China's health care system searching for remedy
Updated: 2006-10-06 14:14

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 population.

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 Economic Research.

"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 companies.