Red hue to China's health care

By Zhou Jiangong

SHANGHAI - The Chinese government has announced plans to reform the country's health-care system so that virtually every citizen could be covered by medical insurance by 2010. The new policy reverses a 1994 reform that scrapped the socialist system and made medical care unaffordable for the majority of the population.

While China boasts that it spends only 2% of the total world health-care expenses to support a system that cares for 22% of



the world's population, the flip side of the story is that the government has underfunded its health-care system for more than 10 years.

According to a survey by the World Health Organization (WHO) in 2000, among its 191 member countries, China's health-care system was ranked near the bottom in terms of the budget's percentage of the country's fast-growing gross domestic product.

And some parts of the system are so corrupt that the chief of the State Food and Drug Administration, Zheng Xiaoyu, was sentenced to death this year for receiving bribes worth more than 6 million yuan (US790,000).

For more than a decade, the allocation for health care, as a share in the total government budget, has been shrinking, and the individual Chinese citizen's health-care expenses have been expanding. According to the WHO, two-thirds of China's residents have to pay for all their health services, an amount that accounts for 56% of the country's total health-care expenditure.

The inequality of the health-care system is also alarming. According to a survey by the Ministry of Health in 2003, nearly 50% of the people polled said they never consulted physicians simply because they were not able to afford it. But 80% of the government's health-care budget is used for China's 8.5 million government officials. Beginning in 2003, the government tried to implement "cooperative medical insurance" for the hundreds of millions of rural residents but, according to the World Bank in 2005, fewer than 60% of China's urban residents had medical insurance and only about 20% of its rural citizens were covered as of 2003.

The problem is so bad that some senior officials in Beijing now openly admit that the so-called health care reform of 1994 has failed. Because so many Chinese in both urban and rural areas have fallen into poverty during the past decade because they have spent nearly all their savings for medical expenses, the government has realized that it is an embarrassing "inharmonious" blemish on its ongoing campaign for a "harmonious society".

As such, Premier Wen Jiabao's announcement of the new national health-insurance program comes just prior to the autumn meeting of the 17th National Congress of the Chinese Communist Party.

China's health-care reform has been debated for two years. An inter-ministerial agency, led by the Vice Premier Wu Yi, is in charge of the complex reform project. The agency is tapping into international experiences and academic expertise by soliciting policy blueprints from eight institutions, including the World Bank, Peking University and government thank-tanks.

Currently, only employed urban residents are allowed to participate in the national health-insurance program, but children, the unemployed and millions of migrant workers have no health insurance.

The central government now has designated 79 cities, including all provincial capitals, to pilot the new reform beginning next month. Plans call for the new health policy to be extended to the entire country by 2010. The ultimate goal of the new reform is to have virtually every citizen covered by a basic medical-insurance policy.

The biggest question is where Beijing will find the money and whether regional governments will be willing to allocate sufficient funds to support the program. While a basic insurance policy is planned for all residents, the quality of medical care will also undoubtedly vary widely among the provinces. The relatively rich coastal cities and provinces will provide better health care and insurance than the poorer inland and western provinces and autonomous regions.

Zhou Jiangong is a Shanghai-based analyst on China's economic, political and foreign affairs.

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