China’s Next Great Wall

litbonanza.jpgChina, holder of one-fifth of the world’s population, has been running forward at a remarkable speed. But it’s becoming harder and harder for its healthcare system to keep up.

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When President Barack Obama gave an election speech at the University of Iowa in 2007, one of the main commitments of his campaign was healthcare reform. On the stage, the then-president-elect gave a strong outline of the failures of the current American system and again emphasized the need for change. When I heard this speech, I couldn’t help but see the same need in China. In the past 20 years, China’s political attention has favoured economic growth and a transition to a free-market economy, yet has severely neglected health care, resulting in a dramatic decline in cost-effectiveness, equity, and accessibility to medicine (1). Now, soaring health costs have become the main cause of rural poverty, and have caused distrust and aversion to the system as a whole (2, 3). China was once the vanguard for socialized healthcare, heralded by the World Health Organization as a model system at the historic Alma-Alta conference in 1978 (4). Yet China, like an adolescent entering into adulthood, has grown too big for the clothes in which it used to fit, and rips are appearing at all the seams.

Two worlds in one land
Despite a highly celebrated image of modernisation and prosperity, the majority of China’s population is still poor (4). Over three quarters of China’s 1.3 billion population is rural, and the majority of these people do not have access to adequate healthcare (5). Rural residents have much higher maternal mortality and infant mortality rates than urban residents, and suffer from more infectious diseases such as tuberculosis and malaria (4,5). As a result, health indicators in urban areas are comparable to or better than those in the United States, while indicators in rural areas are comparable to those in sub-Saharan Africa (1).

The most glaring and amendable factor is the inequality of healthcare insurance. In the 1970s, China’s Rural Cooperative Medical System (RCMS) ensured that healthcare coverage was essentially universal (6). But since the 1980s, the RCMS has crumbled under the weight of unsupportable increases in medical care and drug costs. China’s increasing social divide had created an economy in which the large majority of people had little to no access to medicine (7). Now, the cost of hospitalization is approximately equal to a year’s salary for rural farmers, and in 2001, 21.6% of the rural poor fell into poverty because of healthcare related expenses (3).

This has been due to several health policy changes. First, the federal government decentralized health services to the provincial government and withdrew much financial support (8). Under this system, better-off provinces could still fare well, but poorer provinces (which tend to be in Western China) were left scrambling for ways to cover their costs. Hospitals, feeling the effects of the trickling hose of income, began to sell more drugs to make money, marking them up by up to 200% of their original price with little regulation by the central government (3). Hospital-based doctors also felt the pressure to order sometimes-unnecessary treatments and ineffective drugs increase their profit margins (3). As a result of two decades of privatization of services and neglect from the central government, the WHO in 2000 ranked the Chinese health system as #188 out of 192 member states in terms of fairness in access to care (3).

Change is in the air
The New Cooperative Medical System was established in 2003 as a response to the deluge of media attention and international pressure for change (9). The government-subsidized insurance plan provides a fund pool for subscribers. Although participation is voluntary, the response has been overwhelmingly positive, with subscription rates going above 80% in most rural counties (9). Also, as of 2007, coverage extended to some 78% of rural counties, with projected “full” coverage expected by the end of 2008 (9). As a result of this plan, rural people across China will be able to be reimbursed for treatment, lessening the financial burden of medical care.

But this coverage has its own social detriments, and sceptics of the NCMS question its sustainability as a long-term solution. Many academics have criticized the effort as simply an ineffective bandage that doesn’t solve the underlying problem. Others say that the NCMS is a promising system, but needs more financial backup from the central government. The funds operate under an extremely limited budget- each farmer, with subsidy, contributes only 50RMB (less than $8) towards the common insurance pool; which is hardly sufficient for purchasing a comprehensive benefits package (9). Thus, the insurance reimbursements are very limited, and co-payment (i.e., out of pocket expenses) are still high. Indeed, as a result of the NCMS, farmers who did not previously seek professional care may be encouraged to do so, leading to a paradoxical increase in their health spending (10). The system also operates on a “pay first, claim later” basis (3). Reimbursement requires a myriad of forms which can seriously hinder an uneducated or seriously ill person from reclaiming their benefits- reimbursement rates were found as low as 30% in some areas (3). All of these problems may lead to fewer and fewer families subscribing and an eventual collapse of the insurance plan.

To be fair, the NCMS is doing surprisingly well for a modern cooperative medical scheme. The NCMS has scored well on performance indicators like subscription rates (an astounding 90% in most counties), much higher than similar cooperative medical initiatives in Indonesia and Thailand. It is also more uniform, has a better-trained management system, and spans a broader coverage than the dispersed cooperative medical schemes of India (touted as a “drop in the ocean” of India’s health problems) (12). Moreover, continued monitoring of the pilot stages of the NCMS by the World Bank have shown that the NCMS is having an impact: enrolled areas show higher rates of health care use and less poverty due to health costs (9). China’s characteristically zealous marketing campaigns have appeared to pay off. But it is still questionable whether these indices point to a system with better overall coverage and more equitable care for all.

A population as impoverished as China’s farmers is extremely vulnerable to barriers enforced by the combination of socioeconomic conditions and complications of the medical system. Gender, low education, ethnicity, and access to transportation are vast barriers to health care – a recent study showed that tuberculosis patients delayed treatment an average of 61 days due to the inaccessibility in a mountainous region (11). These are all issues the government must address if it hopes to continue development for the long term.

