China's main economic planning body, the National Development and Reform Commission, outlined the plans on its website, saying it wanted to launch a public debate and inviting people to comment by November 14.
The project aims to "create a basic healthcare system covering both urban and rural citizens, offering the population services that are safe, efficient, convenient and affordable," the Commission's website said.
The plan calls for greater health funding from local and national government and stricter price controls on drugs in public hospitals.
Until the 1980s, most Chinese citizens had access to cheap healthcare, but the system was broken up in the 1980s under the country's economic reform policies.
That led to an increase in the cost of healthcare and drugs, and to an increasing divide in access to treatment.
Recent cases of patients dying because they could not afford treatment have highlighted the inadequacies of the current system, and provoked strong criticism.