The Chinese government has promised that all 1.3 billion Chinese will have access to basic health care as it moves to calm growing discontent at the gap between rich and poor.
By Malcolm Moore in Shanghai
Last Updated: 11:31AM GMT 22 Jan 2009
The long-awaited reform plan was agreed by China's State Council, or cabinet, on Wednesday. Wen Jiabao, the prime minister, who visits the UK next week, presided.
According to state media, the authorities will spend 850 billion yuan (£85 billion) over the next three years to "make medical services more accessible and affordable for ordinary people".
"China will take measures to provide basic medical security to all Chinese in urban and rural areas and to improve the quality of medical services," said Xinhua, the state news agency.
The government is aiming to cover 90pc of the population by 2011, with each person allotted 120 yuan for health care costs from 2010.
A catalogue of widely-used drugs will be produced and distributed under government control starting from later this year. A new social insurance agency will be established to pay for medicines and treatment. Finally, a pilot programme is in the pipeline to reform the management and operations of public hospitals.
Xinhua said there was "growing public concern" at soaring medical bills, a lack of access to decent services and low medical insurance coverage.
Free health care was abolished in China in 1994, a decision which made decent medical care unaffordable for the majority of the population at a stroke.
Currently, China has 22 per cent of the world's population, but only spends two per cent of the global health care bill.
There has been a decade of underfunding, and the World Health Organisation said China is near the bottom of a 191-country table in terms of how much of its public spending went on health care. The WHO said two-thirds of China's residents currently have to pay for all their health services.
As a result, the majority of Chinese rarely visit a doctor or seek hospital treatment. The ministry of Health said in 2003 that half of all the people it surveyed had never asked for medical treatment.
Presently, roughly two-thirds of China's city dwellers and only one-fifth of its 800m rural residents have medical insurance. Meanwhile, around 177 million are now suffering from high blood pressure as diets and working practices change.
Providing universal health care is seen by many economists as a way to stimulate the economy, since Chinese families will feel less need to save their money and may increase their spending.
One of the most important steps towards the ultimately goal of stimulating domestic consumption. Lack of universal health care is partially responsible for china's high savings rate. Just one piece of the puzzle. I am glad it's making progress.
a step in the right direction, also all exports should be hit with an environmental tax to off seet the damage to the environment that isn't being calculated into the equation when selling abroad, setting out a way to truely enforce standards and policies through out the country and eliminating corruption should be a high priority as it causes most of the problems you see in china today.. it's not that there isn't policy in place or laws to be followed, it's happens that alot of low level officials get corrupted thus as orders come from the top it doesn't reach ground level when reaching the people, there should be setup a very strict monitoring system with multiple backup systems to safeguard itself from corruption with counter ops monitoring in the same way the intelligence ( CIA, KGB) community , the punishment should be harsh but most importantly it needs to be fair and accurate based on solid evidence based on the rule of law and judiciary that needs to be independent from the communist party to have true legitimacy
Well that's good...make sure you train the doctors and nurses up to western standards...that way their retraining costs are minimal when they come to western capitalist nations for higher paying jobs.
"Patriotism is your conviction that this country is superior to all other countries because you were born in it."
George Bernard Shaw
"What does that have anything to do with the topic? "
Well you will have train someone to, as the article says, "to "make medical services more accessible and affordable for ordinary people"." Or you were thinking it was going to be done by machines? Some of those will leave China, through a variety of means, for the promise of higher pay/better life, no?
"Patriotism is your conviction that this country is superior to all other countries because you were born in it."
George Bernard Shaw
hum, of course.....that's like saying China needs to increase manufacuring so training engineers and skilled workers will happen. it goes without saying ,right? I guess you forgot to mention nurses and medical administrative stuffs...
"hum, of course.....that's like saying China needs to increase manufacuring so training engineers and skilled workers will happen."
Yes and rest assured that some of them will end up in other countries...the world as a whole needs workers to be more productive. I guarantee you, somewhere, there is a young Chinese engineer working in a foreign nation, who has fell in love with the country and wants to move there permanently...just as I am sure that the nationality of the engineer is for the most part irrelevant.
" it goes without saying ,right? I guess you forgot to mention nurses and medical administrative stuffs..."
I did mention nurses...they are the backbone of most successful medical systems.
"Patriotism is your conviction that this country is superior to all other countries because you were born in it."
