Written by Laurence Brahm - Published by South China Morning Post on 04/18/2006

A policy debate is raging on the mainland as to whether the past half-decade of medical reform has been a disaster. Some think the jury is still out.

“We cannot debate ether the system has failed or is successful, because it is still in transition,” said Wang Yanzhong, deputy-director of research management at the Chinese Academy of Social Sciences. “You can only identify where the problems are, and try to address them systematically and pragmatically.”

The reforms have produced a structural dilemma: a free-market medical economy where 90 per cent of all medical infrastructures belongs to the state. So hospitals – which should be creditable institutions run along Ministry of Health codes of conduct – are being managed entirely as enterprises for grabbing cash. The two systems are running in parallel, without co-ordination.

In 1998, medical and health-care restructuring were included in then-premier Zhu Rongji’s reform package. This involved commercializing the health-care system, disconnecting it from its government underwriters.

But, by 2003, cracks were already showing in the reforms: commercialism was leading to inequitable medical services and sparking social friction. Beijing then introduced a concept called the “3-3 system”. It split the cost of medical treatment into three equal parts: between the central and local governments, and individuals. It was a good idea, but was implemented only on a small scale because of the difficulty of extending support beyond urban areas, to reach the rural poor.

Premier Wen Jiabao is seeking to improve the situation in rural areas, providing more financial help for patients: namely, a 30 per cent dispensation of central government funds for every 50 yuan spent by patients. The plan sounds inspiring. But, like so many policies in China, the question remains: will the implementation go awry? So far, the initial results of Mr Wen’s approach seem promising.

According to official reports, the programme has already been introduced experimentally in 600 counties. This year, it is expected to spread to some 40 per cent of counties nationwide, increasing to 80 per cent by 2008.

Without question, the basic responsibility of any government is to provide for its people, and medical treatment is certainly a basic requirement in this regard. But that is difficult when doctors leave state research institutes and hospitals for the commercial world – in some cases as pharmaceutical sales staff – for better income and working conditions. This affects the level of research and the quality of people left in the health-care professions.

One group of doctors walked out of their rural clinic in Hunan province and joined a village medical facility in Guangdong; it needed doctors, and offered salaries that were 3 ½ times higher than Hunan could pay. The invisible hand of money now rules all in China.

The past decade has witnessed a decentralization of budgets, making local governments and operations independent of the centre. This limits the degree to which state plans can be realistically implemented.

Current government support for national medical care is only 5.5 per cent of gross domestic product. Of 600 billion yuan spent each year on the mainland on medical care, only 100 billion yuan comes from Beijing’s budget, leaving 80 per cent to be paid for by individuals. So, richer people get the better care.

If China’s freewheeling capitalist system is not reined in soon, neither a stable market nor a society will survive. So will the mainland have to go down the socialist route again for medical care?

“China is still trying to complete the transition to a market economy, but has already recognized the weaknesses of the market,” said Dr Wang. “The market cannot solve everything.”

Laurence Brahm is a global activist, international mediator, political columnist and author. He is the leading advocate of a fresh development paradigm - The Himalayan Consensus - an innovative approach to development.

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