaking power. Administrative departments should only be responsible for two tasks: the formulation of public policy and monitoring the implementation of public policy," said Zhu Lijia, professor at the Chinese Academy of Governance. Specific implementation of policies should be performed by relatively independent entities. If policy formulation and implementation fall under the same department, efficiency will be low and it will be difficult to avoid waste, corruption, and other negative effects.

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Full article in Chinese: http://magazine.caijing.com.cn/2013-06-02/112858203.html

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