This is in stark contrast to three decades ago. Urban residents enjoyed
state-funded hospital services and rural people had access to subsidized health
clinics run by "barefoot doctors", who were mainly middle school graduates
trained in first aid.
This service, essentially free, helped almost double the country's average
life expectancy from 35 years in 1949 to 68 years in 1978. When China began its
economic reform in early 1980s, the old system was dismantled as China attempted
to switch to a market-oriented health system.
But the government has failed to establish a viable substitute. Almost 90
percent of the rural population has no health insurance. The urban population
isn't much better off. Nearly 60 percent of city dwellers are not covered by
health insurance, according to the Ministry of Health.
From 1980 to 2004, the central government's share of total funding for health
care dropped from 40 percent to 16 percent, according to the World Health
Organization. It was 44 percent in the United States, 56 percent in Thailand, 66
percent in Australia, 82 percent in Germany and 85 percent in Japan.
For some developing countries like India, Cuba and Vietnam, medical care is
free. Government funding is also distributed unequally. Almost two thirds of the
money is spent on urban areas covering only one third of the country's
Eighty percent of government funding in urban areas is only used by 8.5
million people, mainly officials at various levels, revealed a report by the
China Academy of Sciences. Possessing the fourth largest economy in the world,
China ranks 188th of the 191 member countries of the World Health Organization
in the fairness of its medical resources distribution.
"China's health care reforms have turned hospitals into clubs for the rich,"
said a 2005 report released by the Development Research Center (DRC) of the
State Council, which concluded the reform "unsuccessful". "It's a market
failure," said Li Ling, professor at Beijing University's China Center for
"It is not right. The economy is growing, people have more disposable income,
but medicine costs are rising even faster." "Indeed, since doctors and hospitals
rely more on profits, they have come to rely on medicine sales for the bulk of
their revenues." Ge Yanfeng of DRC noted that five to 20 percent of medical
staff salaries are provided by the government, while 80 to 95 percent has to be
gained from patients.
"This leads to a tendency to overprescribe medicines, which can carry public
health risks," He said. The business of peddling medicines to hospitals has also
bred corruption, with many hospitals accepting kickbacks from drug