China's Health Care: Cash Up Front, Lots of Drugs
If you are Chinese, or visiting China, try very hard NOT to get sick. Here's why:
1. China has no system of general practitioners, so most people go to a hospital for health care.
2. Most hospitals demand cash up front. Chinese people cannot get treatment, even for life-threatening illnesses, until they hand over money.
3. Chinese hospitals have been turned into pharmacies on steroids, more than half their funding is from the sale of drugs. The system has in-built incentives for everyone to sell as many drugs as possible, including doctors, whose salaries are tied to prescription targets. It is no coincidence that one of the biggest corruption cases this year centred on the former head of the state food and drug administration, who was executed last month for taking bribes of $1m to approve new drugs.
4. The most common prescription is for antibiotics, with devastating effect. The health ministry says that 70-90% of child pneumonia patients are resistant to drugs used to treat the disease, because of overuse of antibiotics.
5. A Chinese journalist visited 10 hospitals this year and, pretending to be a patient, provided tea in the place of a requested urine sample. Six of the hospitals said they had discovered "blood cells" in the "urine" and immediately prescribed drugs.
Read more in the Financial Times here.
MP: China's health care system also has implications for China's trade surplus with the U.S.
The fear of being financially crippled by falling ill is an important driver of the country's high savings rates, which in turn feeds the economy's bias towards investment and, more recently, with a large current account surplus, in favor of exports.
Countries like Japan and China with high savings rates (and low consumption) typically have trade surpluses and countries like the U.S. with low savings rates (and low consumption) have trade deficits. Trade policies in the U.S. targeted at reducing the trade deficit with China will never work unless the underlying savings/consumption patterns are altered in both the U.S. and China. That is, unless the U.S. somehow becomes a high savings country, we'll continue to have a trade deficit, and unless China somehow beceomes a low savings country, it'll continue to have trade surpluses. Not likely during our lifetimes.