George Bernard Shaw
"lol, although health care should progress this is one of the worst options for China. "
Why so? A modern medical system requires immense amounts of support industries and the jobs in those support industries can't be moved to lower labour jurisdictions as easily as let's say manufacturing.
"Patriotism is your conviction that this country is superior to all other countries because you were born in it."
George Bernard Shaw
The larger the population the worse the "universal" health care is. There are several reasons which I wont go into, but a private system that works around each region is a more suitable option.
"The larger the population the worse the "universal" health care is."
You have to define what you mean by worse, money spent versus what?
"There are several reasons which I wont go into, but a private system that works around each region is a more suitable option."
If the regional systems are funded from the central "wallet" it's the same, no? Also I am not convinced that a wholly private system works, the US spends more on "administration" than any other nation yet one could argue that it receives the poor results.
"Patriotism is your conviction that this country is superior to all other countries because you were born in it."
George Bernard Shaw
"$85 Billion over 3 years for 1.3 billion Chinese?"
That's 85 billion pounds, at most likely nominal exchange rates, if you use a PPP exchange rate you can probably triple the amount of in terms of real value. So what's $250 Billion mean to today's global health market? In 2007 the US spent $2.26 trillion, so that's like adding a tenth of the US health care to the global market in like one year (or three, the article mentioned something)...I can't imagine a corporation in the business not happy with an increase in addressable market. And happy businesses are needed to stave off recessions.
"Patriotism is your conviction that this country is superior to all other countries because you were born in it."
George Bernard Shaw
coalde, scanners etc will be bought with hard currency from abroad and the cost will be the same for China as for a western country.
Don't forget that EVERYTHING in the health sector is expensive.
Mobile airpower
"The enemy dies relaxed," observed a Lockheed Martin manager.
US system is better because far less money gets wasted, especially when you pay your insurance. Nationalized healthcare is only good for a small population living in a developed environment otherwise you will pay 2-3x for the same level of care. Today the US government still has a lot to say in how the healthcare is distributed, what they should do is enact laissez fair to all the insurance companies.
"US system is better because far less money gets wasted, especially when you pay your insurance. Nationalized healthcare is only good for a small population living in a developed environment otherwise you will pay 2-3x for the same level of care. Today the US government still has a lot to say in how the healthcare is distributed, what they should do is enact laissez fair to all the insurance companies. "
According to the article, "The rural population in China was recorded at 64 percent of the total 1.3 billion in 2001 and 74 percent in 1990. ", if my math serves me correctly it will take about 5 years for China to have majority urban dwellers and the article was written over a year ago.
"Patriotism is your conviction that this country is superior to all other countries because you were born in it."
George Bernard Shaw
Stop worry about expensive scanners.. if anything China got way too much money for their own good right now... with 3 trillion dollar foreign reserv and every weakening dollar against RMB + 5 billion trade deficit everyday to USA alone.. i think china can afford a couple of scanners... in addition, don't underestimate the Chinese medical equipment.. Actually, Swedish dentists are importing Chinese made scanners right now...
I dont think most ppl here understand the chinese economics enough.. the true stimulans package of this move is not hostpital staff or doctors salaries.. instead:
right now Chinese people save way too much money.. because there are literally zero saftey if one gets sick.. as the result no one dares to spend their money... By creating a universal medcare Chinese mentality will be more Westernized and spend more.. as people has less to worry about incase of getting sick... That in turn is the true power of this move...
There are currently 1,4 billion people in China ... and Chinese people SAVE ALOT.. imagine everyone suddenly have nothing to fear.. and start spending their savings?
__________________________________________
No Matter Who Wins, our troops are always in Good Hands!
Large urban population does not equate to being developed. The big difference between private vs public healthcare is how much money is lost, the larger the population the more money is lost as a percent of the overall budget.
As for the scanners, I would bet they were developed with Western RD coming from private companies
l1o1l1o1l1o1l, this is brand new and someone already is saying it won't be good....l1o1l1o1 Of course, it won't be as good as any of the other more mature health care systems out there. Give it some time before you call it a lemon.
BTW, as for scanners, I doubt Russia makes any nice scanners either so what's your beef, Filin?
Yes, in fact during my investment career here in China. There are a few Chinese companies that produce CT-scanners and even Gamma Knife. There is a nasdaq-listed Chinese company that produces these products with huge profit margins. You'd be surprised how vibrant the Chinese private enterprises community is. My job is to invest in these companies so I see it first hand.
