Foreign Affairs, November/December 2011
Although China has made remarkable economic progress over the past few decades, its citizens' health has not improved as much. Since 1980, the country has achieved an average economic growth rate of ten percent and lifted 400-500 million people out of poverty. Yet Chinese official data suggest that average life expectancy in China rose by only about five years between 1981 and 2009, from roughly 68 years to 73 years. (It had increased by almost 33 years between 1949 and 1980.) In countries that had similar life expectancy levels in 1981 but had slower economic growth thereafter --
A look at China's disease burden also reveals a worrisome picture. Like many less developed countries, China still battles a legion of microbial and viral threats, including HIV/AIDS, tuberculosis, viral hepatitis, and rabies. For instance, more than 130 million people in China have the hepatitis B virus -- accounting for about one-third of all HBV carriers in the world. Meanwhile, chronic noncommunicable diseases, which are typical of developed countries, are becoming an even more intractable problem. According to the 2008
More Chinese are suffering from mental illness. Data from the
Despite the seriousness of these issues, in their single-minded pursuit of economic growth, China's leaders have long overlooked public health. After the Maoist health-care system began to collapse in the early 1980s, government spending on health as a share of GDP declined, from about 1.1 percent in 1980 to about 0.8 percent in 2002. (In 2002, U.S. government spending on health accounted for 6.7 percent of GDP.) The introduction of market-oriented reforms in the 1980s further hurt an already debilitated health-care system: by 2003, more than 70 percent of China's population had no health insurance at all. There have been some reforms since, but China's disease burden continues to grow -- threatening the country's health-care system, the economy at large, and even the stability of the regime.
Throughout much of China's history, health care was seen as an individual responsibility, not a right. The attempts by Mao's regime to build a system of state-sponsored health care thus marked an important departure from the historical norm. The early 1950s saw the establishment of health insurance plans for government officials and state workers and the construction of state-owned hospitals and clinics at the county and district levels. With the Great Leap Forward, which began in 1958, the state found another reason to get involved in the health-care sector. In exchange for free and accessible health care, peasants would support agricultural collectivization and the spread of people's communes -- which, in turn, would serve as the institutional and financial foundations for the new health-care regime. By 1959, China had built a three-tiered health-care system in rural areas consisting of county hospitals, commune health-care centers, and village (so-called brigade) clinics. This system delivered not only medical treatment but also preventive care, which played a critical role in implementing the government's strategy to prevent infectious diseases.
After the launch of the Cultural Revolution in 1966 and the mass purge of senior health officials that followed, the
Mao's death and the ensuing economic reform dramatically changed this landscape. The demise of people's communes and the return to household farming in the early 1980s eliminated communal welfare funds, which had been the main source of financing for the Maoist rural health-care system. In 1978, 82 percent of all brigades were tasked with implementing cooperative medical care; by 1983, the figure had fallen to 11 percent. The number of barefoot doctors dropped by about 23 percent during that time. The rural economic reform increased the disposable income of peasants, who could now afford to bypass the village health-care stations or township health-care centers and seek medical care at urban hospitals. This development both undermined the three-tiered referral chain in the countryside and generated strong demand for more and better health care in cities. The system's urban bias had returned.
The rehabilitation of bureaucratic leaders who had been purged during the Cultural Revolution brought demands that selected social groups, particularly government officials, receive more attention in health care. This led to the reemergence in the 1980s of a coalition that Mao had sought to break up in the mid-1960s: city administrators, health bureaucrats, and urban residents with a common interest in qualified urban health care. Thus, when health-care institutions in the countryside started falling apart, rather than take corrective action, the leaders of the
This transition was compounded by a shift in the government's agenda regarding economic development. Public health was relegated to the back burner. Using economic development as the new yardstick of performance, local government officials pursued growth at the expense of public health. As a result, communicable diseases that had been all but eradicated during the Mao era reemerged and spread quickly in the 1980s. The government retreated even further from providing health-care services with the 1994 tax reform, which allowed it to recentralize fiscal power but further decentralize fiscal responsibilities. Government spending as a percentage of total health expenditures dropped precipitously -- from 39 percent in 1986 to 16 percent in 2002 -- leaving individual Chinese to pick up the slack. Local governments had to shoulder almost all state subsidies to health-care institutions: more than 97 percent between 1991 and 2007, according to publications from the
Dwindling government support, in conjunction with market-oriented economic reform, also changed the behavior of health-care providers. They became revenue-making machines. Public hospitals began aggressively selling drugs and providing extra, often high-tech services in order to recoup losses caused by shrinking government support and fuel growth in revenues. Overall health expenditures increased exponentially. And this occurred at a time when there was virtually no social safety net: the 1998
A SICKLY, SLEEPING GIANT
The 2003 SARS debacle jolted the Chinese government, highlighting the importance of balancing economic development and social services. Within nine months of the virus' appearance, a total of 8,422 cases and 916 deaths had been reported worldwide; in China alone (excluding
