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China's challenges: health and wealth
Editorial
China’s challenges: health and wealth
www.thelancet.com Vol 367 February 25, 2006
report on China’s health system found that less than 1% of drug prescriptions were reasonable. Believing that patients are partly to blame for fuelling demand, the Government is also trying to curb costs by making patients pay more from their own pockets for health care. But because patients rely on health-service providers for information about which treatments and tests they need, this policy is doing little to curb growth in usage, and instead has caused considerable financial hardship. Rural areas do particularly badly because their inhabitants can least afford the fees for treatment, and services suffer from the disproportionate subsidies given to urban hospitals. Furthermore, since the 1980s, the community structures that previously made China’s rural health care so effective have collapsed. Government funding of rural services has not kept pace with cost increases. And income inequalities between rural and urban areas have been rapidly followed by health inequalities. Although a planned new rural healthinsurance scheme subsidised from central government funds should help improve access to care, the Government is simultaneously promoting the idea of urbanisation as a solution to the poverty of rural farmers. This policy could end up providing justification for the investment bias towards urban health services as experts predict cities will house 60% of the population by 2020. The World Bank has repeatedly criticised what it perceives as China’s slow response to its growing health inequalities. But these criticisms sometimes overemphasise the dichotomy between the country’s premarket-reform health system—where universal insurance enabled health care for all—and the less socially inclusive system that exists now. They also ignore the sheer enormity of the transition that the Chinese Government must achieve. The World Bank’s November report labelled health-care reform as “urgent” if China is to cope effectively with new public-health threats. The high priority now afforded to health by the Chinese Government suggests it shares this concern. But the biggest challenge is one for which there is no precedent. To convince China’s public to give up hospital-based care for cheaper community-based alternatives, the Government will have to renegotiate the expectations of a population rightly proud of two decades’ success. ■ The Lancet
Rights were not granted to include this image in electronic media. Please refer to the printed journal AP
In embracing market reform two decades ago, China succeeded where the states of the former Soviet Union unquestionably failed: it managed to protect the health gains accrued through collectivisation while delivering an impressive rate of economic growth. 20 years of sustained prosperity have lifted 200 million Chinese out of poverty. However, plummeting levels of insurance coverage and rising health-care costs mean the benefits of the smooth transition have been ebbing away ever since. Now, facing unsustainable health-care costs and a rapidly ageing population, the Government must reposition the health-care system to tackle future threats, while combating newly entrenched inequalities and, perhaps most difficult, satisfying the heightened expectations of an increasingly prosperous population. It is an enormous challenge. But if China tackles this crisis successfully, it may soon be advising western nations on how best to adapt to demographic change. The Government’s recent moves are encouraging. On Feb 15, the Chinese State Council announced plans to set up comprehensive community health services in all major cities by 2010. This new urban health-service system is expected to make medical services easier and cheaper to access for residents, especially elderly and disabled people and patients with chronic diseases. The change is sorely needed. Health services in China are focused on acute hospital care, much more so than in Europe or the USA. So they are unnecessarily expensive—for the Government and for patients—and are not really suitable for treating the health problems of an ageing population. Community-based care could cut down hospital stays considerably, making the health system more efficient. This move will also help curb costs, but only in part. The real driver of China’s massive health spending is the high price of pharmaceuticals, and government policies are partly to blame. In an effort to ensure that basic care is affordable to everyone, the Government sets prices at levels that cause providers to make a loss on basic care, but a considerable profit on drugs and high-tech care. Hospitals and other service providers (which depend on user fees and profits from drug sales for up to 75% of their income) have a strong incentive to sell patients expensive drugs and diagnostic tests even if they are unnecessary. This means much drug use is inappropriate. A study of village clinics cited in a November, 2005, World Bank
For the World Bank report on China’s health system see http://siteresources.worldbank. org/INTCHINA/Resources/ 318862-1121421293578/ china11-05.pdf
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China’s challenges: health and wealth
www.thelancet.com Vol 367 February 25, 2006
report on China’s health system found that less than 1% of drug prescriptions were reasonable. Believing that patients are partly to blame for fuelling demand, the Government is also trying to curb costs by making patients pay more from their own pockets for health care. But because patients rely on health-service providers for information about which treatments and tests they need, this policy is doing little to curb growth in usage, and instead has caused considerable financial hardship. Rural areas do particularly badly because their inhabitants can least afford the fees for treatment, and services suffer from the disproportionate subsidies given to urban hospitals. Furthermore, since the 1980s, the community structures that previously made China’s rural health care so effective have collapsed. Government funding of rural services has not kept pace with cost increases. And income inequalities between rural and urban areas have been rapidly followed by health inequalities. Although a planned new rural healthinsurance scheme subsidised from central government funds should help improve access to care, the Government is simultaneously promoting the idea of urbanisation as a solution to the poverty of rural farmers. This policy could end up providing justification for the investment bias towards urban health services as experts predict cities will house 60% of the population by 2020. The World Bank has repeatedly criticised what it perceives as China’s slow response to its growing health inequalities. But these criticisms sometimes overemphasise the dichotomy between the country’s premarket-reform health system—where universal insurance enabled health care for all—and the less socially inclusive system that exists now. They also ignore the sheer enormity of the transition that the Chinese Government must achieve. The World Bank’s November report labelled health-care reform as “urgent” if China is to cope effectively with new public-health threats. The high priority now afforded to health by the Chinese Government suggests it shares this concern. But the biggest challenge is one for which there is no precedent. To convince China’s public to give up hospital-based care for cheaper community-based alternatives, the Government will have to renegotiate the expectations of a population rightly proud of two decades’ success. ■ The Lancet
Rights were not granted to include this image in electronic media. Please refer to the printed journal AP
In embracing market reform two decades ago, China succeeded where the states of the former Soviet Union unquestionably failed: it managed to protect the health gains accrued through collectivisation while delivering an impressive rate of economic growth. 20 years of sustained prosperity have lifted 200 million Chinese out of poverty. However, plummeting levels of insurance coverage and rising health-care costs mean the benefits of the smooth transition have been ebbing away ever since. Now, facing unsustainable health-care costs and a rapidly ageing population, the Government must reposition the health-care system to tackle future threats, while combating newly entrenched inequalities and, perhaps most difficult, satisfying the heightened expectations of an increasingly prosperous population. It is an enormous challenge. But if China tackles this crisis successfully, it may soon be advising western nations on how best to adapt to demographic change. The Government’s recent moves are encouraging. On Feb 15, the Chinese State Council announced plans to set up comprehensive community health services in all major cities by 2010. This new urban health-service system is expected to make medical services easier and cheaper to access for residents, especially elderly and disabled people and patients with chronic diseases. The change is sorely needed. Health services in China are focused on acute hospital care, much more so than in Europe or the USA. So they are unnecessarily expensive—for the Government and for patients—and are not really suitable for treating the health problems of an ageing population. Community-based care could cut down hospital stays considerably, making the health system more efficient. This move will also help curb costs, but only in part. The real driver of China’s massive health spending is the high price of pharmaceuticals, and government policies are partly to blame. In an effort to ensure that basic care is affordable to everyone, the Government sets prices at levels that cause providers to make a loss on basic care, but a considerable profit on drugs and high-tech care. Hospitals and other service providers (which depend on user fees and profits from drug sales for up to 75% of their income) have a strong incentive to sell patients expensive drugs and diagnostic tests even if they are unnecessary. This means much drug use is inappropriate. A study of village clinics cited in a November, 2005, World Bank
For the World Bank report on China’s health system see http://siteresources.worldbank. org/INTCHINA/Resources/ 318862-1121421293578/ china11-05.pdf
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