The next big one is public education to high school in the rural area. Currently there are fees and that besides health is a huge burden on families and force them to save.
i sawed many chinegook babies cryign due to bad tainteds milk of chinegooks kunt fu king karaate chopstick judoka flying kim chi ninja artists
I hopeds they will receiving much health care its good move by our korean partners of friendship
sayonara
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I am old Christiankiller
Sorry for offensive to our good religion christian brothers
I am not hating christians
It's not like all those savings will be injected in the economy. Anyway, once those savings are spend you're back at square one.
You can't make "all" of anything. The real world, especially economics, works off of percentages. Policies like health care and public education are created to change the level of savings so cash currently locked up in mattresses and bank accounts can be put into consumption.
"Large urban population does not equate to being developed. The big difference between private vs public healthcare is how much money is lost, the larger the population the more money is lost as a percent of the overall budget. "
Actually more of your private health insurance premium goes to ensuring no one gets treated (administration) than the administration overhead of national health service...maybe your thinking of the "special" administration overhead in Russia...cough, organized crime, cough.
We have a couple of estimates of how high administrative costs are - i.e., expenses incurred by the health care system to do things other than to provide health care services. One prominent study that appeared in the New England Journal of Medicine in 2003 estimated that the cost of administering the USs health care system was about $300bn in 1999. A more recent study in the International Journal of Health Services found that in 2003, administration costs in the US health care system ate up about $400bn, or about 25% of total health care spending.
By comparison, national health care systems incur administrative costs of a few percent of total health expenditures: according to the NEJM study Canada's national health insurance system spends just 1.3% on overhead, and the US's Medicare and Medicaid programs have administrative costs of between 2-5%.
In addition to being large in an absolute sense, administrative costs have been rising faster than other health care costs in recent years. The Medicare and Medicaid Actuary's Office estimates that the direct administrative costs of private health insurance plans (including profits) rose from about $40bn in the late 1990s to about $95bn in 2004. The following chart shows these costs represented in dollar terms and as a percent of total private health insurance payments.
Note that these estimates only measure the direct costs paid by the insurance plans themselves, however, and exclude the bureaucratic burdens faced by doctors, hospitals, etc. to deal with insurance paperwork. The NEJM study estimated that hospitals and doctors devote roughly one-fourth of their resources to dealing with insurance paperwork (no time series of these costs exists, unfortunately). Indirect administration costs in the US health care system are roughly four times the direct administrative expenses incurred by the insurance companies themselves.
All in all, the IJHS study concluded that the US health care system could probably eliminate 75% of its administrative costs by switching to a single-payer system (see this document for one good example of what such a system might look like). The excessive bureaucratic burden (i.e. over what it could have with a single-payer system) of the US's health care system seems to be in the neighborhood of $300bn per year. That's some real money. And it's growing, not shrinking.
What Explains the Excessive Expenses?
Economic theory provides several fairly clear and convincing explanations for why private health insurance plans spend so much money on administration, including economies of scale (or lack thereof), burden-shifting, and selection.
First of all, private health insurance plans are far smaller than national health insurance plans, and thus have much less ability to reap economies of scale. For the same reason, the relative administrative costs of the Medicare system have steadily been falling over time.
Secondly, private health insurance plans have a strong financial incentive to try to shift as much of the costs of each insurance claim on to individuals, providers, and other health insurance providers. It therefore makes sense for them to devote substantial resources to the task of trying to avoid paying claims that are brought to them. One example of this effect is how insurance companies go over claims with a fine-toothed comb to try to deny them whenever possible. A national government-run insurance plan would have no such incentive, since there would be no one to try to shift the burden to.
Finally, private plans also have a strong financial incentive to try to exclude high-cost individuals from their plans. It therefore makes sense for them to devote a lot of resources toward vetting potential enrollees and screening out those that they guess will have large claims. Again, a national insurance plan has no such incentive, because by definition it is set up to insure everyone.
These are just some of the ways in which the market for health care is rife with what economists call "market imperfections" and "market failures". And as every economist learns in their first year in graduate school, when there are market failures and imperfections, the private market outcome is not likely to be the most efficient outcome, and government intervention (or even provision of the good) will probably produce far better results. Unfortunately, the evidence from the US's health care system seems to suggest that economic theory is exactly right in this case.
"Patriotism is your conviction that this country is superior to all other countries because you were born in it."
George Bernard Shaw
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