New Marketplace

Perspective from the East: Health Care in China

Article · April 24, 2019

After 2 decades in clinical and operations leadership at the Mayo Clinic in Minnesota, I came to Shanghai in 2016 to help stand up a small private health care system, Jiahui Health. At that time, I was only partially aware of the challenges faced by providers and millions of patients in China: a 4-minute visit after a 4-hour wait, over-treatment and under-treatment, insufficient or inconsistent physician training, distrust between patients and providers, and more. A New York Times article last fall described many of the obstacles and frustrations in Chinese health care.

Through a western lens, the patient experience in China is undeniably quite poor. However, China, even while undergoing historic change, has taken tremendous steps to reform its health care delivery system in ways that would probably not be possible in the United States. The scope and persistence of these reform initiatives since 1998 dwarf any similar efforts in the United States.

So, at the risk of being called a China apologist, I suggest that in a period of Sino-American tension, conversations about health care in China would benefit from a reframing. An interpretive failure in understanding Chinese health care comes from a failure to account for, and appreciate, the China context.

Context of Chinese Health Care

While the health care needs of people are similar throughout the developed world — a woman with a breast lump or a 3-year-old with croup want positive outcomes — and medical knowledge is country-agnostic, the means and priorities for delivering care are not easily translatable between the U.S. and China. China is different. To understand this, it’s important to remember that the execution of care is inseparable from the context in which it occurs. That context is like a series of nested boxes that include the provider’s practice patterns, the clinical setting in which the episode occurs, the health system to which the clinic belongs, the relationship between health resources in a system, the regulatory and economic constraints of the city or province, and the local or national goals for health care.

China, the second largest economy in the world, has an estimated per-capita income of USD $8,827 (2017 World Bank figure). Care affordability on a population scale is a critical priority. Over the last 2 ½ decades, China has experienced probably the greatest social change in human history — not only massive economic growth, but internal migration and the urbanization of more than 470 million people. The percentage of individuals over age 65 has more than doubled, according to the National Bureau of Statistics. Along with its aging population, China faces serious health challenges from a mounting burden of cancer and chronic illnesses, such as diabetes, cardiovascular disease, and pulmonary disease.

Health Insurance Reform

In the face of this upheaval, China has tried to keep up. With the launch of landmark health care reform in 1998, China began a series of changes to its health care system and insurance model. Among them were creation of the Urban Employee Basic Medical Insurance (1998), the New Rural Cooperative Medical Scheme (2003), and the Urban Resident Basic Medical Insurance (2007). Medical assistance programs were also established in rural and urban areas in 2003 and 2005, respectively. In 2009, the central government set a goal of building a universal coverage health insurance plan. The direction of the Chinese government’s reform has been clear: Expand coverage and shift to market-oriented health care, consistent with the country’s move toward a market-based economy.

Interestingly, both China and the U.S. undertook generational reforms between 2009 and 2011 that expanded health care coverage through insurance. The Affordable Care Act (ACA) was enacted in 2010, while the 12th Five-Year Plan was released by the Chinese Central Committee in 2011.

The ACA was designed to increase access to health insurance for roughly 20 to 24 million Americans (about 7% of the population) by 2016. It aimed to insure the uninsured, increase affordability by expanding the risk pool, and reduce uncompensated care and the consumption of high-cost emergency services. The program has faced both continuous political challenge and rising costs. For consumers on a Silver plan (the most common choice for people buying insurance through the federal government’s Health Insurance Marketplace), the estimated average out-of-pocket expense for a primary-care doctor visit was $30 in 2017. While reasonable for most Americans, the average monthly premium for the lowest-cost Silver plan was $345 in 2017 and jumped to $452 in 2019. Although the ACA has successfully expanded coverage for millions, nearly 13% of Americans still lack health insurance.

In China over the same period, 2009 to 2011, health insurance coverage was expanded, particularly in rural areas. By 2011, more than 95% of China’s 1.4 billion people had basic coverage, according to the China Statistical Yearbook. Given the size of the population, rural-urban disparity, and the per-capita income, the Chinese government’s goal was to provide access and make universal basic coverage affordable.

Patients and physicians alike decry a physician appointment lasting only 3 to 4 minutes. However, a typical charge can be the equivalent of USD $4. This low cost is achieved in part — particularly in rural areas and smaller cities — by community health centers (CHCs), where providers are likely to have only 4 years of postsecondary education. The CHCs are underutilized because of lack of trust, and patients flood large academic hospitals to see specialists for minor health issues. Nevertheless, the CHCs and their providers are effectively community health resources, a solution particularly well suited to meet the basic health needs of the Chinese population, so the challenge is to encourage acceptance of their less sophisticated providers and services.

