China's healthcare system: structure and policies

China's Healthcare System

China is the world's fourth largest country, ranking after Russia, Canada and the United States, with a land area making up 6.5% of the earth's land mass and 23% of the world's population. Lack of equity in access to health care, along with the changing epidemiology of disease patterns related to economic development and the aging population have become major social and political issue in China.

According to the World Health Organization the leading diseases among inpatients in city and county hospitals during 1999 were injury and poisoning, diseases of the digestive system, diseases of the respiratory system, pregnancy, childbirth and puerperium causes, diseases of the genitourinary system, and infectious and parasitic diseases. The leading causes of mortality were malignant tumors, cerebrovascular diseases, heart diseases, diseases of the respiratory system, and injury and poisoning. Chronic diseases such as cerebrovascular diseases and cancer are responsible for two thirds of all mortality, and while both diseases are strongly associated with smoking tobacco, China's smokers consume 30% of the world's cigarette production.

WHO reports that the immunization coverage under the Expanded Program on Immunization-Polio Eradication for the year 2000 was 98%, with the last case of endemic poliomyelitis caused by wild poliovirus had onset in September 1994. One of the more serious health problems is Hepatitis-B, with a carrier rate of roughly 10% places China among one of the highest in the world.

On average, people in China are still poorer than people in richer economies, and although the "economic reforms have yielded impressive results on development in the past years, the forces unleashed by those reforms have brought unintended negative impacts and growing gaps between the rich and the poor." As a result, despite overall positive aspects of key health indicators, such as life expectancy, infant mortality rate and maternal mortality rate, health standards, especially among the poor, have been affected.

From the 1950's to the 1980's, China made remarkable gains in health and life expectancy due to a broad, publicly financed and implemented disease prevention strategy with accessible health services. And control of infectious diseases far exceeded what was achieved in many other developing countries, however, despite these positive aspects, some worrying recent trends are emerging.

Beginning in the early 1990's, mortality rates have increased in some very poor areas, significant because the rate of improvements in health-related indicators has been slower than similar advances in the 1980's. According to the 2002 United Nation Common Country Assessment's Health in China paper, "this slowdown in health status improvement, in an overall climate of rapid economic growth, can be attributed to several factors, particularly the shift of health financing from a collective system to a market-oriented system.

Tuberculosis remains a major killer and cause of morbidity, although other infectious and endemic diseases pose significant burdens, particularly in rural areas, where the major causes of death are associated with maternal and child health. The recent growing incidence of "HIV-AIDS and the SARS epidemic have reminded authorities that basic public health functions cannot be provided reliably through reliance on market mechanisms" and that public financing is required to benefit the whole of society.

Non-Communicable Diseases (NCDs) are continuing to increase in China and will cause a steep rise in preventable burden of death, disease and suffering over the next several decades. The country now faces a double burden of communicable and non-communicable diseases, aggravated by poverty, malnutrition, illiteracy, gender discrimination and environmental degradation. The trend towards NCDs is part of a health transition caused by demographic changes of many more people surviving to reach middle and old age, and prolonged and increasing risk factor exposures (such as tobacco consumption, nutritional and life style risks) which raise the probability of developing a non-communicable disease.

The breakdown of basic health services in the poor rural areas is the direct result of decentralization of public health funding and changes in health financing from 1978 to 1993 reflect a decline of the Rural Cooperative Medical System. At peak, agricultural communes provided basic health services for approximately 90% of the rural population, compared to roughly 15% today. Local governments now bear expenditure responsibilities, including health services, which are not matched by adequate own-revenue sources or sufficient government transfers. In poor provinces, health services are under-funded and there is limited access in remote areas, while system efficiency reforms of the last few decades have focused on hospitals and tertiary care where 60% of total health expenditures are concentrated. Basically, market-oriented reforms of the past decades transformed public health hospitals and clinics into profit-making enterprises.

Due to stagnant government subsidies and restrictions on medical service charges, public hospitals maximized revenues through loosely regulated drug sales, and the problem has become even worse in the rural areas. In 1998 the Ministry of Health sponsored a national health survey which revealed that up to 80% of outpatient fees were spent on drugs in rural areas, compared to 62% in cities.

Between 1993-1998 the average medical fees per outpatient visit rose by 35.5% annually, much higher than the annual income growth.

