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China policy proposal of the day
Shouldn't this story be on p.1 of every newspaper?
Now China’s government has unveiled a controversial plan to achieve universal care that would both increase health-care funding and control prices.
As this morning’s WSJ explains, the proposed plan would be quite a shift for China. The draft plan’s overall goal is to cover 90% of the population within two years and achieve universal care by 2020. It aims to return to non-profit national health care, an idea that was largely abandoned in the country 1980s.
This all stands in contrast to China’s current system, which provides little government funding to government hospitals and requires patients to pay heavy out-of-pocket expenses. The WSJ notes that out-of-pocket payments made up more than 60% of health spending in China at the end of the 1990s.
The plan — drafted in consultation with groups including the World Health Organization, the World Bank, consultant McKinsey & Co. and a few Chinese university-based public health experts — requires all revenue raised by public hospitals to be funneled to the state. The government also aims to set pricing standards for medical services.
Posted by Tyler Cowen on October 20, 2008 at 12:49 PM in Medicine | Permalink
Comments
Great. I wondered the otehr day on Brian Setser's blog about China's willingnees and ability to impose higher consumption. They already had it in hand.
Posted by: David Heigham at Oct 20, 2008 1:21:53 PM
You would expect government control/monopoly to lead to higher prices(increasingly in the form of waiting) and lower output (fewer services supplied).
But the system in China is currently so bad, that if suppliers are given greater assurances of regular payments, output might increase and you might actually see prices fall (less of a cross-subsidy of customers.)
Also, since basic sanitation and basic health care give you the most dramatic increase in outcomes, with China starting from a very low point you could see rapid improvement in basic health outcomes.
However you will also probably see a secondary system spring up offering better services for a price rather quickly.
So this change in China could be a big improvement over their current system.
However the situation in America is very different starting point with very different outcomes.
Posted by: DanC at Oct 20, 2008 1:32:08 PM
You would expect government control/monopoly to lead to higher prices(increasingly in the form of waiting) and lower output (fewer services supplied).
But the system in China is currently so bad, that if suppliers are given greater assurances of regular payments, output might increase and you might actually see prices fall (less of a cross-subsidy of customers.)
Also, since basic sanitation and basic health care give you the most dramatic increase in outcomes, with China starting from a very low point you could see rapid improvement in basic health outcomes.
However you will also probably see a secondary system spring up offering better services for a price rather quickly.
So this change in China could be a big improvement over their current system.
However the situation in America is very different starting point with very different outcomes.
Posted by: DanC at Oct 20, 2008 1:34:06 PM
The government also aims to set pricing standards for medical services
How do you say "impending doctor shortage" in Mandarin?
Unless of course they do like France does and massively subsidize medical school.
Posted by: happyjuggler0 at Oct 20, 2008 1:34:36 PM
Maybe you can both increase funding and control prices, but I don't think in the common sense of the words.
Posted by: Andrew at Oct 20, 2008 2:43:28 PM
Impending doctor shortage? I read somewhere that China has only about 4,000 primary care doctors now. Only 2% of US graduates are pursuing primary care. Bring on the clinicians and diagnostic tables.
Posted by: pytheian at Oct 20, 2008 2:54:20 PM
Obviously, anyone who speaks out against the government won't be getting health care...But who would want socialized health care anyway?
Posted by: jorod at Oct 20, 2008 3:22:54 PM
jorod has a good point. Now that the state will have total control over healthcare, you better not say anything against the state or else you basically are out of luck when it comes to healthcare.
David Carlson
http://www.davidcarlsonpolitics.com
Posted by: David Carlson at Oct 20, 2008 3:59:02 PM
Will they have to stop smoking cigarettes?
Posted by: kurt at Oct 20, 2008 4:10:21 PM
Its one of the reasons that social libertarians should be wary of socialized medicine. Political expediency and pressures often come into the doctor's office, and there is a lot of room for abuse. Under market medicine, if your doctor is racist/sexist/mean/doesn't_like_you against you you can always go to another doctor. The old doctor will lose out on your money and the new doctor will gain your money thus incentivizing good behavior. Under a socialized (or heavily unionized) system if the leadership is against you, you are sunk.
