Medicare or Medican't ?

A sense of déjà vu came over me as I read two articles from the Economist, one published October 11, 2007 and the other February 21, 2008, that dealt with the mounting problems of China’s health care system. While I read through both articles it seemed all too familiar- what was the source of this familiarity? Then it struck me- this is a duplicate of the US dilemma! The question for both countries is how to provide health care for its citizens and how large a role should government play in that solution?

As China’s economy has shifted into overdrive and the population of urban areas continues to swell, countryside peasants who served as Mao’s poster children for reform under the CCP still lag significantly behind their urban counterparts in both income and benefits. A nostalgia permeates the countryside for the “barefoot doctors” of the 1970’s Cultural Revolution that provided for the basic health and hygiene of the rural population. These paramedical personnel were generally given between six to eighteen months of training, oftentimes by doctors “sent down” to the countryside. It wasn’t state of the art healthcare, but it was free and somewhat reliable for basic health needs. The October 2007 article, “Missing the Barefoot Doctors” (http://www.economist.com/world/asia/displaystory.cfm?story_id=9944734 ) finds that although grain production in rural areas has risen three years consecutively and incomes have shot up by 6%, the total agricultural contribution to the GDP has taken a nosedive. Once 25% of the GDP in the early 90’s, it has dipped to 12% for the remainder of the decade. Peasants still find themselves on the periphery of the economic boom and squeezed out by aid targeted to urban areas, particularly healthcare and education. In spite of increased incomes, some peasants have moved from poverty to dire poverty, usually the result of mounting medical expenses. While the central government allocated 8-11% of total expenditures on agricultural and rural welfare in the 90’s, currently those allocations have plummeted to 7-8%. Peasants and laid off workers of SOE programs that enjoyed healthcare benefits have found it necessary to move to the cities to survive. Even in the cities this underclass is shut out. Labor contract laws passed this year now mandate that urban employers provide coverage for migrant workers. However, hiring of migrants is most often an informal affair, which makes it easy for employers to circumvent the law. I’m experiencing that déjà vu feeling again- employers and migrants circumventing laws? Hmmm….

China touted a medical insurance scheme for countryside residents in 2003 in an attempt to address the growing problem of medical care. The voluntary plan calls for each peasant to contribute 15 yuan, with the central and provincial governments chipping in 10 yuan each respectively for annual healthcare coverage. Voluntary yes, but some have contended their contributions were withheld from their government subsidies for grain production. The government is still reluctant to loosen the reins too much. Under this plan, the insured could expect reimbursement of 40-60% of expenses, but only once the bill was paid in full. Therein lies the rub for many peasants. Rich peasants benefit from the plan, but for many peasants up front payment is a virtual impossibility. Additionally, medical care can only be accessed in one’s own locality, thereby excluding the millions who have migrated to the cities The government’s move to decentralization and delegation of decision making to the local level has created its own problems. Doctors and healthcare workers are prone to ordering expensive drugs and unnecessary procedures for patients in order to bring in revenue for covering salaries. Shortfalls from provincial funding have put the burden on healthcare facilities to make up the difference. Some economists have suggested a reduction in size of bloated local bureaucracies and greater aid contributions from higher levels of government.

China is aware that it must take action if it is to prevent an economic unraveling that could result if it ignores this problem too long. While the central government has pushed for modernization and economic reforms in urban areas, it is all too aware of the elephant in the middle of the room. “Losing Patients”, found in the February 21st article of the Economist (http://www.economist.com/world/asia/displaystory.cfm?story_id=10727824) notes China will revisit the healthcare issue at the March 5th parliamentary session. There is the growing recognition by China that as its economy pushes forward at full throttle, its cheap labor force is vital for continued growth. The plan to be unveiled will seek stronger government control of healthcare and a larger percentage of the budget dedicated to healthcare needs along with a move toward universal healthcare. The US might do well to listen in and see what the Chinese propose, especially since this hot button issue tops the lists of most of the aspiring presidential candidates.