China's State Council, or the Cabinet, Monday pledged to further upgrade the funding system for the country's grassroots medical institutions.

To ensure low income-earners can afford essential medicines, the government will provide more funding to grassroots medical institutions while improving the funding system.

Over half of China's medical clinics based in rural townships and small urban communities have already been offering essential medicines at low prices since August 2009 due to the ongoing healthcare reform, according to a statement issued after a State Council executive meeting presided over by Premier Wen Jiabao.

However, some medical institutions were short of revenue because of the lowered drug prices, which had affected their operations.

According to the meeting, under the system, the operational expenditure of government-run hospitals and clinics in townships or urban communities should be covered by government subsidies and medical service charges.

Government authorities should allocate enough funds so medical institutes could purchase basic medical facilities and equipment while also arranging subsidies for medical staff.

"Regular channels and ways of funding and subsidizing grassroots medical organizations should be established to ensure their smooth operation and development and the successful implementation of essential medicines system," the statement said.

(Xinhua News Agency December 6, 2010)