China aims to expand its medical insurance to cover all citizens and upgrade services through its new healthcare reform package, Health minister Chen Zhu said at the ongoing CPPCC session.

The government already put the 850-billion-yuan ($124 billion) plans into action from January 21 following public criticism over soaring medical fees, a lack of affordable services, poor doctor-patient relationships and low insurance coverage.

"We will improve medical insurance systems and services to ensure both equality and efficiency when it comes to healthcare," the minister said.

The package lists public health, rural areas, urban community services and basic medical insurance as the four key areas for government investment. It also promises to tighten control on medical fees in public hospitals, with a "basic medicine system" set up to include a catalog of the most prescribed medicines to ease concerns of rising drug costs.

Chen admitted there was pressure to make the plan happen, with cooperation vital, especially in areas such as attempts to eliminate the chronic prescribe-for-pay phenomenon.

But he assured new cooperative medical systems in rural areas, expansions to urban community health services and public health will be top priorities for government investment.

In recent years, the government has promoted a rural system guided and supported by it but with volunteers working on its administration, as well as also financed by individuals and collectives. The new system focuses on serious disease planning and mutual aid and fraternity between rural residents.

A Ministry of Health report last week showed about 1 billion Chinese - from a population of 1.3 billion - were covered by some sort of health insurance by the end of 2008, including 814 million rural residents.

In an attempt to improve the country's medical services, especially those at the grassroots level, China will build another 5,000 clinics at the township level, 2,000 hospitals at the county level and 2,400 urban community clinics in three years, the minister said.

At the same time, China will also increase spending on public health to enhance prevention and education.

Statistics from the Ministry of Health show China's financial costs in healthcare reached 2.36 trillion yuan in 2005, two-thirds of which were related to cases involving chronic diseases.