Posted by: Jorge Landivar at Oct 20, 2008 4:11:13 PM
But who would want socialized health care anyway?
Canadians, Australians, Europeans, the Japanese...
Who would want private for-profit health care?
Posted by: Ian at Oct 20, 2008 4:16:19 PM
This will widen the urban-rural gap. Universal healthcare would mean shifting the constraint from income to infrastructure.
Posted by: Yan Li at Oct 20, 2008 4:25:41 PM
Bryan Caplan's post at econlib.org (http://econlog.econlib.org/archives/2008/10/why_dont_the_ch.html)
hits the nail on the head. This is a good policy if the Communist Party wants to stay relevant (without having to resort to all that overt brutality) and show that they care. Whether it does or does not improve health outcomes is secondary, it buys them some more support.
Posted by: scott clark at Oct 20, 2008 4:58:58 PM
That's too bad - life expectancy had been rising in China :)
http://www.china.org.cn/health/2008-01/07/content_1238345.htm
"The average life expectancy of Chinese increased to 73 in 2005, 1.6 years more than in 2000...The infant death rate decreased to 1.53 percent last year, down from 2.55 percent in 2003"
"Life expectancy was only 36.5 years in 1949 when the People's Republic of China was founded."
In the face of:
http://www.newscientist.com/article/dn14986-worlds-largest-health-system-rejects-free-market.html
"Free-market economic reforms rolled out across the Chinese health system in 1978 have led to a collapse in healthcare provision for a fifth of the world's population, researchers have concluded."
1978 life expectancy at birth in China was about 65 to 68 depending on who you believe...now after "a collapse in healthcare provision", it is only 73!
Posted by: Mr. econotarian at Oct 20, 2008 6:46:52 PM
Mr. econotarian,
You assume nothing else has changed in China from 1978 to 2008, like nutrition, income, etc.
Posted by: carolinian at Oct 20, 2008 7:26:10 PM
carolinian isn't that the point more freedom has improved nutrition, income, etc. Which BTW effect health much more than medical care.
Posted by: Floccina at Oct 20, 2008 9:25:38 PM
absurd choice ... with the help they received I am not surprised they made the wrong decision
Posted by: bee at Oct 20, 2008 11:12:13 PM
jorod has a good point. Now that the state will have total control over healthcare, you better not say anything against the state or else you basically are out of luck when it comes to healthcare.
I agree... but why do we have to pretend that this doesn't happen in the West?
The Chinese aren't evil, and in the grand scheme of things their current regime (lets say, 1990 and beyond) isn't that much more repressive than many western governments in the latter half of the 20th century. If the Chinese government finds it useful to ration health care based on political expedience of the ruling class, then I am sure there is a long behavior of similar behavior in the West.
This kind of China bashing and double standards for China is a bit annoying.
Posted by: Rex Rhino at Oct 21, 2008 1:38:43 AM
I wouldn't trust those numbers on infant death rates. According to most left-wing sources, the US has the highest infant death rate among developed countries. If any of those numbers were true, why would people from all over the world come to the US for treatment? Every day you read some article in the paper/internet about poor people from the third world coming to the US for life saving treatment. Fact of the matter is, the US has the best treatment for the money, especially if you are criticaly ill. India may be cheaper on an individual basis. But when it comes to treating the massses and timeliness, the US wins. In Canada, you get on a waiting list. That's not health care.
Posted by: jorod at Oct 21, 2008 2:17:25 PM
Rex, you are right. Bad things only happen to people in Nazi Germany and Stalinist Russia. Let's stop picking on the Chinese.
