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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.

That may be about to change:

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.

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About Dave Schuler
Over the years Dave Schuler has worked as a martial arts instructor, a handyman, a musician, a cook, and a translator. He's owned his own company for the last thirty years and has a post-graduate degree in his field. He comes from a family of politicians, teachers, and vaudeville entertainers. All-in-all a pretty good preparation for blogging.

Comments

  1. Steve Verdon says:

    I’ve argued in the past that the intellecutal property aspect of health care is not taken into account by many who talk about health care and U.S. health care costs (this would mostly be liberals). Just as they all too often ignore various definitions in regards to things like live births when looking at infant mortality statistics.

    In short most people engage in half-assed sloppy thinking on this topic.

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  2. $123 billion for universal healthcare for 1.3 billion. So just over $100 per person gets you universal healthcare. Who knew quality healthcare was so cheap. It would almost be worth it to have the US spend $100 per person to implement universal health care and then agree that the left can not propose any other government programs for any other democratic presidents term when it is found to not be enough.

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  3. Franklin says:

    What a bunch of commies!

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  4. Davebo says:

    I’ve argued in the past that the intellecutal property aspect of health care is not taken into account by many who talk about health care and U.S. health care costs (this would mostly be liberals).

    Could you expound on this a bit? Is it that somehow IP won’t be honored in a single payer system? Is the VA making counterfeit Prozac?

    Or is allowing large purchasers to negotiate quantity discount somehow detrimental to IP?

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  5. just me says:

    Is the VA making counterfeit Prozac?

    Nope, but if there is a drug you know works, and the VA can’t get it cheaply enough they don’t give it to you.

    We learned several years back that Advair is one of the best treatments for controlling my husband’s asthma (which is a service connected disability). The VA refuses to give him Advair, and instead gives him another approved drug, which isn’t as good, which also leads to my husband having several asthma flare ups the advair prevented. He also, for a very long time could not get zyrtec through the VA, even though other allergy drugs did not work or he could not take, and he had to try a whole slew of drugs before they would finally prescribe singulair.

    I am thinking the VA system isn’t what I want for the rest of my family-either in the drug choices they make to save money, or in quality of care (which varies a lot-quality of care in Durham, NC was excellent, but quality of care in rural NH stinks).

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  6. Steve Verdon says:

    Could you expound on this a bit? Is it that somehow IP won’t be honored in a single payer system? Is the VA making counterfeit Prozac?

    Are you being deliberately obtuse? Just curious.

    In the event you aren’t the standard argument goes something like this:

    1. In the Country of Milk and Honey they pay $X for universal health care.
    2. In the U.S. they pay $2X (for the sake of argument) for non-universal health care.
    3. If we just switch to the same model that is used in the Country of Milk and Honey, why we could save $X on health care.

    Now, if the health care firms in U.S. are some of the primary providers of intellectual property–i.e. new drugs, etc.–then it is possible that these other countries are essentially free riding which could explain in part the cost differential. Thus we may not be able to save $X becuase we’d still have to pay that portion that is due to the production of health care related IP.

    Or is allowing large purchasers to negotiate quantity discount somehow detrimental to IP?

    Not necessarily, but the U.S. consumers are the one’s largely footing the bill then go to step one above.

    As for a single payer system honoring IP, yes that is another potential problem. In many countries health care costs are spiralling out of control (e.g. Britain, Canada, and France). One way to help with that problem would be to change IP laws so that the holders of IP no longer enjoy their temporary monopoly. This could reduce the overall level of R&D in the future making us all worse off.

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  7. Drew says:

    $100 per person? Are you sure this wasn’t universal hair care?

    The typical universal health care debate is as absurd as my comment. Verdon just nailed one point, but the “cost” of inferior quality and restricted access are never mentioned by universal health care advocates.

    I find myself unable to take any commentator on the subject seriously unless they are willing to acknowledge that we need to reintroduce price, and the original concept of insurance into the debate.

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  8. [...] Dave Schuler talks about China’s plan to provide an estimated $123 billion universal health care system for its citizens. Ezra Klein discusses how Chinese leaders see the plan as a way to induce consumption and economic dynamism. Chris Albon offers a link to an article about Cuba’s education of thousands of foreign students in the medical fields and its expeditionary medical efforts. [...]

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