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Pulling the Plug: Healthcare for Whom in China?

December 22, 2011

By Fiorenzo Conte

In what ways do population and health indicators in India and China look similar and different since 1970?  What development lessons can be derived from this comparison — and from other case studies in South Asia — for contemporary developing nations? 

If one was to read Yanzhong Huang’s article on Foreign Affairs and answer to this question (which was an essay question during my master) the short answer would be that, if one focuses on China, the lesson to be drawn is that economic growth will not deliver automatically better health outcomes. The conventional wisdom that health improvements will be brought about by economic improvements stems from a misinterpretation of the Preston curve. The curve show the relationship at one point in time of life expectancy and level of income across countries: the upward slope of the curve means that countries with a higher GDP per capita do enjoy higher life expectancy. However, this curve does not mean that higher GDP per capita cause health to improve over time in a specific country.  Furthermore, if one looks at how the curve changes over time, it moved upwards: such move implies that over time a given level of life expectancy can be achieved with less and less income per capita. The case of China offers further support against such conventional wisdom.

China achieved dramatic health improvements between 1949 and 1975: the mortality rate dropped from 20 per 1,000 to 7 per 1,000 while life expectancy increased from 35 years to 65 years. Such improvements slowed down drastically between 1981 and 2009: life expectancy for example only increase from 68 to 73 years. Why did this happen, despite the fact that China experienced high growth rate during the latter period?

A significant part of the answer lies in the definition of healthcare: during the first period it was defined as a right which was to be provided by the state to its citizens; in the second period it was seen as an individual responsibility where no role was to be played by the central government. Such definitions translated into practices: during the first period a three-tiered healthcare system was established in rural areas and an unprecedented number of health personnel (barefoot soldiers) were sent there to correct the traditional urban bias; at the same time a community based health insurance scheme was put in place to make access to healthcare for all a reality. These improvement were in other words the result of  major investments in public health by the central government.

With Mao’s and socialism death healthcare became the responsibility of the individual: the government pulled the plug on its healthcare system and  it virtually disappeared. And this support dwindled even though the financial bonanza enjoyed thanks to economic growth. As healthcare services was something to be paid for, healthcare services concentrated where there was capacity to pay i.e. the cities. This set the stage for the rural-urban health inequality to return, whereby the urban rich Chinese received a Western, high tech care and the poor did not receive any care at all. At the very same time that the quality of healthcare services was deteriorating in rural areas its cost for the citizens was increasing: healthcare providers in fact resorted to over-diagnosis and over-treatment to make up for the funding gap resulted from the dwindled government support. To make things even worse health insurance was virtually inexistent. The result was that farmers falling sick were dying at home because they could not afford treatment, as the health vice minister denounced in 2004.

Chinese authorities have woken up to the fact that they dismantled a functioning health system without putting anything else in its place. New initiatives such as this providing pregnant women 500 yuan to deliver in the hospital marks the return to an idea of healthcare as a right for all. The lesson for other countries is that if one expects economic growth to improve healthcare services the result will not be healthcare for all but “a portrait of pockets of medical affluence in the midst of declining financial access and exploding costs and inefficiency” as Blumenthal and Hsiao put it. And this lesson holds for both developed and developing countries.

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