Opinion
Healthcare reform may need rebalancing act
By Michele Geraci (China Daily)
Updated: 2010-01-26 07:50
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After 30 years of economic reform, China appears to have shifted its focus toward social issues such as a more even distribution of income, improving the quality of life for the poorest and enhancing the welfare system.
Often social reform and economic development are seen as pursuing opposite goals at the expense of each other. But this is not always true and especially in the case of China, economic gains and social improvements both can be achieved hand in hand.
I am happy to see significant improvements made in the healthcare system over the last couple of years. China is taking the right steps to fix a problem that has become very serious since the reform and opening up.
Reforming the healthcare system in such a large country with such a large population is a daunting task and to find a solution the interests of all involved must be aligned: the government, pharmaceutical companies, medical equipment suppliers, hospitals, doctors and, last but not least, the patients. The magnitude of the problem and the difficulty in finding a comprehensive solution for it should not force us into a state of inertia.
The costs of consultations, medicine and treatment should be directly linked to individuals' income. Healthcare should be free for those who can't afford to pay for it, and a progressive fee should be charged to people with higher income, with the richest bearing the heaviest financial burden. It can be similar to progressive income tax structures, but patients could be charged a nominal fee to dissuade them from visiting hospitals unnecessarily.
Currently, the contribution of employees to healthcare funds is capped and those with incomes higher than two times a city's average do not have to contribute in proportion to their incomes. This favors high-income earners and such cap should either be relaxed or eliminated altogether.
The first stage of implementation should start in rural areas where most of the low-income families live, facilities are not often within easy reach and sometimes not adequate. It may not include workers who have left their homes in rural areas to work in large cities of other provinces in order not to weigh too heavily on the more-expensive-to-run health structures of other provinces or larger cities.
The policy could be extended to cover migrant workers as well. But the central government needs to fund this part of the provinces' healthcare budgets. This will eliminate the problem of deciding which provincial government should pay when a migrant worker from one province falls ill in another.
And doctors' remuneration should not be linked to the cost of the medicines and medical tests they prescribe because this creates a system in which the incentive to "over prescribe" distorts the real needs of patients.
On the other hand, discussions I have had with several doctors reveal they are not (naturally) satisfied with the existing salary structure and general working condition. Perhaps a lot of money is spent on purchasing medical equipment, at times only to enhance the prestige of a hospital. Doctors' salaries and expenses for medical equipment should be balanced through improved purchasing models, based on real needs and a more efficient tender process that would eliminate any misuse of funds.
This will mitigate unnecessary expenditure, while higher salaries for doctors will attract much needed new general practitioners (GPs), whose number needs to grow, especially in rural areas. GPs will embrace their career with more enthusiasm and act as gatekeepers, referring patients to consultants only when needed and helping contain overall costs.
Implementing a comprehensive basic health insurance for 200 million people with the lowest income - say 1,000 yuan per year per person - would cost $30 billion, a big but affordable amount. Instead of increasing tax on the wealthiest section of the population, the government can shift its budget slightly away from large infrastructure projects and try creative ways to use part of its foreign reserves to subsidize the purchase of medical equipment from abroad.
Of course, airports, motorways and railways are crucial for economic development, and China's achievement has been impressive. But if the government were to simply delay the construction of non-urgent infrastructure facilities it could free up some "working capital" that can be used for more immediate needs like saving lives.
Moreover, apart from actual financial problems, low-income households also suffer from a sense of disconnect from the rest of society. This feeling of kun nan (trouble) is heightened when people who cannot afford the simplest health service see a high-speed train rushing past not far from their villages.
I advocate a two-stage approach in which the government first takes full financial responsibility and expedites the process to improve the healthcare system. Once basic healthcare charges become affordable for all, the government can shift its financial burden to the richer segment of society.
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A byproduct of making healthcare charges affordable and predictable will be the security people would feel about their future. This could help raise consumption levels and have a beneficial effect on the country's overall economy, and those who offered help in the first place could see something coming back to them. It would be almost a win-win situation for all.
In UK, the most capitalist country in Europe, healthcare is free for all. Should Chinese people go broke if they fall ill, or, worse, have no chance to be cured? I know our answer is the same. And I'm confident the "No, they shouldn't" policy can be implemented in a socialist country with Chinese characteristics.
The author is head of China Program at the Global Policy Institute of London Metropolitan University and visiting scholar at Zhejiang University.