Productivity and Population Health

In economics, productivity is defined as the economic output per unit of input, so by better understanding the desired output of China’s health care policy, we can estimate what each country has accomplished for the health of its people. The Lancet estimated that in 2013, global spending on health care was USD $7.83 trillion. At the same time, China spent USD $600–700 million on health care for 1.36 billion people; this represents approximately 8% of global health care spending for about 18% of the world’s population. In contrast, the U.S. spends about $3 trillion annually for 321 million people, or 38% of global health care spending on 4% of the world’s population. In spite of this enormous difference, the health statistics of the two countries do not differ greatly.

China’s health policies and system redesign efforts provide evidence that China’s priority is to meet the basic needs of its people through population health. In contrast, while a simplification, the U.S. health system has historically focused on the needs of individuals. In this, the health care priorities broadly reflect the two countries’ political philosophies and histories: China with its strong collective, Confucian orientation and the U.S. with its post-Enlightenment, Jeffersonian foundation and emphasis on the individual. Measuring the success of Chinese health care through the lens of the (albeit bad) individual patient experience is using the wrong yardstick. Similarly, a Chinese critic might look aghast at the lack of basic health services, and their cost, to significant segments of the U.S. population — especially given the disproportionate per-capita spending on health care.

Health Care Snapshot - Chinese Health Care and U.S. Health Care

  Click To Enlarge.

This is not to say the Chinese health care system is without deep flaws. Lack of educational standards, corruption, poor access to specialists and crowding, misaligned incentives, and product unreliability (for example, vaccines) are all appropriate sources of serious public dissatisfaction. Physical attacks on physicians by frustrated citizens are common enough to have their own word in Chinese.

China’s government, the People’s Republic of China (PRC), is fully aware of these challenges, and over the last 5 years it has expanded trials of comprehensive reforms in public hospitals, opened pathways for private health insurance and providers such as Jiahui International Hospital, and continued to improve evaluation and approval systems for medicine and medical equipment. The PRC’s 2018 public report stressed these policy linchpins for the next phase of change:

  • Deepen reform of public hospitals and coordinate the regulation of medical prices, personnel compensation, pharmaceutical access, and medical insurance payments
  • Increase training standards for general practitioners and promote the primary care/specialist referral system so PCPs can book specialist appointments for their patients to reduce wait times at hospitals
  • Raise the per-capita financial subsidy for medical services for residents

The goals of these reforms are to maintain near-universal coverage and address access gaps while improving the quality of medical and health services. The scope and ambition of these initiatives dwarf those of the Affordable Care Act.

More recently, the PRC launched the Healthy China 2030 initiative. The program is remarkable for many reasons: It represents a 12-year population health effort; it sets an ambitious target of bringing health-related quality of life to a standard equaling the West; and by emphasizing health maintenance, disease prevention, healthy aging, exercise, and healthy diet on a national scale, it represents the rapid learning of lessons that took decades in the West, and are, in many ways, still nascent. Setting policy differs from enacting it, of course, and it will be interesting to see how and where Healthy China 2030 succeeds.

Fixing a Flying Plane

Redesigning a health care system for 1.4 billion people is made challenging by the multitude of moving parts in China’s dynamic society. Economic advancement, the demands of better-informed consumers, migration to cities from the countryside, an aging population, and the growing burden of chronic disease have placed seismic stresses, in an enormously short period of time, onto a relatively immature health system. Compared to the West, medical education, payment models, administration, and regulation are all embryonic and in a state of rapid transition from the governmental model before Deng Xiaoping’s opening of China, to one that is truly modern.

China must proceed carefully. Health care in China is considered a public right, and the enormity of the population, combined with a health system that offers basic care to everyone, means that errors in reform or policy have consequences beyond anything that might be seen in the West. The metaphor of trying to fix an airplane while in mid-flight is akin to China reforming its system while not interrupting the nearly 8 billion outpatient visits it delivers each year.

After 3 years in China, I am optimistic about health care in China for several reasons: With health care spending at 5.3% of GDP, China has room to thoughtfully increase health offerings on top of the current base. As evidenced by Healthy China 2030, the country benefits from long-term central planning. China appears to have the courage and political willingness to tackle hard problems. There is an important movement of intellectual capital in critical industries, such as pharma, from West to East. Lastly, China appears likely to rapidly outpace the West in its ability to apply technologies like artificial intelligence and natural language processing, through mobile technology, to transform primary care and chronic health management.

On the other hand, with U.S. health care spending at nearly 18% of GDP, there is little room to move — other than to further constrain its flawed system. And with political entrenchment and a perpetual election cycle, I struggle to have equal optimism for the prospect of meaningful system change or significant gains in the health of the American public. For decades, even centuries, the developing world has looked to the West, directly or indirectly, to chart a course and learn lessons. The time may be coming for U.S. health care to look eastward to find some valuable lessons.

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