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Last Updated

06 May 2003

Source: Wall Street Journal, May 6, 2003


China's Health Care Disaster


Speculating on who is to blame for the current health care fiasco in China is irresistible blood sport in both Beijing and Washington. Cover-ups are particularly intriguing and this one will have long-lasting social and political effects. Nonetheless, if both Chinese and foreign observers become obsessed with the politics of the recent SARS cover-up, they will lose sight of the underlying causes of China's health-care system train wreck.

Although the engineers driving the train must be held accountable, much of the problem is to be found in the rail bed and infrastructure. What are those fundamental challenges that must be addressed? There are many, but three are central. If these problems are tackled effectively by China's new leaders, their shaky positions may be enhanced, along with the welfare of China's people and the world.

The erosion of the public-health system. Mao Tse-tung was a cruel leader, but, in the area of public health, he built a strong system that emphasized the dispersion of medical personnel and resources nationwide, low-cost preventive health care, and mass education. Smallpox, plague and cholera were virtually eliminated by 1960-by the time of Mao's demise, the infant mortality rate had been cut by about two-thirds.

In the "gold rush" era of reform that soon followed his 1976 death, however, medical personnel in rural areas flowed back toward the cities, health care became a fee-for-service commodity more available to the rich than the poor, urban hospitals became the focus of the system, and the tight public-health monitoring system that had been established decayed. One reason for these developments was that the rural cooperative health care system disintegrated with the welcome abolition of the people's communes in the late-1970s and early 1980s.

In 1981, 71% of Chinese had access to state health facilities -- 12 years later the figure was 21%. While absolute government spending on health care has gone up in the reform era, in 1999 China ranked 144th among 191 World Health Organization countries in per capita health expenditures. Further, three-quarters of health spending, according to the World Bank, goes to hospital-based care, with 60% of that going to pharmaceuticals. In short, the rural population and the urban poor and unemployed increasingly cannot access the health-care system. This is a calamity because these persons are at high risk of contracting and spreading infection.

The erosion of central government capacities. One of the reasons for the decaying public health system has been that the central government in the reform era has had less and less proportionate control over the disposition of financial resources. The share of tax revenue at all levels of government in the GDP has dropped to about 18% from 30.9% in 1978, after reaching a low of 10.7% in 1995. Moreover, the central government's share of total tax revenues dropped throughout much of the reform era, falling to about 33.4% in 1993 from 45.8% in 1978, though this has improved considerably in recent years. However, even some of this improvement is illusory because some central revenues are rebated to localities. When all is said and done, the central government is relatively less able to maintain basic infrastructure and more and more tasks are pushed upon often-impoverished local governments. The problem of unfunded program mandates is alive and well in China.

The maintenance of the public health infrastructure is one of those essential tasks that, when ignored, is invisible for a while only to unpredictably burst onto the scene. Even if the villages of China dodge the SARS bullet now, assuredly another bullet will hit them before long. Indeed, TB and HIV/AIDS have hit, with the latter declared to be a "Titanic Peril" by UNAIDS in its June 2002 report.

The non-governmental sector is not allowed to plug the hole. In a July 1993 meeting in Beijing with a then vice premier, I was told that, "The use of social organizations [non-governmental organizations] is to concentrate capital and to meet needs that the government is unable to meet...[To solve our problems] we rely on state funds, but a country so large cannot do everything." At the time of this interview, Beijing was working on a legal framework for social organizations so that such entities could lighten some of the government's burdens in the health care, environmental, and other areas.

A decade after my interview, however, that legal framework for voluntary associations still is not in place nationally, largely because the political elite fears such entities might turn political. Starkly put, as central and local governments have moved off the health-care playing field, political authorities have not sanctioned social organizations in ways that would allow them to flourish and address unmet needs. As the above-mentioned U.N. report put it in speaking of China and the HIV/AIDS peril, "In many other countries, civil society has mobilized on a large scale in the fight against the epidemic and often has been in the forefront for providing information and education to vulnerable individuals, communities... ."

These three problems collectively mean that, although today's leaders initially responded inappropriately to SARS, the fundamental causes for the spread of the disease in China lie in policies of long standing. If China is to move beyond the blame game, more money is going to have to be devoted to a more equitable and decentralized public health system in which the central government plays a more active role, there must be more accountability and transparency in the Chinese system, and voluntary organizations are going to have to be allowed to help.

China's new leaders, General Secretary and President Hu Jintao and Premier Wen Jiabao, "fully" assumed office only in March of this year, nearly five months after SARS first appeared in Guangdong province. Further, they are outnumbered on a Politburo Standing Committee dominated by close associates of their predecessor, Jiang Zemin. Mr. Jiang, himself, still holds substantial power "behind the screen" after his 14-year reign as general secretary, a period at China's pinnacle longer than Margaret Thatcher enjoyed in Britain. Consequently, while blame for the cover-up remains to be sorted out, responsibility for the underlying public-health conditions described above does not principally lie with China's younger successors.

Indeed, this crisis affords China's new, younger leaders an opportunity to strengthen their shaky legitimacy. From their earliest days in office late last year and early this year, Messrs. Hu and Wen have sought to be more populist leaders calling for more social and economic equality and paying more attention to those elements of Chinese society left behind in the last 25 years' rush to riches. However, rhetoric and eating dumplings in a coal mine (as Mr. Wen recently did) will not be enough to convince the Chinese people of their seriousness. Tackling the underlying conditions discussed above that have contributed to the current crisis might be.

Mr. Lampton is director of China Studies at Johns Hopkins-SAIS and The Nixon Center in Washington, D.C. He is the author of "The Politics of Medicine in China" (1977) and "Same Bed, Different Dreams: Managing U.S.-China Relations 1989-2000" (2001).