China has promised to improve health care services to all residents by 2020, in response to a public outcry for increased benefits.
Beijing says it will extend basic health care to 90 percent of its population by 2011, and continue the reforms throughout the decade.
The move is part of a decade-long plan to better fund public health care and, the official Xinhua news agency reports, "address criticism that medical services are difficult to access and increasingly unaffordable."
Joseph Cheng is a professor in the Department of Public and Social Administration at City University in Hong Kong. He says the issue is both political and economic.
"The rationale is that if government can provide better medical services, education services, then people will feel more secure and they will be more ready to spend and this will help to maintain sustainable economic growth," Cheng said.
Cheng says Beijing needs to show its legitimacy as a government. When China experienced double-digit growth, people were more subdued. But as the economy slows due to the global economic crisis, Cheng says Beijing must deliver "economic growth-plus."
"The government has the responsibility to build the social security network. But it has to be gradual," Cheng said.
China dismantled its public health care system in the 1980s, amid economic reforms and a trend toward privatization. But the gap between the rich and poor has widened since then, and health care has increasingly become harder for the poor, especially in the countryside, to obtain.
Cheng says about 20 percent of rural residents and about half of urban residents have medical insurance. But most of China's 1.3 billion people have to pay for their health care costs and a serious illness can wipe out a family's savings.
Most Chinese set aside large amounts of savings for education, medical expenses and retirement. And that means domestic consumption remains subdued.
Cheng says the government needs to provide a health care and social security network if it wants people to spend more. Beijing also needs to fund public health providers, such as pharmaceutical companies, clinics and hospitals.
Cheng says due to low government funding, doctors at state-run hospitals are forced to generate income by prescribing over-priced, sometimes unnecessary drugs and treatment.
In the first three years, China plans to spend $124 billion toward providing universal health care and improving public health care facilities.