Abstract The relationship between the government and the market has been recognized as crucial to reforming the social and economic system in China. Based on an extensive analysis on the operation mechanism of the primary health system in the United Kingdom and the United States which have been transformed in the opposite direction for the last half century, this paper aims to compare and identify the outcomes of varying relationships between the government and the market in the two countries' primary health systems. Based on the findings, we hope that this paper provides proper policy implications for the national policymakers in China. The analyses on the transformation process of primary health care systems in the UK and the US show that three common experiences have been offered to the reforms on China's health care system. First of all, the function and position of primary health institutions among the health care system are defined by the federal law and regulations. Furthermore, the relationship between primary health institutions and hospitals which is cooperative rather than competitive is also regulated by the federal law. Secondly, the government must coexist with the market. Specifically, the free-market reform or fully planned reform on the primary health care system in the US and UK has been proved impractical. Thirdly, the priority of the relationship between the government and the market should be determined by the present principal contradiction of the country's health care system. Notably, the profit-driven mechanism has been confirmed as the principal contradiction of China's health care system. Moreover, the public-oriented mechanism of the primary health care system has been recognized as the primary objective of China's health care reforms. Regarding the complex relationship between the primary health care system and the social and economic system, the government should play the first role in the primary health care system reforms, while the market also takes its supplementary responsibility. To realize the public-oriented operation of the primary health care system in China, three suggestions are offered as follows. Firstly, the relationship between primary health institutions and hospitals should be transformed from rivals into partners through can celations of basic health care functions of hospitals. Secondly, providing sufficient subsidies is indispensible to ensuring the public-oriented operation of primary health institutions. In addition, inputting sufficient subsidies should be based on the uniform subsidy evidence, methods, surveillance, and the full-cost accountings of primary health institutions. Thirdly, to strive to develop private primary health institutions is crucial for the long-term and stable operations of the primary health system in China. Specifically, increasing private primary health institutions is not only indispensible for the effectiveness of the market in the health care system, but it is also relieving the fiscal burdens on the local governments.
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