The Sick Man of Asia

While China’s economic growth and rapid modernization has left the world in a state of wonder, Huang Yanzhong, a professor at Seton Hall, points out China’s healthcare sector is still far behind the rest of the developed world. From Forbes:

His key damning metric: Between 1981 and 2009, average Chinese life expectancy grew by only five years, while in nations that started the period with a similar statistic (68 years) and had slower economic growth (including South Korea and Malaysia), the average rose by 7-14 years.

[…]Huang notes that “of the more than 26 million Chinese who suffer from depression, just 10% receive any medical treatment.”  This may help to explain the recurrent incidents of bizarre antisocial violence including attacks on children, as well as a suicide rate that the author says is twice that of the U.S.

[…]Hospitals remain a weak link in China’s care strategy, Huang writes. In the mixed economy that is China today, the government continues to dominate the hospital sector and, though private operators keep trying to establish niches, theirs can be a frustrating initiative.

In an opinion piece from the NY Times recent series on healthcare in China, Huang attributes falling consumer spending to health related worries:

The share of China’s consumer spending in G.D.P. actually fell from 45 percent to 35 percent in the last decade. Domestic demand is suppressed in large part because of the absence of a well-developed safety net. When people have to worry about expensive medical bills and their children’s future tuition fees, they are less likely to spend money on other things. In 1998, when nearly 90 percent of rural residents were not covered by any health insurance, spending by farmers actually dropped, the first known such decline since 1978.

Even so, the government did not take any serious steps to address the issue until the global economic crisis made it imperative to stimulate domestic demand. From 2009 to 2011, the government pumped 173 billion renminbi, or about $27 billion, into the health care sector. While the revved-up government support has boosted the health coverage rate to more than 94 percent nationwide, it has not translated into real gains in domestic consumption.

The seemingly universal health coverage in China actually disguises the still extremely low level of benefit that most people receive. Out-of-pocket payment for health services remains higher than 50 percent in most regions of the country.

In another NY Times opinion piece, Harvard School of Public Health lecturer Liu Yuanli echoes Huang’s concerns. While acknowledging how far China’s health coverage has come in recent years, he explains that there is still cause for concern:

In 2009, China announced its ambitious plan to “deepen health care system reforms” and aimed to provide universal health care by 2020. With increased public spending totaling 127 billion renminbi over the 3-year period of 2009 to 2011 on insurance premium subsidies and health care infrastructures at the community levels, China managed to provide about 95 percent of its people some kind of basic insurance coverage.

[…]This is great progress. However, health insurance coverage in China is far from sufficient. To begin with, the benefit package is very limited, with average reimbursement rate of inpatient expenses being as low as 48 percent for urban residents and 44 percent for rural residents. Significant inter-regional inequalities also exist, as insurance plans are run by the local governments.

Moreover, given China’s health challenges — a growing aging population and a rise in more complicated and expensive chronic diseases — it needs to provide not just “nominal coverage,” but more “effective coverage” by increasing the reimbursement rate and covering more cost-effective services for all Chinese.

Another scholar argues that China’s socialist legacy keeps salaries low for Chinese healthcare professionals, resulting in a shortage of doctors:

Another challenge to health care — lack of physicians — has a socialist root. Unlike medical personnel in Western societies, Chinese doctors are not among the highest paid. And most hospitals are run by the government. To address the mounting pressure on health care and improve delivery of care to a larger spectrum of society, a rethinking of how to manage medicine and motivate the next generation of health care providers seems imperative.

For more information and opinion on healthcare in China, see the entire five part NY Times series Is China Facing a Health Care Crisis?

November 2, 2011 11:09 AM
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Categories: Economy, Society