Health Care System in China

I just read an interesting article in The Economist titled, “Missing the Barefoot Doctors”.

This article was interesting to me because it highlighted the fact that China is also facing a health care crisis like the rest of the world.

In the United States currently “47 million Americans, or 16 percent of the population, were without health insurance in 2005.” (Source: National Coalition on Health Care) . It appears that currently neither the free-market system employed by the United States nor the universal government programs employed by the likes of countries like Canada are working. The free market system moves health care out of the reach for many and the universal system is plagued by inefficiency and long wait times.

In this article, it appears that China has developed a novel approach. This is a system of public insurance, whereby health care is not free but paid for but insurance is sold through the government. This system would seem to be a way of creating a synergy of the two dominant systems. It encourages efficiency like the free market system by creating a system of deductibles and co-pays. This encourages people to use the system only when the necessary and this reduces unnecessary visits. This keeps waiting time and costs down. The Chinese system also features the advantages of a universal health care system. It maximizes consumer surplus because the government sells to consumers at cost. It also takes advantage of economies of scale. These two things drive down cost and make it available for more. I think this is an interesting solution to the health care crisis.

I do realize that the article, in fact, highlights why such a system is not working in rural China. First of all, the insurance is too expensive. It is the equivalent of 11 days pay. Second, the co-pays are too high. People in rural areas are forced to pay 40% of such treatments. This is equivalent to four months’ income. These prices make the insurance too cost-prohibitive to be used and do not allow the government to take advantage of the economies of scale that could be realized. Still if such a system was tweaked it could provide a novel approach to a global problem.

In addition, I think another issue highlighted in the article is quite disturbing. This is the fact that China follows the “One Country, Two Systems” policy not just in an economic sense, but also a social sense. The health care system directly discriminates against people based on their birth location. It does not allow people born in rural areas to have access to the urban health care systems even if they relocate to a city. This is a direct discrimination against people from rural areas. This is disappointing to see as much of China’s continued growth relies on the migration of people from the rural to urban areas.

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