The impact of urban health insurance reform on hospital charges: a case study from two cities in China

During the transition from a centrally planned to a market economy, China's urban health insurance system is being reformed. The control of the rapidly increasing hospital expenses will be a major determinant of the success of the reform. This study aims to examine the impact of the reform on hospital charges by comparing changes between two cities with different insurance systems and identifying determinants for those changes. Data was collected troth six hospitals in two cities, one city implemented an urban health insurance reform, the other did not. Acute appendicitis and normal childbirth were used as tracers for calculating hospital charges. Methods included the retrospective review of medical records, interviews with health policy makers and hospital staff, focus group discussions, and the review of hospital and health insurance documents. The results showed that hospital charges per case of acute appendicitis and childbirth increased 101 and 94%, respectively, in the city without reform, and 41 and 34% in the city with reform, between 1995 and 1999. Health insurance arrangements and average LOS were the major determinants for hospital charges. Drugs and non-pharmacological treatments were the major service categories for charge containment. The combined measures of a single insurer, selective contracts, a new payment system, and use of an essential drug list, is regarded as the key features for an effective hospital charge control, and would appear to be successful measures for hospital expenditure containment within health insurance reform. (C) 2003 Elsevier Ireland Ltd. All rights reserved.