The New York Times “Room for Debate” Looks at China’s Healthcare System

If you have not already, head over to the New York Times and their “Room for Debate” section.  It has been covering the topic of China’s healthcare system with a series of columns attempting to answer the question “Is China Facing a Health Care Crisis?” The answer, in case you’re not sure, is an unequivocal “yes!”  As part of this discussion, the contributors are wrestling with the opportunities, risks and challenges as China works to meet the burgeoning needs of both its emerging middle class as well as the still-poor sections of the countryside.  I highly recommend the contribution of Yanzhong Huang, whose November/December 2011 Foreign Affairs piece “The Sick Man of Asia” is a superb capture of the challenges inherent in today’s Chinese healthcare system.  If you are going to read just one piece on China’s healthcare challenges this year, make it his Foreign Affairs article.

The idea Huang develops in both his New York Times and Foreign Affairs pieces is that the current state of China’s healthcare system is actually worse now than it was during Mao.  That’s quite a statement to make, yet the statistics he puts forward paint a dire picture.  According to Huang, “Chinese official data suggest that average life expectancy in China rose by only about five years between 1981 and 2009, from roughly 68 years to 73 years.”  Countries with less economic development during this period actually experienced better improvement in longevity, and countries with similar levels of economic development in this era actually experienced even greater improvements than either baseline comparison.  In his Foreign Affairs article, Huang writes that Mao’s barefoot doctor brigades actually delivered some good services to the rural countryside Chinese in particular.  Certainly a controversial idea, I will leave it to the readers to pick up the Foreign Affairs journal to read his justification for these assertions.

As the Chinese economy transitioned from the commune to the city, so to did the government’s focus on where to deploy healthcare services.  Consequently, Huang writes, “By 2004, nearly 80 percent of government health spending was going to urban health-care institutions, even though city dwellers represented only 42 percent of the country’s population.”  For those familiar with the many challenges China is facing, Huang’s analysis reinforces the idea that the inequality of services between rural and urban dwellers remains a chronic problem.

He writes in his New York Times piece that “not only does China’s domestic demand continue to be suppressed, but the burden of the costs of disease continue to rise, canceling out the gains from economic growth. Between 2003 and 2010, while China’s G.D.P. increased by 193 percent, the economic burden of disease increased by 197 percent. This is certainly bad news for a country that is bedeviled by growing inflationary pressures and a property bubble.”

What every contributor to the New York Times “Room for Debate” conversation agrees on is that China’s current healthcare system is a major impediment to the ongoing emergence of a vibrant middle class as well as a stable political environment.  Consumers in China are reluctant to decrease their savings because they fear the need to access these savings as a means of protecting themselves from health problems.  On this point, Yuanli Liu writes that “Moreover, given China’s health challenges — a growing aging population and a rise in more complicated and expensive chronic diseases — it needs to provide not just ‘nominal coverage,’ but more ‘effective coverage’ by increasing the reimbursement rate and covering more cost-effective services for all Chinese.”

Regardless of whether your business is in the pharmaceutical, medical device, hospital services or eldercare market in China, the ongoing development of China’s government sponsored healthcare insurance will be essential to understand and manage if many of the products and services we take for granted are to successfully transition from North America and Europe to China.  As the government’s role continues to evolve, be sure to check out this New York Times debate as it follows this question.