China to Introduce Universal Health Care
China’s current health care system is, to say the least, spotty. People who live in cities who are in need of health care can at least nominally present themselves to a hospital and receive care at no charge. That care varies in quality from quality equal to that in European or American hospitals to conditions that are genuinely primitive. Out in the countryside things are much worse. Modern health care can be very hard to come by there—much of what’s available is folk medicine.
BEIJING — China announced Wednesday that it intended to spend $123 billion by 2011 to establish universal health care for the country’s 1.3 billion people.
The plan was passed Wednesday at a session of the State Council, the Chinese cabinet. Prime Minister Wen Jiabao presided.
Xinhua, the state news agency, said the authorities would “take measures within three years to provide basic medical security to all Chinese in urban and rural areas, improve the quality of medical services and make medical services more accessible and affordable for ordinary people.”
Providing universal health care is seen by some economists as a way to stimulate domestic spending during the current economic downturn. The Chinese have a high savings rate, and one of the reasons usually cited is their worry about possible medical expenses because China lacks a social safety net, including affordable health care.
Bai Zhongen, chairman of the economics department at Tsinghua University’s School of Economics and Management in Beijing, said that establishing universal health care with government-financed insurance would increase general consumer spending. He said the school did a survey in 2007 about the effect of rural health insurance on consumer behavior and “found that in government-sponsored health insurance areas, people are spending more.”
The government already gives many people a small subsidy to help pay for health care, but more government financing for individual health care would strengthen the economy, Mr. Bai said.
Xinhua reported that the plan approved Wednesday would aim to provide some form of medical insurance for 90 percent of the population by 2011. Each person covered by the system would receive an annual subsidy of more than $17 starting in 2010. Medicine would also be covered by the insurance, and the government would begin a system of producing and distributing necessary drugs this year.
Such a move would present both opportunities and challenges for American companies. The United States has some of the biggest health products companies in the world and if the Chinese are spending more on health care it’s possible for those companies to get a share of that market. I think that it should be an objective of American trade policy that that should be the case.
But the Chinese are notably, well, casual about intellectual property and American pharmaceutical and health products companies are some of the biggest creators of intellectual property and are in a position to lose if increased Chinese spending on health care results in the growth of Chinese health care products companies that go into competition with American companies, prospectively with products developed by American companies.