Finance Disbursement Of Health Care Reform:Based On The Perspective Of Health Human Capital Investment

Given that the Chinese economy is now undertaking a deep transformation, traditional factor inputs have not been capable of pushing forward the economic growth as much as they used to. The sources of a new economy nowadays stem more from technology innovations and increased product value-added and higher labor productivity. These improvements all rely on the accumulation and development of human capitals, which consists of factors including knowledge, skills, mobility, working experiences and health. Health plays an important role in human capital and is the basis of human survival and development. A human individual inherits her initial health condition through genes passed by her parents, which depreciates in an inverted U shape form as her age increases, however health can also be well renewed and retained by increasing one's investment in it. This kind of investment in its monetrary form is equivalent to increasing various expenditures on health human capital, including expenditures on nutrition, health care and medical services. Among them, nutrition expenditure, health care expenditure are both consumption of private products, while public health and medical services are public products, which should be provided by the government, and the government bears the responsibility of taking care of the overall health condition of its citizens or even all residents in the country. Therefore, it is of essential necessity that we take a focus on the government's medical and health expenditure as a form health human capital investment in related research.The government plays its role in medical and health area mainly in the form of its fiscal expenditure on relevant sectors. Fiscal expenditures on medical and health care can provide basic guarantee for and efficiently increase the health level of its citizens by supporting and guiding the provision of public health and medical services. As a result it increases the stock and increment of health human capital, and therefore it also induces a positive promoting effect on the economic growth, establishing a transmitting mechanism of "government medical and health expenditure--citizen's basic health guaranteed--health human capital accumulation-economic growth".More specifically, if we take fiscal expenditure on medical and health expenditure as the health human capital investment for every individual and all residents as a whole, the result of such an investment will be accumulated in the form of increases in health condition at the individual and national level, and will bring relevant economic benefits for all individuals and the society itself. On the contrary, if there is a lack of sufficient fiscal expenditures on medical and health care, it will probably result in the stagnating or even the depreciation of the overall health development of its people in a nation. The decrease in civil health could bring down the national income and therefore an increase in the poverty population. Furthermore, the decrease in residents'income may make consumers worry about their future income and therefore restricts their consumption behavior, and hence induces a slowdown of the economy and even recession. It may further boosts risks in public domain systematically, creating a vicious cycle. Based on this perspective, the government's fiscal expenditure on medical and health care as an investment of health human capital is not only needed for the economic growth, but also is the fundamental source for sustainable economic, social and individual development.There is a conception of "thinking highly of treatments, playing down the prevention" prevailing in the development of China's medical and health causes, which results in a rapid increase in medical and health costs such that all the three funding sources, i.e., the government, society and individuals, bear too much burdens on their shoulders. This scenario is not good for decreasing treatment expenditures by "preventing the not happening", and further more it lowers the overall health level. While researches nowadays mainly focus on increasing fiscal expenditure on medical and health expenditures, there are only few theoretical studies taking relevant fiscal expenditure as a form of health human capital investment. Especially, empirical studies on the effect of medical and health expenditures on economic growth are quite limited.Therefore, the presenting research tries to focus on the following three aspects: 1. From the view of health human capital, providing a new research perspective for solving the problem of the insufficiency of fiscal expenditure on medical and health care; 2. With empirical methods, investigating the effect of economic and social factors on fiscal expenditure on medical and health care so that theoretical and empirical support could be provided to the government for expending fiscal expenditures on health; 3. Given lessons from foreign countries as well as China's own condition, investigating how to adjust its fiscal expenditures on medical and health care sectors and therefore promote reforms in the institution of the whole medical and health system.This research consists of three major innovations:1. New research perspectives. The research presented takes health care fiscal expenditure as an investment in human capital production and reproduction. Human capital investment has significant positive externalities, therefore there inherently has flaws in market mechanism, the government must take steps to solve the problem of insufficient investment in human capital. In essence, health inputs have two properties:consumption and investment. More specifically, the consumption of health and the investment in production and reproduction of human capital. In order to maintain competitive advantages in international competition nowadays and in the future, the government should increase investment in human capital, and focus on the expenditure of health care, and adjust its fiscal expenditure in accord to the reform objective established:"hold up to the basic needs, strengthen the grass-level units, build up the mechanism".2. Rethinking the reform of fiscal expenditure on medical and health care from a perspective of risks. In its first sense, in a society of risks, the risk of one's health is not only individual but also has public properites. The relationship between individual and public responsibility is a fundermental aspect of the fiscal reform of medical and health care. Secondly, while fiscal expenditure on medical and health care could help reduce part of public risks, it also increases fiscal risks, which itself is also part of the public risks. Therefore it is necessary that we handle the relationship well between the fiscal and public risks. Thirdly, the transition and spreading of health risks is not linear, not point to point, instead it has a net like form and has hight diffusing velocity. Public health policy should match the net like properites of risks, and try to control risks focusing on the systemetic risks, key transition nodes and the network structure.3. Under the backgourd that national policies now encourage social capitals paticipate in the development of public services, this research suggest that the PSPP (Public Social Private Partnership) model should be taken to help formalize the rights and responsibilities of social capitals in providing public medical and health products. The core of this new practical model relies on the fact that instead of profit maximization, private partners take the goal of the society as their main goal. Revenues coming out of the cooperation in the model are mainly reinvested in the related social causes, while only the rest proportion may be shared by shareholders in form of dividends. In accord with its duties bared, when taking part in providing health care products and services, private capitals also enjoys corresponding rights including independent operation, tax-free, priority in buying out, risk compensation and so on.The PSPP model could balance the public and private aspects well, lay validity foundation of the government's support on using social capitals, and promote the coordination the "two hands" from both government and market.