China puts healthcare cart before the horse
By Iain Mills
BEIJING - As some Chinese observers were slightly too keen to point out, United
States President Barack Obama's recent travails in pushing healthcare reform
through congress highlighted the difficulties associated with reaching
consensus on health issues.
However, a recent Organization for Economic Cooperation and Development (OECD)
working paper and discussions arising from late-March's London School of
Economics Asia Forum in Beijing, along with a slew of alarming new disease
statistics, have laid bare the enormous scale of China's own healthcare
challenges.
With healthcare strategists facing a hugely different set of risks and resource
allocation choices in the 21st century, China's stated ambition of evolving a
fully functioning healthcare system
by 2020 is dependent not only on massive funding increases and widespread
reforms, but also profound changes in the wider alignment of the political
economy.
Failure to effect fundamental change in this area could lead to healthcare
becoming one of the most damaging and expensive strategic oversights of
communist rule. In recent years, many ordinary Chinese people increasingly
complain that health, housing and education have become three “mountains”
(unbearable burdens) on their back. This highlights the problem of healthcare
as a potential source of social unrest.
Before the beginning of reform and opening in 1978, healthcare was the
responsibility of the danwei (work unit), however as danwei coverage
declined, so individuals increasingly shouldered the costs.
By the 1990s, China's healthcare system was “in crisis” and, with only 10% of
the population entitled to benefits, it ranked 188th out of 191 countries in a
World Health Organization (WHO) equality report. Subsequent government attempts
to develop an employee-employer co-funded insurance scheme were of limited
success, and by 2005 had achieved only 40% coverage.
The government's response was to increase healthcare spending by 87% over the
next two years - a monumental rise - and to outline plans for a national
healthcare system by 2020. Further spending hikes and regulatory changes have
followed, particularly as part of last year's economic stimulus plan. Spending
in 2010 is up another 8.7%, with about 4.5% of gross domestic product (GDP)
allocated to healthcare, half of which comes from the private sector.
It is clear that this is not an insignificant increase, but, to put this figure
in perspective, average healthcare expenditure of countries in the European
Union is 9% of GDP, while in the US it is nearer to 16%. The Chinese system is
also weighed down by excessive bureaucracy and inefficiency.
For example, hospitals still operate under soft budget constraints similar to
those of state-owned enterprises in the 1980s: those with high operating
deficits are given large subsidies, while profitable hospitals receive no
funds, thereby locking inefficiencies into the system.
At the recent LSE Asia Forum on healthcare in China, discussions revolved
around issues such as improving efficiency, defining the correct role for the
private sector and how to increase the number of rural clinics and diversify
care facilities in urban areas, where hospitals are struggling to cope with
burgeoning populations.
However, all these issues - despite their importance - risk being rendered
largely irrelevant by more fundamental problems. If China is to be successful
in developing a national healthcare system, reform needs to go beyond merely
improving access and standards of care. Rather, deep-rooted cultural and
political factors are at the heart of the healthcare challenges China faces in
the decades to come.
To understand these challenges, it is necessary to look at patterns of disease
in China over the past three decades. Firstly, in terms of treatment outcomes,
due to improving standards of basic care, the country has nearly eliminated
death by infectious diseases, with mortality rates for these types of
conditions falling from 7,000 per 100,000 of the population in 1970 to under
300 per 100,000 in 2008.
Traditional killers such as malaria and typhoid are now effectively under
control in all but the most remote areas. In addition, life expectancy has
reached 65, a key threshold in terms of maximizing workforce productivity, and
closing in on the OECD average of 72.
However, while infectious diseases data is encouraging, in terms of chronic
conditions - long-term, hard-to-treat diseases such as cancer, diabetes and
heart disease - the outlook is far less positive. Nearly 20% of Chinese adults
now suffer from hypertension, a condition associated with a low-nutrition,
high-salt diet that significantly increases the likelihood of stroke, heart
disease and other sequelae.
The incidence of cancer - particularly lung, liver and stomach cancer - is
rising at around 30% per decade, and figures released last week show that China
now has 92 million diabetics (7% of the population; nearer to 10% in many urban
areas).
From this brief overview, it is possible to see two very different pictures of
China's healthcare development. On the one hand, basic treatment has improved
and communicable diseases have been controlled; however, on the other, China
has struggled to respond to the advent of a new type of healthcare threat -
social diseases.
Social diseases are transmitted not by physical contamination, but by changes
in the way we live. Throughout the developing world, the incidence of
conditions such as diabetes, hypertension and lung cancer have sky-rocketed as
processed food, sedentary lifestyles, tobacco usage and other trappings of
modernity have replaced traditional ways of living.