Posted by: jorod at Oct 21, 2008 2:21:13 PM
Jorod,
I think you need to do some reading on what causes IMR, sure health care is important, but far from everything. E.g. US has quite high proportion of teen pregnancies, which also leads to higher IMF. Also, US indeed have very good health care, but it is access that is the problem (well, it is in every system, it is only the ration methodologies that differs) and when rationing by purchasing power that will hit hard on indicators such as IMR.
Posted by: Henrik at Oct 21, 2008 5:33:01 PM
"return to non-profit national health care, an idea that was largely abandoned in the country 1980s." A lot depends on how you interpret this statement.
The straightforward (but false) interpretation is that China had universal health care before the market reforms and abandoned this policy at that time. This is true for the urban population, which had a health care system more or less like the Soviets (free for all, rationed by waiting, persons with connections skip the queue). The rural population of China (the vast majority) had almost no access to government health care before 1978. They were pretty much on their own. Their health care consisted of the 'barefoot doctors' and traditional folk remedies (to the extent the latter were allowed). My sister-in-law was a barefoot doctor. She was given some basic medical supplies (bandages, antiseptic) and no training to speak of.
If we interpret it as a return to giving lip-service to the idea of universal non-profit health service, the statement is true but uninteresting. For the majority of Chinese, the market reforms increased access to health care.
Posted by: Dave at Oct 21, 2008 5:35:10 PM
Get with it guys. You can see a health care professional for $39. We have supermarkets with better health care than most countries...
Posted by: jorod at Oct 21, 2008 8:12:22 PM
"The challenge is that low expectations and widespread frustration has made consumers vulnerable to the seduction of socialized medicine. The opportunity is in helping consumers see that if the government-imposed barriers in the health care market were erected anywhere else in our economy they would revolt.
For instance, imagine if when consumers wanted to design their own car or computer they were told what they could only design their machine based on arbitrary government mandates that varied state-by-state. Imagine if when consumer wanted to shop for any product they couldn't find basic pricing information or reviews because the government set up a system that made those choices for them. The American people know that innovation, choice, and competition work because they see these forces work every day. Consumers expect that the market will produce better, safer, and more efficient cars at a reasonable price. Consumers expect the market will make electronics faster and cheaper, and so on. History has confirmed this fact time and time again. In 1908, Henry Ford made a car for $850. Eight years later he produced the same car for $360. Today, we see that prices for plasma and LCD TVs have dropped by about 50% in the past two years.
A market-based system that would unleash the power of innovation and competition in health care is within reach. A key reform would involve transferring health care tax benefits to individuals rather than employers. Mr. McCain's plan would do that by providing every American with a tax credit of $2,500 per individual ($5,000 per family) to buy their own insurance plan. Switzerland, hardly a bastion of conservatism, has used a similar individual-based model where costs are 50% less than in America with better outcomes.
The Clinton and Obama plans, far from being harbingers of change, would institutionalize the worst aspects of today's antiquated health care system, such as the World War II era employer-based, third party payer model. Both plans rely on old-fashioned government coercion and regulation in order to forcibly assimilate Americans into a government health care collective. And, ultimately, both plans would rely on rationing — letting patients die before their time — to control costs. As the Canadian Supreme Court said in 2005, "Access to a waiting list is not access to healthcare."
- Tom Coburn
Posted by: jorod at Oct 21, 2008 8:25:34 PM
I have to say as a Brit the fear of nationalised healthcare looks vastly overblown. I'd much rather deal with the NHS than battle insurers or the risk of bankruptcy.
The crucial things about medical care that differs from other goods is that people's need for it varies wildly by risk, when they need it most they are usually rendered least able to pay for it, and the end user finds it very hard a priori to work out what they need and whether it is any good.
Isn't "if when consumers wanted to design their own car or computer they were told what they could only design their machine based on arbitrary government mandates that varied state-by-state" an accurate description of the current situation? I'm given to understand that e.g. the famous GM electric car trial in California was not brought to market not because the cars didn't work but because they couldn't tick all the regulatory boxes.
Posted by: Peter Clay at Oct 24, 2008 9:42:12 AM
