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China's Health Care Reform

Interviewee: Drew Thompson, Director of China Studies, Nixon Center
Interviewer: Toni Johnson, Staff Writer, CFR.org
April 30, 2009

In April 2009, China announced a $124 billion health care reform plan (Xinhua) to address the growing health care crisis in the country. The plan aims to reduce the uninsured from 70 percent now to about 10 percent by 2011--and pledges to improve health care for all citizens by 2020. Drew Thompson, director of China studies at the Nixon Center, a U.S.-based public policy institution, says the current state of Chinese health care is the result of economic reforms that reduced the role of state-owned enterprises in the economy over the last two decades. "By 1992, when you saw widespread dismantling of the public sector in China and growth in the private sector, health care was heavily affected," Thompson says. "Factories, state-owned enterprises, no longer were running their own health care clinics; public hospitals increasingly began to operate like private hospitals; government funding was reduced for the public health care system. The result was the health care system became heavily dependent on fees."

The deteriorating state of health care funding, particularly in the public health sector, contributed to the weak response to the outbreak of severe acute respiratory syndrome (SARS) in 2003, Thompson says. There is widespread insecurity about health care in the country, with more than 60 percent of Chinese citizens surveyed unsatisfied with the health services they receive. "By promoting this concept of 'access for all' they really have laid out a marker for how this system will go in the future," Thompson says.

"If they can't get this right, if their health care system remains sick, if health care is not affordable and not accessible, then they will continue to see a drag on their economic growth, their social development, and potentially even political backlash," he says. He notes that personal saving rates are very high as a hedge against future illness, which in effect reduces domestic consumption, something the government is trying to boost to reduce dependence on foreign exports markets.


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