In late December, the Information Office of the State Council (SCIO) released a white paper titled the “Medical and Health Services in China.” I wrote about the paper briefly over at Forbes, where I suggested that the paper itself is a good proxy for the “glass half-full” versus “glass half-empty” conversation many have about what to make of China’s healthcare reforms. Admittedly, the SCIO is responsible for what we might graciously call “image management” and less graciously, but quite accurately, “information dissemination and control” that comes out of, and goes into, China. Consequently, white papers like this one have to be taken with a grain of salt both for what they do say and what they do not. Regardless, when the SCIO makes the effort both to publish a white paper and to ensure it is translated into English, these steps are being done to signal something about the topic the Chinese central government believes is important for those outside China to understand.
With that frame of reference, what might we glean from the white paper itself? First, let’s give the Chinese government its due: the healthcare reforms they have instituted are impressive. I write this during a break where I just heard a good briefing by who pointed out that regardless of what you think about some of the cross-purposes China’s healthcare reforms might work at when seen from the point of view of industry, you should not argue with the impressive expansion of healthcare coverage and improved access that have occurred since 2009. What are these achievements that the SCIO believes are most important? From the white paper:
- Life expectancy continues to improve (from 67.9 in 1981 to 74.8 in 2010).
- Maternal deaths during childbirth dropped (from 51.3 per 100k in 2002 to 26.1 per 100k in 2011).
- Infant mortality rate dropping (from 29.2 per thousand in 2002 to 12.1 per thousand in 2011).
- Out of pocket spending declined from 57.7% in 2002 to 34.8% in 2011.
- 148,000 new “medical and healthcare institutions” since 2003.
- From 1.5 doctors per thousand people in 2002 to 1.8 in 2011.
- From 1 nurses per thousand people in 2002 to 1.7 in 2011.
- Actual out-patient visits from 2.15 billion in 2002 to 6.27 billion in 2011.
- 95% national insurance coverage from 87% in 2008.
This is a government report, but you get the idea: healthcare access is dramatically improving. Second, throughout the entire white paper, numerous references are made to how rural access to healthcare has dramatically improved. This is a tacit – if not explicit – acknowledgement by the Chinese government both of how serious unequal access between urban and rural areas had become, but also the social instability this might create if not appropriately addressed.
Third, the white paper shows how China is doing more than simply building capacity. They are also working to ensure the transactions that drive payment for healthcare are becoming more efficient at the same time. They note, “Real-time reimbursement has been adopted for medical expenses, making it more convenient for people to have their medical costs settled … forms of payment to include payment by person, payment by disease and total amount pre-payment, enabling medical insurance to play a better restrictive role over medical institutions as well as to control expenses and compel the medical institutions to improve their efficiency.” Quite a few structural items are being lumped into one lengthy sentence, but what this does suggest is China’s reforms are working to ensure that certain procedural and back-office transactions are growing more sophisticated at the same time the environment they operate within grows more comprehensive and complex.
Fourth, the decision to publish this white paper itself is an interesting choice. I believe it is safe to assume this white paper should be interpreted as a signal to the outside world, specifically China watchers fearful that absent meaningful improvements in healthcare access the country could well face near-term social cohesion problems. In addition, this white paper is also a message to economists who share the China watcher’s fears, but also worry that from a purely economic point of view, unless China develops a substantial national healthcare system, consumers will continue to save excessive amounts, which will prevent the Chinese economy from ever becoming the powerhouse it should be (this fear is what some have called the “middle income trap”). China faces a handful of issues that, while small in number, are momentous in their potential impact. Just two, the environment and healthcare, are so multi-faceted and fraught with complex trade-offs that even more developed nations with extremely sophisticated evaluation tools struggle to properly manage. Because of this realization, I choose to believe that China’s healthcare reforms will continue in a positive trajectory, that the business environment will become more – not less – attractive towards foreign investment, and that the Chinese government fully understands human, economic and political needs that have aligned to make healthcare reform one of the most important obstacles to China’s mid-term stability.
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