Designing Effective Healthcare: Matching Policy Tools to Problems in China

Healthcare reforms often result in disappointing failures due to the misguided goals they pursue and the flawed means they employ. The paper proposes that effectiveness—defined as universal access to essential healthcare at a cost affordable to society—is a worthwhile and achievable objective. But to realize effectiveness, reformers need to discard their a priori preferences for markets or governments and instead select a range of policy tools targeting different problems. The paper will argue that a concerted use of regulatory, fiscal, informational and organizational tools shaping the behaviour of healthcare providers, insurers and users can achieve effective healthcare. The paper will highlight the use and misuse as well as non-use of these tools in China to shed light on tools' approach to health policy reforms. Lessons from China are highly relevant to developing countries around the world trying to reform their health sector.