Free-market economic reforms rolled out across the Chinese health system in 1978 have led to a collapse in healthcare provision for a fifth of the world’s population, researchers have concluded.

The Chinese government, recognising the disparities in access to healthcare between the urban rich and rural poor, is planning to overhaul the world’s largest health system. The plan, entitled “Healthy China 2020”, aims to restore universal access to primary healthcare by 2010.

“Before the reforms of 1978, more than 90% of the rural population was covered by a cooperative medical scheme,” says public health researcher Margaret Whitehead of the University of Liverpool, UK, and author of an analysis of the health system in China. “After market reforms, less than 10% of the rural population was covered,” she says.

Since the reforms – instigated by then-leader Deng Xiaoping – there has been a shift towards patients having to pay for their own treatment.


Corrupt system

In 1980, 20% of total expenditure on health in China was funded in this way. By 2000, patients were paying for 59% of their healthcare, falling back to 49% by 2006. In France, the comparable figure is 11%.

This has left 35% of urban households and 43% of rural households in China unable to afford medical care.

At the same time, government funding for health has been almost exclusively consumed by municipal hospitals in cities. By 2005, only 10% of the state budget went to rural and urban health centres.

Forcing health providers to cover most of their costs by charging patients has also corrupted the system, the authors say, encouraging doctors to charge for the most expensive instead of the most effective treatments.

Collectively, the costs and reforms have bankrupted millions of families, pushing them into a “medical poverty trap” where they sell all their assets to pay for medical care.

“Instead of the health system improving people’s health, it’s making them poorer,” says Whitehead. “It’s a complete market failure, and because China is so big, it’s a massive failure.”

To its credit, says Whitehead, the Chinese government is recognising and tackling the problem, not least because of public pressure. A poll in January of 100,000 Chinese households in 5000 communities revealed that healthcare, or lack of it, is the number-one concern of the Chinese population.

‘Awe-inspiring scale’

The Healthy China 2020 initiative was announced by the government about two months ago. “It will involve about 200 medical experts divided into seven special programmes,” says Shanlian Hu of Fudan University in Shanghai, and author of a paper summarising the negative impacts of the free-market reforms.

The priority is to reverse the huge disparities in access to health, particularly between urban and rural populations.

Another big focus will be on prevention rather than treatment. Already, the government has vowed to restore universal access to primary healthcare within two years. And to prevent the scandal of doctors prescribing unnecessarily expensive treatments, the government will foot the drug bill and dictate which drugs are dispensed.

But the devil could be in the detail, says Shenglan Tang of the WHO Beijing Office, and co-author of the Whitehead paper.

“It’s not clear how far the government wants to reduce the percentage patients have to pay,” he says. Nor does it promise to redirect much more money to local governments so that they can rebuild depleted rural health centres.

Whitehead says that the world will be watching to see how China manages such a massive upheaval. “What’s awe-inspiring is the sheer scale of it,” she says. “At least they have the money to do it.”

Journal references: The Lancet (Whitehead paper: DOI: 10.1016/S0140-6736(08)61364-1; Hu paper DOI: 10.1016/S0140-6736(08)61368-9)

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