In the wake of the crisis, the government invested tremendously in its capacity to tackle public health emergencies. By 2008, it had built a multilevel disease-surveillance and disease-reporting system, allowing hospitals (including township health-care centers) to directly report suspected outbreaks to the
Yet major problems remain. Some issues, such as mental illness, have yet to figure high on the government's reform agenda. Of the more than 26 million Chinese who suffer from depression, just ten percent receive any medical treatment. (There are only 20,000 psychiatrists in China, or 1.5 for every 100,000 people -- one-tenth the ratio in
Major urban hospitals are continuing to expand rapidly, and their growing demand for personnel is causing a brain drain from lower-level hospitals and hospitals in the countryside. The resulting shortage of qualified health-care personnel at those lower-level and rural hospitals is undermining the government's efforts to upgrade rural and community-level health-care institutions. Thus far, the government has made no serious effort to reform the administration of public hospitals, which account for nearly 70 percent of all hospitals in China. Instead of separating ownership and operations, officials at the
This in part explains why even though the rate of health-care coverage is now high, the level of benefits is still very low. In 2010, the government gave just
Equally important, China has failed to effectively address some significant risk factors, such as smoking, environmental degradation, unsafe drugs, and tainted food. China signed the
Pollution and other environmental problems, still marginal issues on the government's health-care agenda, are harming people's health as well. A study conducted in 2007 by the
Food- and drug-safety problems are ubiquitous. Since 2006, China has been hit by a slew of scandals involving substandard foods and drugs -- tainted milk, duck eggs, infant formula, and vaccines. According to a series of public opinion surveys published in 2009, respondents ranked corruption, health-care reform, and food and drug safety as their top three concerns. Although the government has passed some measures to tighten regulations on product safety over the past few years, a string of scandals -- over steamed buns dyed with dangerous chemicals, watermelons contaminated with growth accelerators, and pork products tainted with clenbuterol (a steroid used to keep pigs lean) -- has renewed fears recently. Inadequate government oversight certainly is still to blame, but shoddy business ethics is a much bigger problem.
To a visitor who had just returned from China in 1816, Napoleon allegedly said, "China is a sickly, sleeping giant. But when she awakens the world will tremble." The metaphor was echoed a century later when, riven by internal divisions, China had become a pushover to Western powers and was known as the "sick man of
WEAKNESS IN GREAT ONES
Can a rich state with a weak people really be a great power? China's mounting public health challenges do not bode well for sustainable development in the country. An official report predicts that between 2000 and 2025, the number of patients in China will increase by nearly 70 percent, hospitalizations by more than 43 percent, annual outpatient visits by more than 37 percent, and overall medical spending by more than 50 percent. (The population itself is expected to increase by only 15 percent during the same period.) Poor health has already become a major hurdle to further bringing down poverty, and it could even jeopardize the country's achievements to date. A 2004 survey conducted by the
Disease is taking a heavy toll on economic activity. For instance, Chinese health economists have estimated that in 2003, the medical costs of treating clot-induced strokes alone accounted for more than three percent of total health-care expenditures. And according to research conducted by
More generally, in the absence of a well-developed safety net, poor health also suppresses domestic demand. When people have to worry about expensive medical bills, they are less likely to spend money on other things. Between the mid-1990s and 2006, more than 50 percent of total health-care spending was out-of-pocket payments by patients, making medical expenses one of the consumption items that most worry ordinary Chinese. Between 1990 and 2008, health-care spending as a share of consumption expenditure increased from 2 percent to 7 percent for urban residents and from 5 percent to 6.7 percent for rural residents. If consumer demand continues to be depressed this way, China's economic development is unlikely to be sustainable.
The burden of infectious diseases also threatens China's future economic development. Ten years ago,
Especially in rapidly changing societies, such as China, poor health can fuel social agitation. Hardships brought on by economic change are breeding frustration in China, and there are no adequate institutional mechanisms for addressing private grievances. The high costs and inaccessibility of health care lead to frequent disputes between patients and health-care providers, and these could easily devolve into violence. More than 73 percent of China's hospitals reported violent conflicts between patients and health-care workers in 2005, and close to 77 percent of them reported instances in which patients refused to be discharged after treatment or to pay hospital charges. In 2010,
In other words, public health problems have important implications for political stability. Since political legitimacy in China is performance-based, poor health indirectly hurts the regime's standing by jeopardizing the country's economic growth. The state cannot wash its hands of public health issues without running the risk of breaking its implicit contract with society. On the other hand, if it seems incapable of providing adequate services, more citizens might feel marginalized. Even if these people remain loyal to the government, they will have less reason to cooperate with it when it comes to taxes, land development, or population control. With the burden of disease also exacerbating poverty and other stress factors, desperate people might be emboldened to take collective action against the state. As
The Chinese government could avoid these dangers by allowing underserved people to form independent organizations to fight for their health interests. This has happened, for example, in rural communities in southeastern
HU'S YOUR DADDY?
