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The ministry had earlier promised to hammer out medicare system reforms in 2007.

The health-care meeting decided to transform some public hospitals into community medical service providers that offer basic medical services for community residents and migrant workers.

Minister of Health Gao Qiang said at Monday's meeting that the country will improve its medicare system by extending access to reasonably priced medical care and medical insurance in rural areas and urban communities.

The government will pay salaries for medical staff and will increase investment in medical institutions in rural areas and urban communities, to reduce medical costs borne by patients, said Gao.

He said the government-funded medicare system aims to provide equal medical care for both rural and urban residents, and thus narrow regional differences.

From January to September last year, 140 million farmers benefited from a rural medicare system. Farmers, local and central government chip in 10 yuan per person each year to a medical fund. Farmers who contribute to the scheme can then get a certain proportion of their medical expenses refunded, according to Gao.

He added that the country will also improve its medical insurance system to provide better financial support for patients with serious illnesses.

But he said a unified national medical insurance system is not yet on the horizon due to the country's low level of urbanization, widening wealth gap, and vast contrast in regional development.

According to a report by the Chinese Academy of Social Sciences (CASS), medical costs are the biggest burden for people. The report shows that 11.8 percent of household expenditure goes on health care, higher than on communication and education.

Gao also called for stricter hospital management and a standardized drug use system.