SPEAKING
FREELY The need to fix rural health care
in China By Richard Daniel
Ewing
Speaking Freely is an Asia
Times Online feature that allows guest writers to
have their say. Please click hereif you are interested in
contributing.
The brief but deadly
outbreak of severe acute respiratory syndrome
threw the spotlight on the critical role of health
care - or the lack of it - in rural China. The
countryside incubated the SARS virus and might be
the place where an avian-flu pandemic breaks out.
So more than just the inhabitants have a stake in
improving health care and prevention.
The
system in the countryside is marked by
under-investment and limited access to care. It
stands in contrast to increasingly
higher-quality care in
China's relatively more affluent urban areas. In
an effort to prepare for future epidemics and
seeking to address growing economic divisions, the
government has launched several major programs to
improve the quality of health care in the
countryside.
A yawning division in care
has emerged between urban and rural areas.
Affluent coastal cities enjoy high-quality medical
care, while much of the countryside remains
woefully under-served. These disparities in
service are causing serious health and social
problems. Infectious diseases are on the rise in
rural areas, and life-expectancy rates are lower
than in urban centers. Yet it has not always been
so. A few decades ago, China's rural health-care
system was the envy of the developing world.
After the communist victory in 1949, Mao
Zedong built an extensive health-care system in
the countryside based on agricultural communes.
The government controlled all health-care
provision in the country, from local clinics to
specialized facilities. "Barefoot doctors"
ventured deep into the countryside to help the
poorest citizens. Ninety percent of the population
enjoyed life-long, government-subsidized health
care under this system. Although the quality was
limited, China's national health improved
markedly. Infant mortality fell, life expectancy
rose and infectious diseases were brought under
control.
The rural health-care system
started to unravel in 1979, the year Deng Xiaoping
introduced sweeping economic reforms, reforms that
have transformed the country. While these changes
unleashed growth widely throughout the economy,
they wrought unintended havoc on the health
system. As the communes were dismantled and
replaced with private enterprises, the
commune-based rural health-care system
disappeared.
The government created no
alternative system to replace it. Subsidies
evaporated, and local hospitals were sold to the
private sector. The medical infrastructure
virtually collapsed, leaving the majority of rural
residents without access to care. As a result, the
proportion of rural residents covered by the
government's medical cooperative system fell from
90% to 9.8% by 1985, where it remains today.
The current problems affecting rural
health care also have their roots in China's
continuing poverty. Despite years of sizzling
economic growth and industrialization on a
national level, much of country remains rural,
agricultural and poor - ranking 110th in per
capita income. Of the country's 1.3 billion
people, nearly 900 million live in the
countryside.
Deng's economic programs
unleashed a major productivity boom in the
countryside in the 1980s as township and village
enterprises spurred growth. But by the 1990s,
attention focused mainly on growth in the
manufacturing sector along the coast. As a
consequence, urban incomes skyrocketed and created
a widening income gap between urban and rural
residents.
Today, annual per capita income
in rural areas is only about US$317, about
one-third that of urban areas ($1,023). More than
120 million rural Chinese live below the World
Bank's poverty line of $1 per day. These arduous
conditions have steadily taken a toll on the
area's health-care infrastructure.
Beyond
the tough economic environment, the rural health
system faces additional challenges. Improper
training of medical personnel, inadequate
investment and unaffordable care are the primary
challenges facing rural areas. Medical
professionals are scarce and often poorly trained.
Demand for doctors in rich urban areas has
siphoned off many physicians, leaving fewer to
serve rural patients. As a result, while the
majority of Chinese live in the countryside, only
about one-third of medical professionals work
there.
China has a national average of
about two doctors per thousand people, but the
ratio of doctors in Beijing, for example, is more
than three per thousand residents - more than
three times the ratio in rural Anhui province. As
a result, rural patients must often travel long
distances to receive treatment in larger cities.
Low levels of investment result in
obsolete equipment and poor patient facilities in
the countryside. While overall spending on medical
services has risen considerably, government budget
allocations for health care fell to 10% in 2000, a
30% decline from 1997 levels. The government
focuses the majority of its spending on urban
centers, leaving only one-fifth for rural areas.
Consequently, government spending per
capita is about seven times as high in cities as
in the countryside. The United Nations' 2000 World
Health Report evaluated 191 national public-health
systems for equitable funding of medical services.
China ranked 188th, behind poverty-stricken
Ethiopia and Honduras. Beyond government funding,
total health-care spending varies widely by
location. Spending per person in Beijing is more
than ten times that in remote Guizhou province.
The lack of government funding has caused
rural hospitals to raise fees, further limiting
the ability of rural residents to afford care.
China's official media report that 70% of rural
hospitals are losing money or are on the verge of
financial collapse. These facilities are desperate
for revenue. As a result, clinics and hospitals
tend to over-prescribe drugs, as they can raise as
much as 40% of their revenue through
pharmaceutical sales. The resulting rush for high
fees also leads many doctors to ignore cheap
preventive care, further compounding the poor
conditions.
With rapidly rising prices for
medical treatment and stagnant wage growth, most
rural residents are unable to pay for even routine
medical care. Fewer than 10% of rural residents
have health insurance, compared with about
one-half in urban areas. The Ministry of Health
reports that 87% of rural patients pay for all of
their hospital care out-of-pocket, while 60% leave
early because they are unable to afford the bills.
One government survey reports that more
than two-thirds of rural Chinese said they would
not seek medical care if they fall ill because the
price is too high. Average hospital bills, at
2,236 yuan, are nearly equal the average annual
rural salary 2,622 yuan. These high medical bills
often contribute directly to poverty by driving 5%
of low-income families into bankruptcy each year.