In essence, China's health crisis is a governance crisis. The Chinese state is failing the governance test in the health-care sector in terms of incentives, capacity, and effectiveness. In such a hierarchical, authoritarian system, government officials are accountable to their superiors, not the general public. Any provision of public goods and services results not from an institutionalized negotiation between the government and the governed but from a unilateral grant by the government: it treats health care more like a charity than an entitlement. And with the legitimacy of the government, both national and local, hinging on the delivery of steady economic growth, Chinese officials, especially local ones, have little interest in promoting health care. Their lack of action is reinforced by multiple interest groups. The tobacco industry is resisting stricter controls, for example, and health-care providers and government health departments have sometimes colluded to hijack the reform of public hospitals.
Another problem is the lack of bureaucratic capacity when it comes to health policy. In addition to an ill-defined fiscal system, which has crippled the government's ability to fund public services, policymakers in China cannot effectively monitor the behavior of policy implementers. In democracies, there are citizen groups to keep misbehavior by officials in check. But as long as China refuses to enfranchise the general public to monitor administrative measures, upper-level bureaucratic actors will continue to be foiled in their efforts by their subordinates. This problem is of particular concern in the health-care sector because the
That said, the central government's capacity can be beefed up when needed, especially in times of crisis. During the SARS epidemic, for example, it took less than a week for the Chinese government to build a state-of-the-art hospital with the capacity for 1,200 patients. But because
Nevertheless, the government may still be able to undertake certain politically acceptable measures to prevent the current health crisis from spiraling into a political one. For one thing, it should immediately try to address China's huge disease burden. To that end, the government should adopt a more proactive approach to preventing and controlling noncommunicable chronic diseases, including mental illnesses. Given that population aging exacerbates the burden of chronic diseases, China should abandon its notorious one-child policy, especially in cities. Doing so would help maintain China's future competitiveness by lowering the ratio of people of retirement age to people of working age, and given the country's already low total fertility rate -- around 1.3, far below the replacement level -- the shift in policy would not cause the population boom that Chinese policymakers have long tried to avoid.
The government should also take measures to limit risk factors, including tobacco use, lack of physical activity, alcoholism, and unhealthy diets. Health experts widely consider interventions in these areas to be cost-effective, "best buy" solutions. A recent study published by The Lancet found that the accelerated implementation of the
It is also critical that the Chinese government strengthen the health-care system so that it can effectively deliver affordable health services and essential drugs to those who need them. By significantly increasing the coverage of various insurance programs, the government has already made great strides toward achieving its goal of providing universal access to primary health care by 2020. A recent positive sign is that the reimbursement cap for inpatient expenses was raised to at least 60 percent of an individual's medical bills. With the state's coffers growing and the government's increasingly populist approach to governance, the new leadership, to be anointed at the 18th
To make health care more accessible to and more affordable for the general public, the government has already made immense investments in government-run health-care institutions. But officials at health departments and public hospitals invoke the public nature of government-run health-care institutions to claim more open-ended government funding. This comes at a tremendous cost, both financial and social, and is unlikely to be sustainable in the long run. Worse, it does not help stop institutional collusion between the
Meanwhile, doctors' salaries should be raised to a level that would attract the country's best minds to the profession. Yet doctors' pay and benefits should not come from direct government compensation; they should be funded by independent third-party purchasers, such as HMO-type managed-care organizations. The restrictions imposed by responsible third-party purchasers would give public hospitals an incentive to keep costs down and improve accountability. This will eventually require that China move away from its overreliance on a fee-for-service payment method, which is often associated with escalating health-care costs. It will also require that public hospitals be given more autonomy to decide how to finance and deliver health-care services. Public hospitals should be allowed to reform their personnel management and organizational structures so that they no longer act as adjuncts of government health bureaus and instead become independent corporate actors. Meanwhile,
By no means would such measures solve the fundamental governance problems that cripple China's health-care system. But they would keep China's health crisis in check, bringing better and more affordable care to the Chinese people while keeping the
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