As the healthcare critic Richard Gordon puts it, these conditions are “not only
a clinical, but also a cultural problem ... certain disorders become a core
expression of the stresses and tensions of a particular culture or historical
period.” From a disease management perspective, because social diseases operate
in radically different ways to traditional conditions, they require radically
different risk evaluation and treatment strategies.
Social diseases generally cannot be cured by short-term treatment strategies
and may persist for years or decades before death, therefore adding huge
amounts to treatment costs. For example, studies suggest that within eight
years of diagnosis, over half the healthcare costs for a diabetic are spent on
diabetes-related conditions, rather than the disease itself. As treatments
become more effective, the longitudinal costs of healthcare will continue to
increase.
Clearly, social diseases require clinical intervention; however they also call
for a range of other strategies that operate at a cultural level, such as
changing people's diet, exercise routines, consumption habits and improving
education and awareness levels. China has made some progress in these areas -
for example, awareness that smoking increased the likelihood of lung cancer
doubled in the 1990s; however, 30% of the population continues to smoke, and
this figure is growing.
In addition to this, a study released last week showed that China has the
second-fastest rising obesity rate in the world, with over 25% of the
population now overweight. Both tobacco consumption and obesity increase the
likelihood of a whole number of resource-intensive medical conditions. If China
fails to respond rapidly to these new forms of healthcare threats, they will
undoubtedly become an economic and welfare time bomb for the government.
Somewhat ironically, the maxims of health awareness and prevention, rather than
cure, are more in keeping with the proactive approach that informs traditional
Chinese medicine than the responsive strategies which, until recently,
prevailed in China’s Western counterparts. However, while the Chinese
government can justifiably flag up its successes in increasing the number and
skill-levels of medical practitioners and controlling conventional killers,
this should not obscure the fact that far more deeply embedded structural
obstacles exist as it attempts to tackle this new generation of healthcare
threats.
Take for example the tobacco industry, which is run entirely as a government
monopoly. Tobacco taxes have risen in recent years and now account for 7.5% of
total government revenues; however the authorities have been reluctant to take
the more proactive measures, such as educational programs, necessary to reduce
the number of smokers. Indeed, some local authorities still actively encourage
officials and residents to smoke local cigarette brands, and it remains nearly
impossible to buy smoking cessation aids.
A similar situation exists in the salt industry, with foodstuffs produced by
government-controlled companies regularly found to have salt contents three to
four times above the government's own guidelines. Given the long-term
healthcare costs associated with both smoking and a high-salt diet, the
perennial problems of vested interests, corruption and poor legal enforcement
mean that any responsive healthcare reforms the government does introduce will
be akin to bailing water with a teacup as the ship sinks around them.
The key feature of social diseases is that treatment strategies require
coordinated action in a vastly expanded range of areas and, in political terms,
different jurisdictions, and serious doubts must exist over the Chinese
government's ability to deliver this.
For China to even begin to control its social disease epidemics, there must be
substantial improvements to regulatory oversight and the elimination of
corruption in a variety of industries, including food production; vested
interests in potentially harmful products such as salt and tobacco need to be
eradicated; and, pollution levels and workplace safety must be improved.
What is more, these efforts must be coordinated with educational programs,
which raise disease awareness and encourage a healthy lifestyle. Crucially,
these challenges precede any reforms to the healthcare system itself.
In light of this, the discussions over funding mechanisms and treatment
facilities are, in some ways, putting the cart before the horse. China's hugely
ambitious plan to have a fully functioning national health system within a
decade, even with annual spending set to rise 71% by 2014, will be severely
prejudiced if it fails to control conditions such as diabetes, hypertension,
and environmentally-induced heart and lung diseases.
Plus, with the prevalence of these conditions being exacerbated by the current
structures of the political economy, it becomes clear that for China to
effectively tackle its healthcare time bombs, a sea change in governmental
functioning is required.
If certain diseases become “a core expression of the stresses and tensions of a
particular culture or historical period”, then what we are seeing in China is a
government whose interests are often diametrically opposed to those of its
citizens, and whose ability to manage the diverse risks of the 21st century are
seriously restricted by a lack of inter-departmental coordination, poor
regulatory adherence and corruption. No matter how well funded or well equipped
it is, unless these front end issues are addressed, China's national health
system will very soon itself be on life support.
Iain Mills is a Beijing-based freelance writer specializing in the
Chinese political economy. sigmills@hotmail.com
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