Besides having few doctors, low funding
and high fees, the rural hospital system faces
additional problems. Monitoring and communication
abilities are impeded by tangled jurisdictions,
the expanding elderly population is starting to
burden already scarce resources, and the nearly
120 million migrant workers have virtually no
access to medical care.
The unholy
combination of low incomes and poor access to
medical services has created rising health
problems for rural residents. Preventable
afflictions such as hepatitis and tuberculosis are
increasing, infant morality rates are double those
in cities, and commonplace maladies such as
cancer, cardiovascular disease and diabetes are
becoming more frequent. Infectious diseases also
pose a grave danger to rural residents.
Four-fifths of all infectious diseases
occur in rural areas, a disproportionately high
rate. AIDS, for example, is fast becoming a major
problem, with a million Chinese currently infected
with the human immunodeficiency virus (HIV). That
number may rise more than tenfold by 2010. This
vulnerability to infectious disease is a matter of
grave concern for government officials,
particularly given the fears raised by the SARS
epidemic and a possible avian-flu outbreak.
China pushes for change The
poor state of rural health care is a major concern
for President Hu Jintao and the rest of China's
political leadership. The SARS epidemic
highlighted the critical role of the rural
health-care system and the economy's vulnerability
to epidemics. These concerns have prompted the
leadership to launch one of the most significant
government efforts to improve rural health care in
decades. At the National People's Congress in
March, Premier Wen Jiabao pledged to increase
rural health-care funding greatly as part of the
"New Socialist Countryside".
Vice Premier
Wu Yi has been tasked with improving health care
and has launched a battery of initiatives over the
past two years. With limited resources, the
government is focusing on cost-effective
solutions. In particular, the government is aiming
to improve primary care, increasing immunization
rates, preventing infectious diseases and creating
a national medical-monitoring network.
The
government's most ambitious rural health project
is the Cooperative Medical Service program. This
system is designed to make health care affordable
to rural Chinese through subsidized care. Under
it, the government will pay 10 yuan per person
annually into a medical insurance fund matched by
contributions from rural residents. The fund will
then reimburse patients for as much as half of
serious medical treatment (medical bills over 600
yuan).
This pre-payment program pools
risks and allows for cross-subsidization of
medical expenses. Notably, however, the program
will not pay for common illnesses or preventive
care. Launched in 2002, the program is still in a
pilot phase for several provinces, but it has
already raised more than 3 billion yuan ($365
million) for 70 million residents.
Startled by its inability to track or
identify SARS outbreaks, the government is also
committed to improving its capability to monitor
infectious diseases. Beijing will spend 1 billion
yuan to build the rural public-health
infrastructure, including tracking systems,
isolation wards and intensive-care units. These
capabilities should prove invaluable in preventing
or responding to any new infectious outbreak in
rural China.
Finally, the government
mandated an increase in rural health-worker
training several years ago. Officials estimate
that about one-third of rural medical personnel
lack a professional medical education. The new
regulations require all rural doctors to have the
appropriate qualifications by 2010. While the
program's tightened requirements have marginally
decreased the number of doctors in rural areas,
the quality of medical training is rising.
The future of China's health care The development of the rural health-care
sector in the coming years will be driven by three
main factors - economic growth, continued
government action, and increasing private
investment. To start, economic development in the
countryside will play a primary role in
determining the amount of resources available for
medical care. Income growth has stalled in recent
years as the agricultural sector has slowed. As a
result, incomes and investment have flattened or
dropped.
Efforts to attract investment
into rural areas and continued reform may help
reignite growth. Rising incomes will give rural
Chinese greater access to services and the ability
to improve public infrastructure such as water and
sewage systems. If the rural economy stagnates,
however, conditions are unlikely to improve
without major government intervention.
Second, the Chinese government will play a
primary role in shaping and regulating the system
over the coming decade. Increasing health-care
coverage in rural areas is a major priority.
Without coverage assistance, services will remain
too expensive, and there will be limited
incentives for investment. While the government
already is working to improve the quality of
service, it needs to do more.
The
government has announced plans to raise the level
of spending, but it should also review its
investment priorities. For example, the government
could spend less on pharmaceuticals and more on
expanding the scope of its cooperative medical
program to include immunizations and preventive
medicine. The government could also seek to engage
private companies by offering tax incentives or
other programs to encourage their involvement in
the health-care market.
So far, the
private sector has played a limited role in
developing rural health care. This must change.
Private companies can boost health care in two
main ways. First, they can help supply affordable
hygiene and health-care products. They can also
directly offer health benefits to their rural
employees, as some larger multinationals are doing
in countries such as Indonesia. Although rural
Chinese have limited disposable income, the total
market is large. In aggregate they spend billions
of dollars annually on medical products and
services.
The market is clearly
under-served, and demand for cost-effective
treatment is high. This combination of high demand
and low supply in developing economies spells
opportunity for certain corporations. Such firms
as Hindustan Lever (part of Unilever), Aravind and
Voxiva have already reaped profits serving the
bottom of the economic pyramid in such countries
as India and Peru. Innovative companies should
consider replicating this kind of success in
mainland China.
Improving China's rural
health-care sector is critical to raising the
quality of life for rural residents and to the
nation's continued economic growth. While serious
public-health problems are emerging as a result of
the poor quality of care, social tensions are
increasing, and a new outbreak of infectious
disease could impact the national economy.
The government is working to fix the
system, but it needs help. Private investment,
international aid and a national commitment to
rectifying the problems in the countryside area
also needed. With those resources, China may once
again have a rural health system enviable by the
rest of the world.
Richard Daniel
Ewing is a non-resident fellow at the Nixon
Center in Washington, DC.
(Copyright
2006 Asia Times Online Ltd. All rights reserved.
Please contact us about sales, syndication and republishing.)
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please click hereif you are interested in
contributing.