An article in the Washington Times on April 30, 2003, stated that SARS raged out of control in China not only because officials suppressed the information, but also because the country's public health system was in ruins. According to the article, sanitation in food stalls, where the virus might have first jumped to humans, "is atrocious and the hospitals failed to practice basic infection control." Moreover, China also is in need of a better disease surveillance system, and such inexpensive, rudimentary measure would have "paid for themselves many times over." WHO's Commission on Macroeconomics and Health says that every country should spend at least $34 per person annually for basic health care, a paltry sum when compared to the $2,000 spent in wealthy nations, while the average in poor countries is $13.

Another article stresses the need to recognize the fact that there is no longer such a thing as a purely national health crisis, and that SARS should teach that globalization is a complex process that often pushes in opposite directions. While economic globalization tends to weaken public health sectors in both developed and developing countries, "this hollowing-out of the public health sector creates and amplifies the kind of health crisis we confront today." Globalization has replaced public health systems with unregulated private health markets, yet, in crisis situations, it is the public sector, not markets, that is expected to take the lead.

In China, parents decide whether to immunize their child based on their own analysis of costs and benefits for that child, generally ignoring the potential impact of their decision on others. If their child is immunized, the risk of other children contracting the disease is reduced by virtue of the fact that their own child will not transmit the disease, therefore the advantages of immunization go beyond the direct benefits to the immunized child, however, when comparing the cost of immunization to their own private benefit, parents will all too often choose to forego the immunization.

Reliance on market forces alone in the presence of such externalities "will hurt efficiency because decisions are not based on all relevant consequences," thus efficiency can be improved this case by "subsidizing immunizations so that people will choose to purchase the service, resulting in greater overall benefits for the society."

China's image around the world was damaged due to the government's evasive and tardy response to the challenge of the SARS virus that led to the disease spreading nationwide and worldwide. By the middle of 2003, the disease had spread to more than thirty countries, and the rapidity of the spread triggered fears around the globe resulting in about one hundred countries enforcing border control in an attempt to keep the virus out. More than ten countries announced that Chinese citizens would not be allowed to enter their countries, while the rest imposed restrictions on Chinese citizens going to their countries to prevent a SARS outbreak. Moreover, neighboring countries such as Mongolia, Pakistan, North Korea, Kazakhstan and Russia, either closed their borders with China or restricted the passage of personnel and goods through those borders. By mid-May of that year, Russian and Romanian authorities ordered a complete and immediate halt to air link with China, while other airlines cancelled, reduced or suspended numerous flights in and out of China. Several hundred thousand foreigners postponed trips to China, moreover, many businesses, international organizations and professional groups cancelled conferences and other activities, and tens of thousands of foreign students who were studying in China fled the country.

In April 2003, at the Special ASEAN-China Leaders' Meeting on SARS, Chinese

Premier Wen Jiabao, attempting to restore the China's public image at home and abroad, proposed setting up a special fund to promote co-operation with ASEAN in containing the disease. Jiabao pledged $1.2 million initial seed money, however, among the ten South-east Asian countries, only Thailand and Cambodia followed up with a contribution, thus demonstrating most of the ASEAN countries' "displeasure with China's cover-up, which left them unaware and unprepared as SARS spread."

More unfavorable publicity came in June when Jintao had to undergo medical checkups to ensure he was SARS-free when meeting President Bush and other G-8 leaders in France. There is little doubt that China's international standing was clearly badly damaged by its government's mishandling of the SARS epidemic.

On July 21, 2004, Dr. Bates Gill, Freeman Chair in China Studies Committee on House International Relations Subcommittee on Asia and the Pacific, stated official Chinese estimates show China now has roughly 840,000 persons living with the HIV virus and as of the end of 2003, only 62,159 persons had been tested and officially confirmed to be HIV-positive. "The remaining HIV-positive individuals in China, estimated at 780,000 persons or more, are not known to public health authorities, and the individuals themselves probably do not know their status, posing significant risks for the further spread of HIV." Yet, outside observers believe that the number of HIV-positive persons in China is higher than China is prepared to acknowledge, perhaps 1.5 million or more, because despite improvements in estimating techniques, China's HIV surveillance system remains inadequate, and remains as a major obstacle to successfully confronting the spread of HIV.