Abstract The current reform of China’s healthcare system focuses mainly on two dimensions: the promotion of primary healthcare and the improvement of quality of grassroots healthcare (GH). Specifically, the reforms are aimed at meeting the needs of patients in the grassroots areas (PGAs) through the provision of universal healthcare and hierarchical diagnosis and treatment (HDT). In practice, however, disparities in health outcomes between the grassroots and upper levels persist. The gaps between increased health coverage and heightened barriers to accessing quality medical care in the grassroots areas are growing ever larger. What explains this paradox is the limited capability of PGAs to transform healthcare resources into better health‐seeking behaviors and health outcomes, resulting in injustice that is built into the system, which is neither ethical nor fair. Using Amartya Sen’s capability approach (CA) to explore issues of justice in relation to China’s GH system and its performance, we suggest that an institutional structure, one that focuses on promoting universal coverage in the grassroots areas, although necessary, is by itself insufficient in promoting justice and equality in accessing healthcare. Institutional disparities in the healthcare system and China’s household registration policy, constructed according to the rural–urban divide, have also produced injustices. We argue that greater attention should be given to meeting the medical needs of PGAs and empowering them with greater choice, permitting them a higher level of freedom and agency, and thus remedying the problems that we describe. We conclude with policy recommendations aimed at improving justice within the system.
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