An answer to the problem
Solutions to the current insurance conundrum are presenting themselves slowly, and all depend on the provision of more financial investment from the government. First, the government needs to increase its contributions to the NCMS. By doing so, rural workers may be more persuaded by the financial incentives to enrol in the program. This involvement will also allow more of the financial payments to be covered, decreasing co-payments by the farmers and therefore decreasing their financial burden. Next, one should abolish the “pay first, claim later” system and incorporate financial reimbursements as an automatic part of the claim. This way, poor and uneducated subscribers are not faced with complicated form-filling and do not suffer from the barriers of paperwork when accessing medical care. China is enlisting some of the world`s top minds to help solve the health care dilemma. In particular, a group from the Harvard School of Public Health called the China Initiative is working directly with the central government to advise on health policy, and is setting up an education institute that will be mandatory for Chinese officials hoping to move up in the party ranks (13, 14). In this institute, officials will learn about issues of equity and sustainability in addition to their political curriculum. Such activism on the part of a group of policymakers at Harvard hold promise to make a huge impact on the direction of decision-making within the Central Party.

As a doctor, I concern myself with the biological presentation of illness. Yet system-wide problems, structural problems in health, can also present themselves in similar patterns of human pain and suffering; in the farmer who sells his livestock to pay for tuberculosis treatment for his wife, or the child who chooses taking care of his cancer-ridden mother over school. These problems can be addressed at a local level, but the true change lies in correcting the faulty policy that is chronically creating these problems within the entire system, from the top down. It is with this in mind that I have been contributing to the daunting but inspirational challenge of renewing and renovating the health policy for one-fifth of the world’s population.

We are at a level of global interconnectivity where the lines between “first world” and “third world” are becoming indelibly blurred. International trade, international aid, and international health are all fundamental concepts for the global citizenship that we strive to achieve. No longer should issues be considered ours or theirs, but all should be addressed with concern and empathy, and all resolved through global collaboration. In particular, the health of China is of profound international interest because of the sheer size of the population. China has over 110 million migrant workers, roughly the population size of Russia. Moreover, China has over 750m rural people with inadequate access to sanitation; this is roughly equal to the same population situation in the entire sub-Saharan Africa. With over 750m rural people at stake, small changes in Chinese health translate to large changes in global health.

China`s stellar healthcare record in the past has proven that cooperative medical schemes can work, but it will take a considerable amount of time to implement the structural adjustments and incentives to make healthcare services more accessible to the rural poor. The central government is also showing signs of waking up. The NCMS, though still paltry by many standards, is being expanded every year and will cover much of the rural population by 2010. Last year, the government announced a plan to have universal health care coverage by 2020. With small steps like these, China is on its way to dressing itself in a new, modern healthcare system that fits in all the right places. Helping to solve the Chinese question of healthcare sets precedence for the resolution of many more challenging problems, all through global collaboration, and all through eyes of hope.


(1) Kaufman J. China’s heath care system and avian influenza preparedness. JID 2008, 197 Suppl 1(1):S7.

(2) How Healthy is China? Challenges and opportunities, now and in the future. Benkedam H, Presentation at the Kunming Medical University, 16 March 2006.

(3) Hennock M. China’s health insurance system is failing poor people. BMJ 2007 Nov 335(7627):961.

(4) Wang H, Yip W, Zhang L, Wang L, Hsiao W. Community-based health insurance in poor rural China: the distribution of net benefits. Health Policy and Planning 2005 20:366-74.

(5) Wang H, Xu T, Xu J. Factors Contributing to High Costs and Inequality in China’s Health Care System. JAMA 2007 289:1928-1930.

(6) Liu Y and Rao K (2006). Providing Health Insurance in Rural China: From Research to Policy. Journal of Health Politics, Policy, and Law 31:71-92.

(7) Liu M, Zhang Q, Lu M, Kwon C, Quan H. Rural and urban disparity in health services utilization in China. Medical Care 2007 Aug 45(8):767-774.

(8) Fang J. The Chinese health care regulatory institutions in an era of transition. Social Science & Medicine 2008 66:952-962.

(9) Wagstaff A, Lindelow M, Gao J, Xu L, and Qian J. Extending Health Insurance to the Rural Population: An impact evaluation of China’s New Cooperative Medical Scheme. World Bank Policy Research Working Paper 4150 2007, World Bank, Washington.

(10) Wagstaff A. Can insurance increase financial risk? The curious case of health insurance in China. Journal of Health Economics 2008 27(4):990-1005.

(11) Lin X, Chongsuvivatwong V, Geater A, Lijuan R. The effect of geographical distance on TB patient delays in a mountainous province of China. Int J Tuberculosis & Lung Disease 2008 Mar 12(3):288-93.

(12) Devadsan N, Ranson K, Van Damme W, Criel B. Community Health Insurance in India: An Overview. Economic and Political Weekly 2004 Jul 3179-83.

(13) Liu Y. China Initiative – Letter from the Director. (link). Accessed March 24, 2009.

(14) Personal correspondence with Yuanli Liu, Feb 20, 2009.

(15) Hsiao W. Medical Savings Accounts: Lessons from Singapore. Health Aff 1995 262:260-266.

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Diane Wu is a medical student at UBC. She worked with the Canadian International Development Agency researching healthcare insurance in China and is continuing her work in Chinese health policy this summer at the World Health Organization in Switzerland.