Getting Sick

China is finding that it has to get its health care system in order before it can move forward economically.

From The Financial Times a couple days ago:

China’s economy has turned the corner. Government banks have been lending at a rapid rate, factory output is rising again and the local stock market is blazing ahead. But just how quickly the world’s most populous country emerges from the global economic crisis will depend, in part, on places such as the cancer ward of Jingdong hospital in Sanhe, not far from Beijing, and how they treat patients like Cao Jun.

Aged 13, Jun was diagnosed a few months ago with leukaemia. His parents managed to get him into the hospital, a Sino-US joint venture, and have been impressed with the level of care. “The doctors and nurses have been very helpful and are doing everything they can to assist us,” says his father, Cao Jirui.

But Mr Cao now works in part-time jobs after losing his position in a factory and, with little money left, he knows his son will not be able to stay much longer. “My son’s disease is bleeding our family financially dry,” he says.

Patients who cannot afford to treat serious illness are an all too common feature of any developing country. But they are particularly important in China for two reasons. The failings of the healthcare system have become a large source of political discontent, the biggest blot on the Communist party’s claims to be substantially improving the welfare of ordinary Chinese. In addition, health insurance has become a central issue in the country’s immediate economic future. For all the signs that China is beginning to rebound, the government has only won half the battle. To return to rapid rates of expansion, the country will need to find new sources of growth to replace stagnant exports, and that means boosting consumption.

f the US economy stored up problems for itself through consuming too much, China has distorted its economy by saving too much and spending too little. In recent years, the savings rate has risen as high as 50 per cent of gross domestic product, including the retained earnings of state-owned companies, and even families with incomes of less than $200 a year still save 18 per cent of their income, according to the World Bank.

One of the main underlying causes is the weakness of the social safety net. Many Chinese put a large chunk of their wages into bank accounts because they are worried about pensions, education expenses and – most of all – the prospect of a big hospital bill if a family member falls seriously ill.

Read On

This article goes on to say that the effects of China's new push for a better health care system in the next couple years are probably going to fall short of completely revamping the health care industry. These numbers were a key illustration:

For a start, coverage under the insurance plans is limited – for rural residents, it will be Rmb120 a year, compared with an average in-patient hospital bill of Rmb4,000. Most local governments provide additional subsidies, especially for serious illness, but patients usually end up with substantial bills. Researchers at Tokyo University, who examined the pilot programmes for rural health insurance, found the impact on health expenditures by individuals only modest.

One hundred and twenty RMB a year is a very small amount of money (about $17.58), even in China's impoverished countryside.

Indeed, China has a very long way to go in terms of modernizing its health care infrastructure.

Although it is going to be difficult and costly, getting China's health system sorted out is a great goal for both idealistic and practical reasons.

Of course, China's people deserve the right to modern medicine and technology. Much of China is getting rich. It seems logical that the benefits of economic expansion would include improved medical care.

On the more practical side, freeing China's populace from the potential prospects of having to pay for massive medical costs would allow its citizens from having to horde money like they do now. If Chinese families always have to have massive funds stored for a potential sickness, it's going to be a while before China becomes a "nation of consumers," a change China's leadership wants to see.

America, the wealthiest nation on Earth, shows just how difficult it is to get a proper medical system in place. Health care continues to be one of the biggest concerns for Americans. Now there can surely be criticisms of the kind of system that the US is trying to implement, but the country's struggles with the quality of its medical system show that the problem is a very tricky one. Even for very powerful and rich countries.

China's health care system is going to take years and years to sort out. Even if it has taken the financial crisis and the government's desire for its citizens to spend more of their money, the fact that the issue appears to be being taken more seriously is a good thing. China needs to get working urgently on this now.