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China introduced a health care market about couple of decades back. It is obvious that this induction caused a huge change in the fundamental concept of health care in China because with the introduction of this concept it abolished the existing health care policy that was free universally within the country.

However, it should be noted that the responsibility has been passed to the government with vast amount of financial support. In the process they have introduced a service fee along with other mechanisms of payments. (Rod, 2005, 43)

But the problem with China is that these measures have taken toll of the pre existing equality concept. Under new policy it has been observed that the access to health care has become more asymmetrical and the resources are being used extremely inefficiently. With rising population the socio economic imbalance asks for a better and foresighted solution.

It all started during the early 1980’s with the economic changes in China. (Roy, 1991, 33) New policies were taken whereby it was ascertained that there should be a major demodulations of the country’s health care finance system.

In accordance to this policy the funding in healthcare by the Central government funding was marginalized. At present it has been estimated that the funding is about 1% of the healthcare expenditure. This includes hospital capita grants and subsidy in poorer areas. (Harold, 2005, 331-332)

Moreover it was formulated that that apart from making the country and provincial government responsible it was made sure that the finance were to cover only the unusually low basic salaries and investment in new capital. These two summed up to only about 25% of the hospital expenses. Thus the user had to pay the rest 75% of the expenditure. (Hsiao, 1995, 1047-55)

At the same time the downfall of agricultural co-operatives meant that these organizations were unable to provide the free expense anymore therefore the only option left was to go for services for a fee. On the contrary it was found that the healthcare organizations were given surplus authority in terms of financial independence.

The direct result of this formulation lead to the profit basis upward movement as the healthcare centers were able to generate profit and thus the profit came from the enhanced user fees.

Alongside, a new pricing system was also initiated in the market. Under this policy it was found that there were genuine attempts whereby there would be no inequality in the context of providing health care. But the problem remained that this facility had to be given at a low cost therefore the health centers looked elsewhere for the profit margin and this was found in the form of providing low-grade technological or drug assistance.

Logically enough, this alone was enough reason to lead the whole system into an inefficient formation of system. (Sen, 2001, 98)

The mode of payment options were also diversified in terms of work based insurance, private insurance or self payment but these could not help matters as the miscalculations were already done in the primary segment of the policies and these modes of payment only meant to provide different means but with no further solutions. (Roberts, 2003, 244)

But the best possible model for a developing world could have been the provision of a free health care system which was denied. It was soon found that there enough potential for this market to crash and there were two good reasons for that. This health care market had two significant problems.

The first was the basic unequal nature of the health market in terms of the service that was provided to the poor when compared with that of the insured and the rich. The second and the more important nature was the anomalous structure of pricing lead to a significant amount of inefficiency where it was caused by the use of inadequate resources. In some instances it was also found that the drugs used for the insured were far more costly than those who were not insured with the outcome remaining the same.

(Xung, 1990, 16-7) Moreover, though the World Bank formulated specific technological assistance this system was unable to take advantage of it. (World Bank, 1993, 432) In Jiangxi area it was found that equipments were just face value objects for greater profits. (Zheng, 1995, 64)

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