Feature

After Mao, the market

Health policy in China over the past decade has emphasised ‘modernisation’. Sheila Hillier examines the practical results of China’s moves towards privatisation in healthcare

The bloody events of Tien an Men Square in June 1989 should have proved the inadequacy of assumptions that link political freedom to the workings of the market. By that time, China had been experimenting with economic reforms for almost a decade. The communes had been dismantled, the production-for-profit household and the small business were made the centre of the rural economy, and the self managed profit and loss enterprise the focus of urban development. In short, a market was introduced, and a move away from the mandatory system of economic management had taken place.

However, the reforms went further than the productive economy and were extended into the realms of health and welfare. The slogan of the early 1980s was ‘condemn eating from the same big pot’ — in other words the idea that benefits and wages were somehow unrelated to individual effort had to be combated. So during the decade the collective health insurance schemes which had operated in many villages vanished, along with the barefoot doctors. More and more of the state’s hospitals, or those under local management but in receipt of state subsidies have been handed over to ‘collective’, ie self financing and self governing, management.

Doctors have been encouraged to undertake private practice and now most people pay fee for service to their doctors. On the other hand, health expenditure per head continued to increase, more personnel are being trained to staff the increasing number of hospital beds, and inpatient admissions have doubled.

To understand what has happened we need to look briefly at the position before 1980. Many writers have commented on the excellence of China’s healthcare system under the Maoists yet there were signs of strain even before Mao died. People complained about the quality of care provided by barefoot doctors and smaller hospitals were often underused. Frequently lacking appropriate equipment and staff, they were bypassed by villagers who were prepared to queue at the county hospital for what they believed was better treatment.

The post cultural revolution rulers under Deng Xiaoping took as their policy theme ‘modernisation’ — a particular focus of which was science and technology. But such modernisation, it was felt, could be achieved only by dismantling current methods of organisation, which were seen as stultifying change, eating up a large proportion of the state’s resources, and threatening to take up more. The spectre of ever rising health costs which haunts developed nations loomed over the hopes of these enthusiasts. It was decided that harnessing the forces of the market would solve healthcare problems where previous approaches had failed.

These problems are not unique to China, but by virtue of size, population and geographical situation, China has the special burden of being a world power. At the same time, despite an impressive development record, China is not yet even a ‘middle income’ country. China has the world’s largest urban population — yet 80 per cent of the people live and work on the land.

The pattern of disease is changing as China experiences the ‘epidemiological transition’ — where its disease profile begins to resemble that of an industrialised nation with heart disease and cancer on the increase. Although many infectious and parasitic diseases declined before 1980, there is growing evidence that the decline has halted, or even reversed. So the health services must continue to cope with this burden while simultaneously adapting to the new disease profile.

The broad policies followed through the decade can be outlined as follows: to increase the supply of hospital beds and medical services; to modernise training and medical facilities; and to keep health costs to the state stable or allow only a gradual rise. To these ends, entrepreneurial private ownership and development of health facilities and private practices — in which patients bear the cost of expansion by increased charges — have been promoted.

Initially, the ministry of public health undertook a vigorous programme, investing state funds in modernising urban hospitals. Similarly, there were ambitious plans to upgrade a third of China’s rural county hospitals. This was based on the view that concentrating resources in the hospital sector was the best way of serving rural health needs.

These plans quickly ran into trouble. Although there was a modest increase in hospital beds in the cities, mainly benefiting the large teaching hospitals, the rural county hospital modernisation target was halved. There was simply not enough money. Although expenditure on hospitals consumes 61% of the ministry’s total budget, hospital costs far exceeded this amount. New sources of money had to be found. The obvious answer, in keeping with the political climate, was to encourage other forms of ownership and raise patient charges.

Private or semiprivate hospitals now account for over half of all hospital provision Most are to be found in the townships — they were previously the ill equipped commune hospitals, the costs of which the ministry is glad to off load. These hospitals have had difficulty keeping to their budgets and still fail to attract patients. Some have closed. The net effect has been a 7% reduction in the number of hospitals.

Hospitals that receive a proportion of their funds from the state are also in difficulty. To make up their deficits, they were obliged to adopt a 24 hour opening policy and contract with local factories to provide medical services for all their employees. This has led to overwork among the medical staff. According to one study in Beijing, middle aged doctors had the highest death rate of any professional group.

Accessibility to patients has improved, at least in the cities. The decline of smaller rural hospitals has been offset by the 29% expansion in beds in city hospitals, but this means that rural people flood into the cities for treatment — and sometimes leave without paying their bills.

Eighty one percent of Chinese, including rural and non-insured urban people, pay fee for service. If they use urban hospitals, the charges are often high, with different prices for consultants and junior doctors. In some rural areas, patients can consult a private doctor. Of 133,000 private doctors in China, 80% work in the countryside, but despite the growth in their numbers, there are still too few to provide adequate healthcare for rural areas. Complaints of quackery and overcharging are rife.

Most medical contact occurs through the village clinic, usually staffed by a paramedic and owned and managed privately or by the village committee. About half the village clinics are privately owned. Many barefoot doctors left their jobs at the start of the 1980s, some because they were sacked for incompetence, most because work on the land was more profitable. Despite retraining of the remainder, the gaps remain and are unlikely to be filled, given the abandonment of the co-operative medical insurance system which paid their salaries. Peasants visiting their clinics at the weekend are likely to be treated by an exhausted doctor ‘moonlighting’ from a city hospital. This is hardly a widespread redistribution of scarce high quality medical skills to the countryside.

In the last year, official concern over rural healthcare has been growing. Studies comparing villages and counties retaining a co-operative system of payment with those using private services showed that peasants for whom the private sector was the main source of care were less likely to visit a clinic, more likely to go to a township or county hospital (where they thought the care was better but more expensive), and less likely to receive ante- and postnatal care or have their babies in hospital. They were likely to be paying up to 400% more than people under the co-operative system.

Other reports show how villages and townships are gradually returning to some form of shared insurance scheme, which differs from the previous system in that not everything is covered — medicines, for example, are not included, but visits to the doctor are. There are already signs that enough surplus is being generated by these collective funds (which receive an additional sum from the township’s small industries) to supply adequate medical equipment. At present, the scheme exists in only 2% of counties, but other, similar arrangements are operating patchily throughout China.

The use of market forces has had only modest benefits — increased management flexibility, longer opening hours in hospitals and an increase in hospital beds in the cities. Concern has been voiced about the high price of hospital care — although as yet there is no hard evidence to suggest that people are staying away. Indeed price does not seem to have acted as a deterrent for those in the cities, who have benefited much more from the reforms. It is harder to see any corresponding improvements in rural healthcare — the opposite seems to be the case.

It seems likely that this situation will remain with some gradual improvements. The more extreme forms of private healthcare will fail because of overdetailed administration, high charges and costs and poor service. Serious problems — mainly the rural-urban inequalities in the provision of healthcare — remain untackled. We must assume that, for the moment, they are not part of the political agenda.