China’s Pay Up or Die Health-Care System
“Some 2,000 people mobbed and ransacked a hospital in southwestern China on Friday in a dispute over medical fees and shoddy health care practices,” a human rights group said today. At least ten people were injured when police broke up the demonstration at Guang’an City No. 2 People’s Hospital, according to the Hong Kong-based Information Center for Human Rights and Democracy. The area was described as under tight police control today, with at least five people detained on suspicion of instigating a riot. The unrest erupted after a three-year-old boy died in the hospital, where he had been rushed for emergency treatment for ingesting pesticides.... The human rights group said that essential medical care was denied the boy until his grandfather, who was taking care of him, could pay for the treatment. The boy died after the grandfather left to raise money. ... Medical costs are an enormously sensitive issue for tens of millions of people in Chinese cities and hundreds of millions in the countryside who have no medical insurance and no public safety net to cover soaring health care costs.
—New York Times
As bad as China’s pension crisis may be, its health-care problems may be worse. China spends only 6% of its GDP on health care. This compares to 8% percent in Japan and fully 14% in the United States.
In today’s China, there is an extreme shortage of doctors, and sick people are forced to pay for their health care upfront. Those lacking the means to pay are cast out of hospitals and left to die an often slow and painful death. A big part of the problem is the cost of medical insurance—$50 to $200 per year—in a country where the annual per-capita income for the vast majority of the population remains well below $1,000.
The rot in China’s health-care system truly runs deep. Under China’s privatized model of medicine, hospitals, pharmacies, and even doctors have been turned into “profit centers” expected to finance their activities through patient fees. The basic economic result has hardly been surprising: Hospitals and pharmacies ruthlessly mark up the prices of medicines by as much as 20 times their cost. Doctors then radically overprescribe drugs and get their kickbacks from these hospitals and pharmacies. As a result, more than half of what Chinese patients pay for health care is devoted to pharmaceuticals alone. This is an astonishing statistic when compared to the roughly 15% average in most of the developed world.
Its not just pills that are popping at premium prices. Doctors are also overprescribing new specialized treatments and tests. As yet another symptom of the corruption endemic in China, many sick people find that the only way to get proper care in a hospital is to offer so-called red-envelope bribes over and above their already exorbitant fees. Most heinously, according to China’s own State Council Development Research Centre, some unscrupulous doctors have even “made patients more sick so they would buy more treatment.” This poignant passage from the Washington Post aptly illustrates the cold and ruthless economic calculus that now serves as the centerpiece of China’s shattered health-care system:
On the day she arrived at the Number Three People’s Hospital to seek treatment for HIV, Cai had no symptoms. But she did have a little bit of money, and that gets quick attention in the modern-day Chinese health-care system: The doctors pressured her to check in and begin a regimen of expensive intravenous drugs, warning that the alternative was a swift death.... When she asked for the free anti-AIDS drugs the central government had begun providing to the poor, the doctors rebuffed her...until she agreed to pay for costly tests. And when she ran through her money and all she could borrow—her 45-day hospital stay exceeding $1,400, nearly triple her annual income—the doctors cast her out. “The director told me to go away and wait until I had some money.”
Given that the health-care system is in shambles, it is hardly surprising that infant mortality is again on the rise. The immunization rates for diseases such as TB, diphtheria, tetanus, and polio are steadily falling from levels that were close to 100% during the 1980s; and TB is again surging. Add a rapidly expanding HIV/AIDS crisis and the specter of exotic diseases such as bird flu and SARS, and you have all the ingredients of a health-care meltdown. As Richard McGregor of the Financial Times has put it: “The health system has become a kind of perfect storm for China’s transition from a state to a market economy.”